Vat on works contract

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 August 2013 i am a dealer in karnataka registered under cot scheme for civil works contract. as per our friends instructions and service tax official instruction i have raised my contract bill 60:40 ( 60% for material and 40% for service).accordingly i have collected service tax and since i am cot dealer i have not collected vat. However on 60% of the invoice value i have paid vat. now one on vat audit official asking to pay on 40% of the value also. is it liable to pay. kindly guide me in this regard.

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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29 August 2013 Dear Sir,
For COT scheme especially for Works contract computation of VAT should be as per below mentioned method.

gross amount received: *****
Less: Deductions
a) Land cost ****
b) payment to registered sub contractor *****
(c)Interstate purchases ****

Arrive the amount taxable under works contract @4% ****

Next process is to add the tax on On interstate purchases at local rate

Ratio is not the criteria for determining the taxable amount.