Vat or works contract of government (mainly cpwd & bsnl)

This query is : Resolved

divya dhamija (Querist)
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20 February 2013 Respected Experts

This refers to works contract taken by father in Maharashtra (contractor who is a registered sales tax dealer.)

Contractor undertakes civil construction projects of making buildings for BSNL & CPWD and in all cases, the flats after construction are not sold as they are made like quarters for the use of CPWD & BSNL employees.

Agents cum Principal contractor BSNL & CPWD deduct TDS @ 2% from the bills on the taxable turnover and issue certificates…All these assessments of work done relate to period 1993 to 2000.

Now after so many years, sales tax authorities impose assessment orders running into several crores & they use their own mechanics to calculate and charge tax @ 10- 15% with penalty on turnover.

My basic query is “government contractors” have already got tax deducted at source from BSNL & CPWD, so why are we again burdened.

Can sales tax re-burden us with taxes? Why should the burden not be put on BSNL / CPWD..They are the principal contractors, hence they should be made answerable too.

For us it is the works contract act or do we need to follow new MVAT Act & pay burden on our ownselves. But BSNL & CPWD consider government construction contracts as “works contract” & not under VAT???

Please assist with your valuable input.
Thankyou

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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05 March 2013 Ms Divya Dhamija,
You say your father is a registered under MVAT and Maharashtra Sales Tax Acts. Then he should have filed returns regularly declaring also the works carried out for BSNL &CPWD.In those returns he should have declared his tax liability as per rules,taken credit of the TDS made by the owners of property built, and paid the balance to the govt(if any). If this procedure is completed then there would have been assessments by the department certifying the accounts of your father as correct. Under VAT Act correct declaration of all these works and receipts would discharge your father from any problems.If these statutory requirements are not done then only the department will wake up some day issue notices to recover the old taxes. Anyway,now go to a CA/advocate/STP wirh all records available with you and try settle the matter......MJK

divya dhamija

divya dhamija (Querist)
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05 March 2013 sir
Just a deviation from my query...

If sales tax appeal remains pending for 3 yrs atleast & no action or orders by tax authorities....But suddenly after 3 rs, they say that its a final hearing & pass orders of attachment on d basis that assessee didnt attend last hearing so appeal is dismissed....What as per you are d weaknesses or deliberate omissions of tax authorities.....I dont find thir working correct..Can department keep quiet for 3 yrs & suddenly pass orders....is there no limitation rules or Appeal Rules too ???

Thankyou in advance

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MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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07 March 2013 Ms Divya,
Sales tax authorities all over India are notoriously corrupt,of course,with few exceptions.In your case after filing an appeal aplication you should have persued the matter by requesting them to finalise it soon. Generally,no appeal succeeds without bribe. It is a rule that an appellant should be given enough opportunity to be heard and explain their case.Whereas the appellate authorities do not send notices to the dealers and do not record the objections raised by them.Even now you can approach the appeal officer and request to rectify the dimissal order on the grounds that a mistake has occured in not taking note of the grounds made out and records filed. But,'you have to offer some thing',and then only it materialises.
....MJK