Plz help in solving this problem related to vat work contrac

Dear all,

An engineering metal plating company, does work on contract basis here in bangalore. They, are charging (Vat) of 5.5% on their sales. what they do are :

1) get the material from the customers

2) process the same and purchase materials required for processing it with vat/cst

3) sale it to customers with vat of 5.5%

4) adjust the vat collected with the vat on purchases.

example: they recieve a contract of Rs. 100 and they process it and give it to customers by charging 5.5% of vat on Rs.100. for processing it they might have purchased some material with 12.5% or 4%. In the month they adjust the input vat and out vat and pay / refund the rest amout.

points to be noted:

- they dont mention service/ labour charges separately

- they mention the materials and they put the tax of 5.5% on total bill

Is this transaction correct or they have to choose composite scheme where they will not get credit on purchases ? plz help me...

thanks in advance.

Originally posted by : jafer
	Dear all, An engineering metal plating company, does work on contract basis here in bangalore. They, are charging (Vat) of 5.5% on their sales. what they do are : 1) get the material from the customers 2) process the same and purchase materials required for processing it with vat/cst 3) sale it to customers with vat of 5.5% 4) adjust the vat collected with the vat on purchases. example: they recieve a contract of Rs. 100 and they process it and give it to customers by charging 5.5% of vat on Rs.100. for processing it they might have purchased some material with 12.5% or 4%. In the month they adjust the input vat and out vat and pay / refund the rest amout. points to be noted: - they dont mention service/ labour charges separately - they mention the materials and they put the tax of 5.5% on total bill Is this transaction correct or they have to choose composite scheme where they will not get credit on purchases ? plz help me... thanks in advance.