Service Tax and VAT in same transaction ?

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Prakash (Querist)

26 February 2008 I know that Vat will be chargeable even if Srevice Tax is applicable in some transactions(Ex. in case of works contract). My doubt is that the act says that if the assessee takes INPUT CREDIT of VAT, he has to pay VAT separately. I dont understand this concept. Does this mean that if VAT is not charged separately, Service Tax is chargeable for cost of materials provided along with the cost for service ?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

26 February 2008 THe question is not understandable. State the problem with examples

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)

26 February 2008 PLEASE CLARIFY IT

Prakash

Prakash (Querist)

26 February 2008 What is the procedure when both Service Tax and Vat are applicable in the same transaction ? when can the assessee take input credit on Vat in such a case ?

Dayal

Dayal (Expert)

26 February 2008 You are integrating two different statutes.

Vat is equivalent to Cenvat under service tax.

The works contract service tax takes into account both goods and service.

There are three options, I am sure if you read them carefully you will have an answere to your inquiry.

Still should there be any doubts feel free to raise your inquiry again with suitable example on hand or that you are facing

Srinivas Sharma KN

Srinivas Sharma KN (Expert)

27 February 2008 Question is not clear. VAT & Service Tax are different.

Arbind Aggarwal

Arbind Aggarwal (Expert)

27 February 2008 In case of indivisible contracts WCT is charged on the entire value of contract but the calculation of taxable value for the purpose of WCT is different in various states. Generally there is a abatement of 10/20/30/40 % for arriving at the taxable turnover, in most of the cases it is 20% in all the states.

Input tax credit is available irrespective of abatement.

Basicly the abatement is to ascertain the value of material sold in the contract where it is not possible to ascertain the goods and service portion.

However service tax will be paid on the full value in case of composite contracts.

If it is possible to bi-furcate the two then the taxes will be paid on the respective values.

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