Vat Calculation in Labour with Material Work

This query is : Resolved

Jenish Mehta (Querist)
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17 February 2010 We do job work for many of our clients where we charge service tax as well as CST or Vat. The problem we now face is, we calculate sales tax on the net amount ie. invoice value plus the service tax for which few of our clients are objecting. Their argument is the sales tax is applicable only on the invoice value. so we kindly request you could lead us to any section/subsection in sales tax manual so that we could deal with our clients

CA. O.P. Agarwalla

CA. O.P. Agarwalla (Expert)
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18 April 2010 This is a debatable point that whether VAT will be applicabe on Service tax elements. In case you have not opted for composition scheme, there is no reason for charging VAT on service taxes.

The debate is in the case of Composition scheme only. Recently, in Assam the COT had issued a clarification that in case of a composition scheme, VAT will be calculated on the total value (including Service Taxes).

My client is now planning to miove to Huigh Court on this issue.