Taxation in sale in transit

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Amar Solanki (Querist)
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14 November 2011 Dear Sir

Let suppose there are a Buyer-A, a Contractor-B and a Manufacturer-C

Contractor-B get the contractor from Buyer-A of Rs.1500(suppose)

Contractor-B place a purchase order of Rs. 900(suppose)to Manufacturer-C as consignee Buyer-A

I want to ask what type of taxes, Contractor-B will liable to pay on his profit and margin of Rs.600 in case of sale in transit.

U S Sharma

U S Sharma (Expert)
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14 November 2011 this is not a case for excise, put it in incometax,

B will have to pay local vat on gross transaction value and 600 would be his business income.

Amar Solanki

Amar Solanki (Querist)
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15 November 2011 Dear Sir
Very thanks for your reply.
If Contractor-B is registered in Maharashtra as manufacturer and EPC contractor, Buyer-A is a Power Plant in Haryana and some equipment Manufacturer-C is in Maharashtra. Contractor-B send some equipment by term of sale-in-transit from Manufacturer-C to Buyer-A. Buyer-A get the excise modvat on Manufacturer-C's invoice. In this case Contractor-B will pay what type Trade Taxes (in addition of Income tax), where and on which amount.

Regards

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Amar Solanki

Amar Solanki (Querist)
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15 November 2011 Dear Sir
Thanks a lot.

PUNEET GOYAL

PUNEET GOYAL (Expert)
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15 November 2011 In ur case it appears that contractor B is working as commission agent who has procured material on behalf of A (buyer) from C (manufacturer.

If B(Contractor) has also raised invoice to A (Buyer) for differential amount (Rs. 600/-). Rupees 600 is subject to income tax and it may also be subject to service tax under business auxiliary services if it exceeds rs 10 lac.

Note that in above case, invoice for sale of goods should has been raised by C (manufacturer) in the name of A (buyer).

Amar Solanki

Amar Solanki (Querist)
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16 November 2011 Very thanks

Regards