Dear Members
I have query on works contract. Please correct me with reasons wherever u feel I am wrong.
(1) If a person buys a readymade house from builder whose construction is complete, then there is no service or sale of goods and hence no service tax or VAT will be charged. It being just a sale of immovable property.
(2) If a person goes to builder to buy a house and the house will be build then it is a works contract.
there will be service and valuation of service portion of works contract will be as per Rule 2A of Valuation Rules.
But will there be also sale of goods in this case?
Cement, bricks etc will go into making the house which are movable and hence goods as per VAT acts of state but what ultimately will be sold is a house which is a immovable property and hence not goods. And if house is not good then no VAT is possible.
If you agree that there is no sale of goods then it cant be a works contract because as per section 65B(54) of FInance Act, 1994 there has to be 'transfer in property of goods in execution of contract' for it to be works contract.
Regards
CAclubindia
