Applicability of vat on turnkey contract

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This query is : Resolved

Sanat Kumar (Querist)

30 August 2012 If a works contract (turnkey contract ) is being executed in Mumbai Offshore or any where in India by a foreign contractor not having any permanent establishment in India, does he require to pay VAT / CST on material portion in case contract can be divided in materials & services or Works Contract Tax if it is an indivisible contract? If yes, does he require to obtain VAT / CST no. ? Are such contractors, not having permanent establishment in India, allowed to have CST no. or VAT no ? Can such VAT / WCT be claimed as set off by the customers?

Sanat Kumar

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

31 August 2012 Mr Sanat Kumar,
Here carrying a work off shore is not important,the palce where an agreement was entered into is the main issue. If for an indian organisation a work has been taken up to be excuted then all the VAT and CST laws will be applicable,irrespective of whether the contractor is a foreign company.....MJK

Sanat Kumar

Sanat Kumar (Querist)

01 September 2012 Dear Mr. Krishnamurthy,
Thanks for your response. It is noted that the VAT / CST will be applicable to foreign contractors. Kindly elaborate whether foreign companies not having permanent establishment in India are eligible to get VAT / CST nos? Can CST / VAT nos. be given on individual case basis as companies after completing contract (LSTK / works contract) may not continue to work in India.
Regards

Sanat Kumar

MJ Krishnamurthy

MJ Krishnamurthy (Expert)

01 September 2012 Mr Sanat Kumar,
The foreign companies have open a temporary office for the purpose of executing the work and also to obtain registration. Even for small contracts registration has to made under VAT amd CST Acts,if the value exceeds the threshold(5 laks).....MJK

Sanat Kumar

Sanat Kumar (Querist)

02 September 2012 Dear Mr. Krishnamurthy,
Thank you very much sir.
With regards,
Sanat Kumar

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