17 July 2009
Suppose ‘A’ in Mumbai (Maharashtra State) received Works Contract Order for Construction of a Building from Calcutta (West Bengal). The Site is at Calcutta (West Bengal). Both A and B are registered under VAT in respective States.
Question:- Which Tax will attract for “A”. Whether Interstate Works Contract or Works Contract Tax of West Bengal.??
17 July 2009
Central Sales Tax will be payable on goods involved in works contract, if goods move from one State to another on account of such works contract.
One interesting question that is likely to arise is whether there can be ‘goods involved in works contract’ if finally the article becomes immovable property in other State. For example, if a dealer undertakes supply and erection of machinery in other State, whether it will be a ‘inter State works contract’. In the opinion of author, it will be held so, as the movement of goods from one State to another certainly occasions on account of the works contract. - - It must be remembered that in case of works contract, the sales tax is on ‘goods involved in the execution of contract’ whether the property passes as goods or in some other form. There is no CST on ‘works contract’ as such. Thus, CST on works contract is really only on goods involved, which certainly move from one State to another.
It may be noted that a ‘sale’ can be inter-State even if property in goods is transferred in other State.
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