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Excise duty & vat or service tax on recovery from contractor
Dear Sir,
"A" company has entered into agreement with "B" Company for construction contract in which "A" company will provide materials to "B" company on Free of cost for construction. In contract the clause also specified if "B" company has done excess consumption or excess wastage beyond contractual quantity A company shall recovered the excess consumption/wastage from B company.
What is the tax implication. Whether A company shall charge Excise duty and VAT to B company or charge service Tax.
Replies (2)
I think it will be labour contract & it's more like service rendered since materials are not involved in the same. But if any wastage happens then seller will provide materials + services to buyer.
Service tax will be applicable for the same & if in case of wastage happens, then VAT will come into picture.
The agreement is works contract in which the "B" Company providing labour & Material. However "A" Company providing Cement & Steel to "B" company on FOC basis.
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