applicabe vat rate on price variation bills

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NARESH KUMAR SHARMA (Querist)
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29 June 2011 A Firm undertook a contract for supply of good in 2009. As per terms of esclation clause in contract the buyer had to pay extra for increse in price of material, labour to supplier. The whole goods under contract was supplied in 2009.The applicable rate of vat at the time of supply of good was 4%

The supplier raised bill for price variation in 2011 as per esclation clause of contract. The applicable rate of vat at the time of issue of price variation bill was 5%.

The contention of supplier is that whole goods were supplied in 2009 and p.v. bills are just of rate difference, hence only 4% rate should be applied on P.V. bills.

I would like to ask what rate of Vat should be charged on P.V. bills, either 4% or 5%

kindly advise stating relevant section of law.

Further kindly advise what will be answer in case of excise duty in same situation.

thanks
naresh sharma

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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29 June 2011 Mr.NK Sharma,
The sale price of goods has to be indicated in the invoice. The amount could be recived or receivable,or deferred.But it should be shown in the sale document. Then,such amount forms the sale turnover of that specific period,i.e.of tax rate4%.If any amount,which is not mentioned in the first invoice is received or made receivable,as per the agreement,later i.e. when the VAT became 5% ,then such amount fall in the turnover of later year and 5% VAT will be applicable. So on P.V.bills 5% VAT is to be charged. Regarding excise also the same principle should be applicable,however,please clrify with some other expert also.
MJK

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