Computation under rule 58 of MVAT


Querist : Anonymous (Querist) 05 November 2009

Dear All

We are doing the following activity-
We are purchasing drums from the market & filling it with chemicals supplied by the buyer & after filling of drums with their chemicals, it is sold to that particular buyer only.
We have set up the automatic filling machine in the buyer's premises & the activity is carried out with some labour which are required to move drums.
Now the question arises that whether this amounts to WCT or not. In our opinion it is a WCT since both the labour & material is involved in it.
We are charging WCT as well as Service Tax.
WCT is charged on the 75% of value of the sale.
But now Sales Tax Dept is denying 25% deduction & are saying that it should be calculated under rule 58. But there are no clear guidelines about how to arrive at the profit figure from the said contract under rule 58.All other figures can be arrived at easily since the accounts are maintained & the data is readily available.
We are not doing any other business.
So kindly help

Thanks in advance

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