VAT set off on pre operative expenses

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Subodh Anant Madake (Querist)
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13 October 2010 sir we are establishing power plant in maharashtra state & it will take 2 year to generate power. We will capitalised all pre operating expenses after completion of project. My question is how we trate VAT on expenses? Can we take set off or not? if yes then any retention is require? Please guide.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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14 October 2010 Set-off against what? Whether, is power sale taxable in Maharashtra ?

I don't think so. Power sale doesn't come under VAT.

Subodh Anant Madake

Subodh Anant Madake (Querist)
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14 October 2010 Dear Shalesh Sir,

We are incurring admistartive expenses e.g.purchse of safety shoes,printing & stationery wtc. On this purchases we have paying MVAT. Till there is no sale, therefore there is no liability. We have to take refund from Govt. after completion of year. Sir, my question is currently we are paying VAT on purchases. As per Accounting we are debiting these expenses on AUC. After completion of project all expenses will allocate on asset. Currently there is no criterion decided of allocation. My question is that I have to file MVAT & CST return, how should I treat the VAT in this return i.e. should i take full credit on expenses and apply for refund or should not take credit on expenses?