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Guj VAT Query

CA Sitaram Agrawal (Professional) (86 Points)

02 December 2008

If a company get the contract for a lumpsum amount including all taxes.

The scope of work includes civil work, plant & Machinery and supply of heavy vehicles.

Is purchase heavy vehicle from outside Gujarat state requires to pay the entry tax @ 15.00%.

If yes, it will be available to us as input tax credit.

If No, in what section or Rule it is explained that the entry tax will not be leviable.

Further, how can we determine that the company is under the works contract and liable to pay VAT @ 5.00% on output under Gujarat VAT.

Sitaram Agrawal

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5 Replies

K. Gaurish (Government Employee) (68 Points)
Replied 02 December 2008

Mr Sitaram,

Purchase of heavy vehicles from outside the State of Gujrat would be liable for entry tax . This is because, as per the recent judgement of the Supreme Court, a builder is held to be a manufacturer and conseqently assets purchased by the civil contractor would be liable to entry tax. Further payment of such entry tax would be eligible for input tax credit under VAT.

Whether any company is covered by Works Contract or not would depend upon the circumstances of the case. Prima facie, since your company in involved in Civil Work, such civil work may amount to works contract and consequently you may be libale to VAT @ 5%.

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(Guest)

Dear Sir,

We are in SEZ, surat and suppling material in domastic market.

I want to know are we lible to pay VAT within Gujarat and any where in India.

Thanks and Regards

Kundan Singh

+91 9377289959

Vijay K. Agrawal (Service) (608 Points)
Replied 03 December 2008

DEAR SITARAM,

ENTRY TAX IN NOT COVERED BY VAT ACT. HENCE NO ITC. YOU WILL NOT FIND ANY SACTION WHERE IT WAS WRITTEN BUT WHAT IS AVAIALBE IS WRITTEN IN VAT.PL REFER TO DEFINITION OF INPUT TAX.

FURTHER THIS IS BASED ON THE BASIS OF BUSINESS CARRIED BY YOU. IF YOU ARE DOING BOTH SELLING AND INSTALLING THEN YOU ARE CARRYING WORKS CONTRACT, IF YOU ARE SELLING ONLY THEN YOU ARE NOT CARRYING WCT.

TRUST YOU QUERIES ARE ASNW

Vijay K. Agrawal (Service) (608 Points)
Replied 03 December 2008

DEAR KUNDAN,

YES YOU ARE LIABLE TO PAY THE LOCAL TAX SUBJECT TO LIMIT. EARLIER UNIT IN SEZ ARE ALLOWED TO 25% OF TOT IN LOCAL MARKET SUBJECT TO NET FOREIGN EXCHANGE EARNING.YOU HAVE TO READ LOP GIVEN BY DEVELOPMENT OFFICER AND YOU ALSO REFER TO SEZ RULE AND HANDBOOK.

VAT FOR GURAT WIL BE NORAM RATE

FOR SELLING IN OTHER THAN GUJ, YOU HAVE TO PAY CST

vjsassociates (CA Practice ) (15 Points)
Replied 29 November 2009

Dear Mr. Kundan & Mr. Agarwal,

In my opinion any sale by any SEZ in Gujarat ot any DTA in Gujarat or anywhere in India will not attract any Local VAT. If u read a Preamble to SEZ Act in Gujarat it is clearly adopted by Gujarat State that any Sale from SEZ t oDTA will be treated as Import for DTA Unit and it will be liable for Imporat Dut yas per GOI Polcy. Pl go through the same and let me know ur interpretation on th same since SEZ Act overrides provisoins fof Local VAT Act.

Vipul