18 September 2007
WE HAVE GIVEN BUILDING MODIFICATION CONTRACT WORK TO A KARNATAKA PARTY. THEY HAVE BILLED US FOR THE ENTIRE AMOUNT AS SALE OF GOODS (WITHOUT MENTIONING LABOUR INVOLVED IN THIS) @ 12.5 CST. WORK IS AT KERALA. IS IT CORRECT. AND 12.5% CST RATE IS PREVALENT IN VIEW OF REDUCTION CST RATE. KINDLY CLARIFY.
19 September 2007
In fact, the contractor should have deducted the labour component from the bill value and charged CST only on the material component. You may ask him to revise his bill accordingly. Effective 01-04-2007, the rate of CST is the rate of tax applicable in their state in absence of a C form. Since you may not be entitled to issue a C declaration form for the building works, you may have to pay the tax if the rate of tax applicable for the goods involved is 12.5% in the state of Karnataka. If some of the goods are taxable @ 4% he has to split the material component further into the applicable tax rates.
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