SALE OR WCT

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Deepak Gadgil

Chartered Accountant

19 Points Posted on 10 May 2007

Friends

I have following problem on hand

1) I purchase a gas kit to be fitted to motor vehicles from a vendor on Maharashtra he bills me the kit in 2 parts one is cylinder on which 4% vat is charged - say Rs. 104 incl VAT

2) & the other is conversion kit on which 12.5% vat is charged - say Rs. 112.5 incl VAT

3) the bill is single TAX INVOICE for both the above items.

4) What I do is I fit these two separate items into motor vehicles at my workshop

5) I want to raise a single bill for all this

The Query - whether this is a sale of goods? if yes at what rate the VAT is to be charged? pl provide me with shedule entry no for the saem.

IF it's a works contract at what rate VAt is to be charged & whether any deduction is permissible?

Regards

CA Deepak Gadgil
Solapur
0217-2318152 / 6450752 / 9422068273 / 9325616287

Replies (2)

Abani Kumar Mohapatra

service

29 Points Posted on 10 May 2007

if the the purchase condition is purely material supply only, then VAT is applicable as per tax invoice, but if the supply includes installation/jobbing, then it migh be cosiderred as Work Contract which will attract WCT, if the work contract value exceeds exempted limit of 1 lac vary from state to state.but where the seggregation can be made as to material supply and fixing/installing/jobbing, then the installation/jobbing portion may not attract vat, instead the service tax may attract.but in work contract, irrespecive of vat payment, the liability u/work contract is not ruled out.so suggested to differentiate between work and sale and design the transaction to suit optimum tax benefit angle.