26 September 2012
I have a query regarding Vat ITC which came up from a practical live example and is as follows:
A is a retail registered dealer who buys garments from B a fashion designer(unregistered dealer).According the contract between A and B, A will pay for the garments only if he manages to sell the garment to the final consumer.B agrees to sell the garments @ Rs 225 each to A. A manages to sell one garment and pays only Rs 200 to B for it. i.e he charges B 12.5% Vat, why is it so???? Is he allowed to do so??? Since B is not charging vat to A why is A deducting the Vat amount from B's selling price??? Is A allowed to do so???
CAclubindia
