VAT under composistion Scheme

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This query is : Resolved

Saurabh Mittal (Querist)

03 August 2010 We enetered into an agreement with our client to carry out Civil job for their project in Panipat refinery, Panipat Haryana.
One of the condition of the agreement was "Unit rates shall include all taxes & duties (Excluding Service tax, Excise Duty & VAT, which shall be paid at actual on production of original documentary evidence) etc."

As per above mentioned clasue our client is suppose to reimbure the VAT paid by us to Haryana Sales Tax Authority.

For assesment we opted for composisiton scheme and paid VAT @ 4% on the total contract value and subsequently raised the bill to our client.

Now our client is claiming that VAT paid under composition scheme is not VAT but a lumpsum tax which cannot be considered as VAT.

Please let us know whether VAT paid under composition scheme is VAT or any other tax.

VINOD ARORA

VINOD ARORA (Expert)

03 August 2010 Ofcourse VAT paid under lumpsum scheme of Haryana VAT is VAT.

I would like to suggest you to charge 4% Composition TAx under HVAT in the progressive invoices (RAs) itself and insist to the client to deduct the same amount and deposit at their own with the HVAT Deptt to meet their HVAT_TDS obligation, even if they are not a registered dealer under HVAT.

TDS certificates so issueed by the cleint may be attached by you with the periodic returns as a proof of payment of applicable VAT. Also please note that 4% is to be charged on gross amounts to be received from cleint including basic price/VAT/s.tax, as perr HVAT law.

This is the correct practice under HVAT law for composition dealers, so please ensure adherence to the same.

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