Vat to be charged on goods sold after customisation

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

12 November 2013 Our company purchases material (ie stationery like envolope, letter heads, pouches) from another company and after customisation as per requirement of customer sells the same to the customer. Then please clarify whether vat or service tax or both are to be charged on these invoices at the time of invoicing of material?

CA.Shubhneet Kaur

CA.Shubhneet Kaur (Expert)

12 November 2013 he VAT is a tax on the sale and therefore it is lived on the sale price. Ordinarily sale price is the amount given to the seller for the value of the goods. But under VAT Act the words ‘sale price’ have been defined, as under - – ‘Sale price’ means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the seller in respect of the goods at the time of or before delivery thereof, other than the cost of insurance for transit or of installation, when such cost is separately charged. Thus the definition of the ‘sale price’ suggests that it is not only the price of the goods, but includes the amounts charged by the seller for any thing done before the delivery of the goods.
hence Vat is to be charged after customization of goods.

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