Sales Price determination for inter-state works contract

This query is : Resolved

Kamlesh Shah (Querist)
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21 February 2010 A Dealer registered in Maharashtra(Mumbai) is doing works contract(interior designer) at Gujarat(Baroda) in the year 2008-09 for Rs. 40 lacs. Also the same dealer for same work gives sub-contract(Purchase) of Rs.30 lacs to some other dealer registered at Gujarat(Baroda).

Q.1 On what price the dealer shall levy CST on Rs.40 lacs or Rs.10 lacs after deducting the sub-contract price from the contract price (as amended to sec 2(h)of the CST Act wef 11/5/02)?

Q.2 Whether standard deduction of 25% as per notification no STR. 1506/CR-38/Taxatin dt 8-9-2006 is applicable on 10 lacs(i.e after deducting sub-contract value) or on the whole contract value of Rs. 40 lacs ?

Q.3 Is he eligible to do composition and levy CST @ 8% instead of 12% ?

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)
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18 April 2010 Being the CST Act and Rules are silent on this issue, it is advisable that the amount of taxable turnover should be calculated as per the policy laid down by State legislature.

I don't find any reason that standard deductions will not be allowed i your case, if other conditions (if any) are satisfied.

I don't think that composition scheme should rule the CST transactions.