Robin (AUDITOR) (854 Points)
07 June 2012Company XYZ having two departments - Dept A ( Sales Division ), Dept B (Service Division )
Dept A ----- sales to consumers at VAT invoice and sale to Dept B without VAT
Dept B ------- Uses the product in discharging the service to consumers
Issue - in the above case who is required to pay VAT output ?
Its obious that Dept A being a sales division is only can be registered under VAT act. but it is not collecting the VAT
output from Dept B. Kindly Solve this issue
AMAR SAMPAT
(ca final cum SERVICE)
(100 Points)
Replied 07 June 2012
CO XYZ HAS TO PAY VAT AS WELL AS SERVICE TAX (IF EXCEEDS THE LIMIT PRESCRIBED IN SERVICE TAX LAWS)
DEPT A AND B IS DIFF FOR THE CO POINT OF VIEW BUT BOTH COMES UNDER ONE CO AND ONE PAN NO AND ONE VAT NO AS WELL AS ONE SERVICE TAX NO
VAT HAS TO BE PD ON SALES OF GOODS AND SERVCIE TAX HAS TO B PD ON SERVICES PROVIDED AND INVOICE RAISED
krishna vishwanath
(student)
(81 Points)
Replied 07 June 2012
Robin
(AUDITOR)
(854 Points)
Replied 08 June 2012
Both of you are right....But situation please try to understand.
Now,, It is like this....Dept A does Stock transfer to Dept B, So no VAT output collected by Dept A --- Upto this clear
Next -- --- Dept B while rendering service to customers uses such products, and Service bill will be raised.
So Dept B is not issuing VATable invoice.
NOW TELL ME UNDER VAT RULES WHAT WOULD BE MY VAT OUTPUT ?
CA Riswa Parekh
(Practicing)
(1591 Points)
Replied 10 June 2012
your output VAT would be only to the extent sold to consumer.i.e., output vat would be only to be paid on Dept.A
Yogita
(Partner)
(434 Points)
Replied 14 August 2012
No Your VAT on Dept B will come. When you render services & Only services then there cannot be use of any material, but when you use some material for rendering services then
1) Either that material trfd will be shown as material sold to the Customer Srvc Recvr coz there is the transfer of Rights in the material along with the SRvcs, even if there is no material seen seperately but Mtrl is an Integral part in completion of the Srvcs. ( Refer Provisions of JOB WORK & Taxation of that under VAT & your point will get cleared)
2) If its only srvcs if you claim that then you can also come under Works contract ( Refer WCT Act under VAT & Srvc TAx)
Refer JOb work & Works Contract Tax Prov under VAT & Srvc Tax & your issue will get cleared. There is nothing as Brain Teaser inthis situation. It is a clear case of J/W or WCT based on actual situation for Dept B who pays Tax there on, Withour any Onput credit as it has been trf from Dept A without VAT.
CAclubindia
