GOVERNMENT OF ANDHRA PRADESH

COMMERCIAL TAXES DEPARTMENT

PROCEEDINGS OF THE

AUTHORITY FOR CLARIFICATION AND ADVANCE RULING

(Under Section 67 of APVAT Act, 2005)

Present: Sri G. Lakshmi Prasad, Addl. Commissioner (Policy)( FAC)

Dr. K. Raghavaiah, Jt. Commissioner (Audit - II )

Sri. D.Venkateswara Rao, Jt. Commissioner ( Legal)

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A.R.Com/ 8 /2008. Dated : 26th May, 2009.

Ref:- CCT's.Ref.No: PMT/P&L/A.R.Com/2005, Dated 13-04-2005.

O R D E R:

I. M/s D.L.F.Commercial Developers Ltd (TIN 28279577836.) have filed an application and sought clarification and advance ruling on the following items under Section 67 of APVAT Act, 2005 read with Rule 66(2)(i) of APVAT Rules, 2005 along with the application fee of Rs.1,000/-

II. They sought clarification on the following:

Tax deduction at Source under Rule 18 of AP VAT Rule, 2005 in view of amendment in Schedule-II by inserting new Sl.No. 3-A vide notification No. G.O.Ms.No. 227 dt. 23.2.2008 issued by Secretary to Government of A.P. would be still applicable to awarder of the contract in SEZ for deduction to be made from contractor's bill/payment?

III. The applicant submitted the following documents:

Write up on the issue.

IV. Mr. S.K. Jawahar, authorized representative, appeared for hearing and explained the case.

V. The issue has been examined with reference to the provisions of the APVAT Act and Rules and ruling is given as under:

VI. Firstly, it may be noted that by G.O. M.s. No. 716, Revenue dated 4.6.2008, entries 3 & 3A of Schedule II to the AP VAT Act were omitted and included as entries 59 & 59A of Schedule I to the AP VAT Act w. e .f. 1.6.2008. Secondly, Rule 18 of AP VAT Rules read with Section 22 (3) of AP VAT Act provides for tax deduction at source at the prescribed rates by all the contractees from the works contract bills submitted by the contractors except in cases where a contractor files an application before the assessing authority concerned under Rule 18 (1) for quantifying the turnover and the tax payable by the contractor. In such cases the contractee shall deduct the tax at source at the rate determined by the assessing authority. In all other cases tax shall have be deducted at source at the rates prescribed under sub-clauses (i) and (ii) of clause (b) of Rule 18 (1).

The question whether a contractor is liable to be taxed or not and the extent of their tax liability is to be determined by the assessing authority and not the contractee. In case the contractor is liable to pay more tax than what was deducted at source he would be issued a demand notice and if the tax assessed was less than the tax deducted at source the contractor would be issued a refund order along with the assessment order by the assessing authority. More over the provisions relating to Tax Deduction at Source are independent from the charging sections under the Act.

Therefore, the ruling is that contractee is liable to deduct tax as prescribed under Rule 18 without any reference the charging sections.

NOTE:- An appeal against this proceedings can be filed before the Sales Tax Appellate Tribunal, A.P. Hyderabad within 30 days of this ruling.

Addl/Jt.Commissioner