Works contract

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Aditya (Querist)

29 January 2016 Sir, if the dealer prepares SAMOSA aur other like eatables wherein material & labour is used then can it be said to be works contract?? also kindly tell me the tax calculation of it.. of both service tax & sales tax

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)

29 January 2016 Samosa , Namkeen and sweet it amounts to manufacture only VAT is applicable

Aditya

Aditya (Querist)

30 January 2016 It amounts to manufacture.. but the main query in calculation of VAT is that the VAT should be calculated on the actual sales value or on the sale value obtained by adding a profit to the purchase price..?? like it is done in the case of works contract (in case of VAT) as the actual sale value also includes the labour amount in its cost..

Guest

Guest (Expert)

08 February 2016 For clarification on this you must see the Judgment of BSNL Case. Supreme court said that although Doctor gives prescription and charges consultation fee, the dominant nature is only consultation. So there is only service and no supply. This is called dominant nature test !!! This is fundamental for understanding Works contract. So in your example, although there is labour involved, the dominant nature is only goods ie samosa. For that matter, any manufactured product will have labour component and the government cant keep charging service tax. Anyway good question :-)

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