VAT on self consumption

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Amit Khandelwal (Querist)
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26 August 2009 pls note that we have a contract of construction a wall, rate inclusive of cement, now we are providing cement to the contractor and will recover the same from his bill.

we are manufacturer of cement.
my question is :

1.is this constite sale or self
consumption.
2.how we raise the bill/debit note to party
3. is vat would be applicabe on such bill or not

Vishnu Saboo

Vishnu Saboo (Expert)
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27 August 2009 you are saying yourself that you will recover the amount of cement from the contractor, then where is the confusion?

Amit Khandelwal

Amit Khandelwal (Querist)
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27 August 2009 pls go through with my abone 3 points

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 Let's break down your query step-by-step:

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### Situation:

* You are a **manufacturer of cement**.
* You have a contract for **construction of a wall** (probably with a contractor).
* You are **providing cement to the contractor** and recovering the cost from his bill.

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### Questions and Answers:

**1. Is this a sale or self-consumption?**

* Since you are **providing cement to the contractor and recovering the cost from him**, this **amounts to a sale of cement to the contractor**.
* It is **not self-consumption**, because you are transferring ownership of cement to another party and charging for it.
* **Self-consumption** means you are using your own goods internally without transferring ownership or charging outside parties.

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**2. How to raise the bill/debit note to the party?**

* You should raise a **tax invoice** to the contractor for the quantity of cement supplied.
* The invoice should clearly mention:

* Quantity of cement supplied
* Price per unit
* Total amount
* Applicable VAT rate and VAT amount
* GSTIN/VAT registration number (if applicable)
* This will serve as your sale invoice.

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**3. Is VAT applicable on such bill or not?**

* **Yes, VAT is applicable** because this is a **sale of cement**.
* You are supplying cement to another party, so VAT on cement (as applicable in your state) must be charged.
* The applicable VAT rate on cement varies by state but typically ranges from 5% to 12.5% (you should confirm your local VAT rate on cement).

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### Summary:

| Question | Answer |
| ------------------------------- | ---------------------------------------- |
| Is it sale or self-consumption? | It is a sale (not self-consumption). |
| How to bill? | Raise a proper VAT invoice with details. |
| Is VAT applicable? | Yes, charge VAT as per applicable rate. |

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If you provide the **state** you are operating in, I can help confirm the exact VAT rate applicable on cement for your location.

Would you like that?

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