VAT @ 1% vs VAT @ 4% of APVAT Act

 hi all,

I'm having a peculiar problem with a builder/developer regarding the calculation of VAT. The issue goes like this, i bought a house in a gated community in hyderabad. The project costed about 50 Lakhs, which is split up as Plot Cost = 9,33,000 + Cost of construction = 40,67,000. This was signed up by both the parties on a "Agreement of Sale Cum Construction/Development" heading. In the agreement the original plot/site owners represented by GPA  ABC Pvt Ltd., & then the builder/developer is EFG Constructions Ltd. The point why i'm explaining this is, the GPA as well as the Builder are one man/person only, running the process under different headings. So far so good.

I got the house registered at Sub Registrars Office as a semi constructed house, as per the prevailing govt rates the valuation is done for Rs.21,67,200/- (9,33,000+12,34,200). Actually I was supposed to pay VAT while registering the house at prevailing govt rate of 1% on registered stamp duty. Which would amount to Rs.21,672/-. I hope its clear so far.

But now the builder/developer has been insisting that I pay VAT @ 4% as he has already paid VAT @ 4% as he is a registered dealer with AP Commercial Taxes Department. So I insisted that he give me a receipt or proof of what he is claiming. So after a lot of brickbatting back and forth, he finally gave me a copy of filed Return Form VAT 200 & Form VAT 250 (composition scheme) where in he calculated the VAT @ 4% rate. I took this copy and went to the Commercial Taxes Department and met Asst.Commissioner and he was kind enough to spare his time for me. He told me that the builder is not supposed to charge at 4% rate as he opted to pay by way of composition, he should be collecting VAT at the rate of 4% of 25% of the total consideration or market value whichever higher Under Section 4(7)(d) of AP VAT Act 2005. 4%(25%)=1%. So after giving a through reading of the copy of the section mentioned above and perusing the copy of Form VAT 250. I noticed that in the Form VAT 250, there were 4 clauses mentioned in it which i'm quoting for easy reference, I quote as follows:

i) At the rate of 4% on the total value of the contract executed for the government of local authority subject to such condition as may be prescribed.

ii) At the rate of 4% of 50% of the total consideration received or receivable for the contract other than State Government and local authorities subject to such conditions as may be prescribed.

iii) At the rate of 4% of 25% of the total consideratioon received or receivable or the market value fixed for the purpose of stamp duty whichever is higher, for the contract of constructing and selling of residential apartments, houses, buildings or commercial complexes subject to such conditions as may be prescribed.

iv) At the rate of 12.5% on 60% of the total consideration charge for food and drink to such conditions as may be prescribed.

I agreed to pay VAT @ 4% of 25% on 40,67,000 but he is not least bit interested and is debating with all possible pretexts. He also gave me a copy of an Advance Ruling in his defense, even when I read thru the copy of the advance ruling, as a layman here too I could understand and relate the case in my favour, but he insists that its the other way round and I should pay VAT @ 4% rate. Please find attached the advance ruling copy.

So to my understanding as a layman, it would seem plausible that i'd fit in the Clause (iii),  as also confirmed by the Asst Comm of Commercial Taxes Dept., then why is it not understood by the builder??? I just dont understand his stubborness in this matter. So I inquired with the department and they told me that I have to file for a "Advance Ruling" in this matter. So would anybody throw some light and clarify my doubt regarding the calculation of VAT percentage and how to go about applying for Advance Ruling. What do I need to enclose in the process of Advance Ruling.

Thanks.