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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 August 2013 We found a contradiction of provision as provided in Sec13 (7) read with Sec 4(7)(a) and Rule 17(1) (g).

“Sec 13(7) states that where any VAT dealer pays tax under clause (a) of sub-section (7) of Section 4, the input tax credit shall be limited to 75% of the related input tax”

“Sec 4(7)(a) reads as under
“Notwithstanding anything contained in the Act;-
a) Every dealer executing works contracts shall pay tax on the value of goods at the time of incorporation of such goods in the works executed at the rates applicable to the goods under the Act:
Provided that where accounts are not maintained to determine the correct value of goods at the time of incorporation, such dealer shall pay tax at the rate of specified in schedule V on the total consideration received or receivable subject to such deductions as may be prescribed”

“Rule 17(1) (g) of AP VAT Rules state where the VAT dealer has not maintained the accounts to determine the correct value of the goods at the time of incorporation he shall pay tax at the rate of (14.5%) on the total consideration received or receivable subject to the deductions specified in the table below: In such cases the contractor VAT dealer shall not be eligible to claim input tax credit and shall not be eligible to issue tax invoices”

My query is whether the contractor not maintaining the books of accounts can utlise the 75% input tax credit or not as per the above provisions?

Kindly clarify me at the earliest.

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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20 August 2013 It is an option offered. Every VAT dealer who is a contractor can choose this option as if he has not been able to maintain correct accounts to determine he exact value of transfer of property in the works executed by him.....mjk

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