S.t and vat on more than 100% of bill in case of works contr

This query is : Resolved

RANJAN (Querist)
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21 September 2012 Dear Experts,
The most interesting fact of this year's budget is that one of my service provider of composite AMC contract for UPS is charging VAT as per Delhi VAT Act on 80% of bill value and charging S.T on 70% of Bill Value . We are paying tax on 150%. Is it justified ? What is the way out?

RENGARAJ R.K

RENGARAJ R.K (Expert)
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21 September 2012 We are marching towards GST where in every bill, one has to pay vat to the state govt and servicetax or excise to the central govt. There is no way out.

RANJAN

RANJAN (Querist)
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21 September 2012 Dear Experts,

Can anyone please comment?

RANJAN

RANJAN (Querist)
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21 September 2012 Dear Experts,

Can anyone please comment?

RANJAN

RANJAN (Querist)
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21 September 2012 Dear Experts,

Can anyone please comment?

RANJAN

RANJAN (Querist)
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21 September 2012 But is it logical to pay taxes on 150% of the bill for material and service part . Whether material and service part consolidates to greater than 100% . Please reply with specific provisions and case laws.

RANJAN

RANJAN (Querist)
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21 September 2012 But is it logical to pay taxes on 150% of the bill for material and service part . Whether material and service part can consolidate to greater than 100% . Please reply with specific provisions and case laws.

CA Nikhil Jhanwar

CA Nikhil Jhanwar (Expert)
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21 September 2012 At present you are paying VAT under composition scheme. One way possible to bifurcate the material portion and labour portion of the Contract and pay VAT on only Material Portion and Service Tax on Service Portion.

In that case You shall pay VAT on actual value of goods transferred rather than going for deemed value of 80%

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