Can purchase for works contract be done by issue of c form?

This query is : Resolved

Amit shah (Querist)
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02 July 2014 Dear Sir,

My Client is a Works Contractor (WC) ( Furniture Contractor) carrying out Works Contract for Modular Kitchen and Wooden Doors ( Material plus Labour) in New construction project in Maharashtra.

Location of the client and execution of Works Contract - Maharashtra

RC Certificate - Shows Works Contractor as principal Nature

Query:
1. Now, He wanted to purchase Wooden Doors from a Supplier based in Gujarat by issuing a C Form. The Doors would be installed in the same Form at a Site located in Maharashtra
a) Can He purchase by issuing a C Form at concessional rate ? Any restriction on goods purchased for Works Contract
b) Can We get the Input of CST Paid on such purchases against Sales to Contractee
c) What would be the rate to be levied on Subsequent Work Contract Sales Bills to be issued by WC to Contractee customer ?

Please guide. Your early response in the matter would be highly appreciated

Thanks in advance

Amit shah

Amit shah (Querist)
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12 July 2014 Dear Experts,

Request for the valued feedback on the matter.

Thanks for time and response.

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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18 July 2024 Based on the details provided regarding your client's situation as a Works Contractor (WC) in Maharashtra, here are the responses to your queries:

1. **Purchase of Wooden Doors from Gujarat using C Form:**
a) **Issuing C Form for concessional rate:** As per the CST Act, 1956, a Works Contractor can purchase goods (like Wooden Doors) from another state (Gujarat) at a concessional rate by issuing a C Form. This form signifies that the goods purchased will be used in the execution of works contract in Maharashtra. The rate applicable under CST with C Form will typically be lower than the standard CST rate applicable without C Form.

b) **Input Tax Credit (ITC) on CST paid:** Yes, the CST paid on purchases made using C Form can be claimed as Input Tax Credit (ITC) against the CST liability on subsequent sales to the contractee (customer).

c) **Rate applicable on subsequent sales (Works Contract Sales):** For the subsequent sales of the works contract (modular kitchen and installation of wooden doors), the applicable rate of CST will depend on whether the goods involved in the works contract are declared goods or not. In Maharashtra, declared goods attract a lower rate of CST (2% currently), while non-declared goods are taxed at the applicable VAT rate.

Since wooden doors are not typically classified as declared goods under CST, the standard VAT rate applicable in Maharashtra would apply on the subsequent works contract sales invoices.

It's advisable to consult with a local Chartered Accountant or Tax Consultant to ensure compliance with specific state regulations and to handle any nuances related to Works Contracts under Maharashtra state laws.

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