We do job work for many of our clients where we charge service tax as well as CST or Vat. The problem we now face is, we calculate sales tax on the net amount ie. invoice value plus the service tax for which few of our clients are objecting. Their argument is the sales tax is applicable only on the invoice value. so we kindly request you could lead us to any section/subsection in sales tax manual so that we could deal with our clients
11 Replies
hemant gupta
(CA)
(20 Points)
Replied 03 May 2008
your clients are absolutely right sale price can include excise but service tax is not to be added to sales price while calculating VAT/CST amount.
ragavendhiran
(audit asst)
(93 Points)
Replied 03 May 2008
As per service tax act "taxable service amount" not inclued any tax or cess. If works contract is divisable as material and labour and evidenced by supporting document, we may calculate service tax only labour amount.
In TN VAT act section 2(41) "turnover" some amount are excluded are noted in explanation and Rule 8 . As per explanation IV if tax is not inclued in taxable turnover if separately charged in invoice. Here my view is tax mean VAT tax only.
In the case of divisable contract, we may calculate st on labour amount and vat on material sales.
In the case of indivisable contract, we first calculate st on contract amount and calculate vat amount for contract amount including service tax.
vinothkumar
(Accounts Officer)
(28 Points)
Replied 05 May 2008
Sir,
I have today met the CTO of our assessment circle. According to when our material is used in the process we will have to pay CST. If we can prove the actual cost of the material, then we can pay CST on the cost of it. If not, we will have to pay CST on the full cost of the invoice excluding the service tax part. But they did not give any written documents.
what to do?
neeraj
(Service)
(23 Points)
Replied 21 May 2008
We do job work for many of our clients where we charge service tax as well as CST or Vat. The problem we now face is, we calculate sales tax on the net amount ie. invoice value plus the service tax for which few of our clients are objecting. Their argument is the sales tax is applicable only on the invoice value. so we kindly request you could lead us to any section/subsection in sales tax manual so that we could deal with our clients
Vijay K. Agrawal
(Service)
(608 Points)
Replied 22 May 2008
Dear neraj,
I am recolletcing that there was a notification that if you manufacturing then service tax is not applicale.( you are not in this category since no manufacturer)
Basically you are providing work contract in which you are using material.in these case you may bifurcate your turnover- 33% for vat and rest for service tax.
thre is specific provision in each vat act. you can refer and arrived at the solution.
Rgd.
vijay
biren thakkar
(accounts manager)
(231 Points)
Replied 23 May 2008
Dear Neeraj ,
Let me know from which state you are raising an invoice & what job work you do. if possible can you give me a sample invoice you are raising so i can clearly solve your problem.
Biren
amarnath jaiswal
(asst. accounts manager)
(22 Points)
Replied 24 October 2009
SIR PLEASE PROVIDE ME A SAMPLE FOR CALCULATING OF WORK CONTRACT VAT UNDER WEST BENGAL VAT ACT .
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