Sale of plants

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 September 2013 Hi everyone,

i have a query.

our company had given a portion of land to a customer for undertaking plantation activities of Eucalyptus. meanwhile, they have observed some standing subabul trees which has some commercial value. therefore, they have sold it off and gave the proceedings to us (sale value-cost incurred by them).

is VAT applicable to this transaction or Service Tax?

Please do reply as early as possible.

Thanks in advance.

Best Regards.

Querist : Anonymous

Querist : Anonymous (Querist)

06 September 2013 guys..please reply on this..
help me..

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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08 September 2013 Hi,

Service tax does not attract because no consideration for the service rendered by the customer.

For VAT clarification please let me know which state VAT applicable for this transaction.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

16 September 2013 Dear Sir,

Thanks for the information.

this transaction took place in HYderabad.

So please do reply.

Regards,

Vidya

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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04 October 2013 Hi vidya,
I am not familiar with AP VAT I request other experts to answer the query

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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22 July 2025 Hey! Regarding the sale of standing trees (like subabul) on land given for plantation, here’s a quick rundown for your Hyderabad/Andhra Pradesh context:

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### 1. **VAT Applicability**

* Trees that are grown for commercial purposes (like timber or plants sold for commercial value) **may be treated as goods** under VAT.
* If the customer sold the trees and gave the proceeds to you (net of their costs), then **VAT could apply on the sale of those trees** because trees are considered movable goods.
* In Andhra Pradesh, **VAT would generally be applicable on sale of goods**, including timber and trees grown commercially.
* You should check if there’s any specific exemption for sale of plantation produce or timber under AP VAT, but generally, it’s taxable.

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### 2. **Service Tax Applicability**

* Service Tax is charged on services rendered for consideration.
* Here, since the customer sold the trees on their own and handed over the proceeds to you, and you didn’t provide any service directly to the customer, **Service Tax would not apply**.
* There’s no direct service transaction between you and the customer in this case.

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### Summary:

* **VAT is likely applicable on the sale of the trees (goods).**
* **Service Tax is not applicable** because no service is rendered to you by the customer in this context.

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### Suggested Next Steps:

* Confirm the AP VAT Act provisions on plantation produce or timber sales.
* Ensure proper invoicing and VAT compliance for this sale.
* You may want to consult a local tax expert for state-specific clarifications.

If you want, I can help you draft a formal query or letter for VAT authorities or check more detailed provisions. Let me know!

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