Vat & excise applicability on sale in transit & job work
This query is : Resolved
20 March 2012
Our Company’s Current Position
Our Company is currently performing two Work contracts with Railways for laying of Washing Lines at Anand Vihar Terminal(ANVR), DELHI and for construction of Bridge at Sarita Vihar(SV), DELHI by sub-contracting the entire work to “JSM Engineers & Contractors(JSM)”. We are registered as “work contractor” with DVAT office and submit monthly DVAT return. Our Company make purchases of two materials :
1. “Ready Mix Concrete(RMC)” and
2. “CEMENT” to be used for producing RMC.
RMC: Our RMC Supplier “Techno Concrete” has set up its factory for production of RMC at the project site i.e. ANVR site since the material is of daily use nature. Techno Concrete currently supplies RMC under Tax Invoice charging Price of RMC and Taxes(Excise & DVAT) thereon excluding price of CEMENT as it is supplied by our company to them. We claim DVAT input on purchase of RMC.
CEMENT: Our Company(CSSPL) purchase cement from “Ultratech cement Ltd. & other like parties(DELHI)” and cement bags are delivered directly to the factory of “Techno Concrete” running at both sites(DELHI) thus making Sales in Transit to “Techno Concrete”. We claim DVAT input on purchase of CEMENT as bills/invoices and delivery note are issued in our company name.
Proposed Situation
From now onwards, Techno Concrete invoices issued to us will include price of RMC & CEMENT and Taxes (Excise & DVAT) thereon thus avoiding short payment of duties on account of CEMENT not included in invoices as raised earlier. They are suggesting us to raise debit note equivalent to cement cost or to issue material Transfer note
Queries:
We seek your kind opinion in case of following queries:
1. Does Production of RMC supplied by Techno Concrete using cement provided by us is covered under “JOB WORK”. If Yes, whether Excise duty or DVAT is exempt on this job work? Should Techno concrete charge Taxes on Cement Part supplied by us?
2. Can our company claim DVAT input on CEMENT & RMC both on basis of invoices raised on our company’s name? Whether goods delivery note or invoices from Ultratech to us should contain name of Techno concrete for supply of cement.
3. How the entries in books to be routed through without violating any legal provisions?? Should we raise Sale invoices for Sale in Transit to Techno Concrete? Whether we should issue Debit Note or Material Transfer Note to Techno Concrete for the payment made for cement? Kindly suggest in respect of sale within Delhi only.
4. What are other legal & statutory obligations/procedures to be followed or any suggestions in respect of above keeping in mind the risk of any financial loss to the company.
Our Company is currently performing two Work contracts with Railways for laying of Washing Lines at Anand Vihar Terminal(ANVR), DELHI and for construction of Bridge at Sarita Vihar(SV), DELHI by sub-contracting the entire work to “JSM Engineers & Contractors(JSM)”. We are registered as “work contractor” with DVAT office and submit monthly DVAT return. Our Company make purchases of two materials :
1. “Ready Mix Concrete(RMC)” and
2. “CEMENT” to be used for producing RMC.
RMC: Our RMC Supplier “Techno Concrete” has set up its factory for production of RMC at the project site i.e. ANVR site since the material is of daily use nature. Techno Concrete currently supplies RMC under Tax Invoice charging Price of RMC and Taxes(Excise & DVAT) thereon excluding price of CEMENT as it is supplied by our company to them. We claim DVAT input on purchase of RMC.
CEMENT: Our Company(CSSPL) purchase cement from “Ultratech cement Ltd. & other like parties(DELHI)” and cement bags are delivered directly to the factory of “Techno Concrete” running at both sites(DELHI) thus making Sales in Transit to “Techno Concrete”. We claim DVAT input on purchase of CEMENT as bills/invoices and delivery note are issued in our company name.
Proposed Situation
From now onwards, Techno Concrete invoices issued to us will include price of RMC & CEMENT and Taxes (Excise & DVAT) thereon thus avoiding short payment of duties on account of CEMENT not included in invoices as raised earlier. They are suggesting us to raise debit note equivalent to cement cost or to issue material Transfer note
Queries:
We seek your kind opinion in case of following queries:
1. Does Production of RMC supplied by Techno Concrete using cement provided by us is covered under “JOB WORK”. If Yes, whether Excise duty or DVAT is exempt on this job work? Should Techno concrete charge Taxes on Cement Part supplied by us?
2. Can our company claim DVAT input on CEMENT & RMC both on basis of invoices raised on our company’s name? Whether goods delivery note or invoices from Ultratech to us should contain name of Techno concrete for supply of cement.
3. How the entries in books to be routed through without violating any legal provisions?? Should we raise Sale invoices for Sale in Transit to Techno Concrete? Whether we should issue Debit Note or Material Transfer Note to Techno Concrete for the payment made for cement? Kindly suggest in respect of sale within Delhi only.
4. What are other legal & statutory obligations/procedures to be followed or any suggestions in respect of above keeping in mind the risk of any financial loss to the company.
21 March 2012
Mr Kumod,
1. Even when you supply cement to the RMC supplier it will not become a job work,because,they will have to add metal,sand and water to it and mix them in their mill.Ithink the excise rate will not change by your supply of cement to M/s Techno.
2. You and the RMC supplier are in the Delhi territory only. So,no question of sale in transit.You can take input tax credit of RMC purchase from M/s Techno concrete or partly of cement from M/s Ultratech and partly from Ms Techno concrete.Whenyou issue cement to M/s Techno you can issue material transfer note.You can directly get the cement delivered to the RMC maker....MJK
1. Even when you supply cement to the RMC supplier it will not become a job work,because,they will have to add metal,sand and water to it and mix them in their mill.Ithink the excise rate will not change by your supply of cement to M/s Techno.
2. You and the RMC supplier are in the Delhi territory only. So,no question of sale in transit.You can take input tax credit of RMC purchase from M/s Techno concrete or partly of cement from M/s Ultratech and partly from Ms Techno concrete.Whenyou issue cement to M/s Techno you can issue material transfer note.You can directly get the cement delivered to the RMC maker....MJK
22 March 2012
I agree with Krishnamurthy
25 March 2012
Dear Expert, thanks for ur valuable comments!!
Please tell me about how Material transfer note is to be issued? Does it contain Quantity, Value & VAT part of cement supplied also. kindly send me a proforma of the same if available.
Please tell me about how Material transfer note is to be issued? Does it contain Quantity, Value & VAT part of cement supplied also. kindly send me a proforma of the same if available.
27 March 2012
Mr Kumod,
For this purpose you can use statutory or own forms. When you are a checkpost barrier or if there is a mobile checkpost arrangement in your area, then you have to carry a statutory form 34 or 35 issued by the commercial taxes department of Delhi. To obtain these forms from the department you have to apply in form46(as per rule 43A). If it is only a movement within the city limits you may use your own form in the same patter like the statutory forms for record purpose of both the parties involved....MJK
For this purpose you can use statutory or own forms. When you are a checkpost barrier or if there is a mobile checkpost arrangement in your area, then you have to carry a statutory form 34 or 35 issued by the commercial taxes department of Delhi. To obtain these forms from the department you have to apply in form46(as per rule 43A). If it is only a movement within the city limits you may use your own form in the same patter like the statutory forms for record purpose of both the parties involved....MJK
01 June 2012
thanks for explaination krishnamurthy ji....
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- SEC 54 OF IT ACT
- Form 26QB for TDS on property
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Is Aadhar PAN linking required for opening bank account?
- Where to show the RCM on Rent paid to unregistered landlord
- RCM - commercial rent paid to URP under GST
- GST Annual Returns filing due date
- BLOCKED-INELIGIBLE GST CREDIT
- Amendment of September 2021 Invoice
- Payable outstanding for years disallowance
- Regarding Form 15CA & CB
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding Resignation by Auditor from Pvt. Ltd.
- Regarding einvoice taken on nil rated sales
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
