29 September 2015
Dear Sir / Madam, We have awarded a civil contract to Contractor “A” under composite method. Hence “A” is claiming service tax 14% on 40% value of the contract value. As per TNVAT act he can’t claim vat under this method. During scrutiny of TNVAT & Service Tax documents, we came to know he is paying vat as per sec 5 of tn vat act as per gross profit method. My query is if one contractor is doing business under composite method and raising bills how he can pay vat under gross profit method by the way of splitting the materials like 5% & 14.5% and without claiming the amount from Employer. Is there any dispute will arise in case of any scrutiny comes from the vat department. Kindly guide us for better clarification.
CAclubindia
