Declared goods used in works contracts - rate of VAT not to exceed 3%
The Assam High Court had occasion to decide whether the Assam VAT Act could levy tax on declared goods such as iron and steel used in works contracts at a rate higher than that allowed by Sec 15 of the Central Sales Tax Act, 1956.
The commercial tax authorities of Assam proposed to levy VAT @ 12.50 % on all goods used in works contracts. The Commissioner of Commercial Taxes, Assam clarified that the State can levy tax on works contract by treating the same as distinct species apart from the constituent materials undergoing bodily transfer. This meant that even declared goods would be taxed at 12.50%.
Sec 14 of the Central Sales Tax Act, 1956 declares certain goods to be of special importance in inter-state trade and such goods are normally referred to as declared goods. Sec 15 of the Act restricts the rate of tax on local sales levied by state governments to 3%.
By treating the declared goods used in works contract as a separate species, the commercial tax authorities of Assam, tried to overcome the limitation imposed by Sec 15 of the CST Act, 1956.
In Afcons Infrastructure Ltd vs State of Assam [2007] 9 VST 195 (Gauhati) the Assam High Court held that the state government cannot levy tax on declared goods used in works contracts at a rate higher than that permitted by Sec 15 of the CST Act, 1956.
Date of decision : 10th Aug 2006.
sir…as tyre retreading comes under works contract, it means we can avail the composition scheme….now lets say the cost of retreading a particular tyre is rs 100… as 70% is the retreading material vat @ 12.5% is being paid ….so if the retreading is being done under contract service tax is applicable on the service part ,but what i understand from composition scheme provision…we can pay rs 2 as sevice tax….pls clearify is it right…also clearify that if u r paying 2% tax under composition scheme on the gross amount ,do we need to pay the vat also
Dear Harpreet,
In your transaction, the VAT part on 70% is already been paid; service tax at whatever rate is paid; so further payment of VAT should not arise. You should have documentary proof of having paid VAT on the 70% in the event of scrutiny/ assessment. I stand corrected if I am wrong?
Dear Sir,
We intend to carry out job on subcontract basis for pipeline project of PHED Ajmer. Our scope involves providing anticorrosion tape coating (imported from outside India) and labour job for installation of this coating on the pipeline. If the material cost is , say Rs100.00 per sq.m and application cost is Rs25.00 per sq.m then do we have to pay WCT on Rs125.00 ? and what rate?
Do we need to take work contract registration at Rajasthan? If the job is done under composition scheme, what will the impact on us? Kindly enlighten.
We are tyre retreaders in belgaum,karnataka.We are paying VAT on 70% of bill amount as it is materialcost.hence according to us we must pay service tax on remaining 30% of bill amount @12.36%.However the commisioner here in bgm is asking us to pay service tax on whole bill amount(100%) which i think is unfair as 70% bill amount is taxed TWICE
Also our firm stand is that Tyre retreading is not covered under SERVICE TAX AT ALL IN THE FIRST PLACE
PLease can you refer us a judgement wherin the specific case of tyre retreading with regards to service tax is concerned.
Your feedback will be highly appreciated
Regards
plz give me list of goods on which vat is applied
(1) please give me list of list of goods on which Assam VAT is applied & rate of Assam VAT
(2) Please clearfication of Bengal Work Contract Tax of Sub Contractor