The Commercial Tax Department of the State Government has clarified and issued an advance ruling that any chemist who is required to collect separately any amount of tax under the provisions of any other law in force, can collect the tax paid by him on his purchases and in addition, can also collect the turnover tax (TOT) payable by him on his sales. And an unregistered dealer, below Rs 5 lakh turnover threshold, can collect VAT paid on purchases by him from his customers, they further clarified.

This is in response to the application filed by Karuna Pharma (P) Ltd on April 29, 2005 seeking clarification and advance ruling on whether the TOT dealer who has paid on his purchases can collect the same along with TOT payable on his sales and whether an un-registered dealer who has paid VAT on his purchases can collect the same on his sales made to consumers, under section 67 of the APVAT Act, 2005 read with rule 66 (2) (i) of APVAT Rules, 2005.

The application was examined by T Yugandhar Reddy, additional commissioner (VAT), T Vivek, joint commissioner (VAT) and K Raghavaiah, joint commissioner (Audit). The case was posted for hearing on May 7, 2005. Ramesh Chandra Gupta on behalf of Karuna Pharma appeared and explained the case.

There is a clear provision in Drug Price Control Order, a Central enactment, that all local taxes could be charged and collected over and above MRP, it noted.

Ramesh Chandra Gupta, a member of Taxation Committee of All India Organisation of Chemists and Druggists (AIOCD) said, this clarification / ruling would help consumers understand that it’s not illegal if a chemist collects tax from them and they have the right to collect tax.