Take a Vendor having VAT Bus Posting grp= Domestic, and Item having VAT Prod Posting Grp= VAT25
Create a Purchase Invoice for the Vendor & the item given above, and bring the fields VAT Bus Posting grp & VAT Prod Posting grp in the Sales Invoice using Design mode
Clear the records in the fields VAT Bus Posting Grp & VAT Prod Posting grp from the Sales Header & Lines respectively.
And then do preview posting, G/L entries and VAt entries are created for the setups on the Item & Vendor Master records. As per me, it should not calculate VAT, as the records are deleted from the Invoice document.
VAT Entries created:
