Kvat, 2003

Others 577 views 3 replies

Rajesh Kumar Loya

student

177 Points Joined July 2010

Sir/Madam,

Presently i am Working with CP Pvt Limited Company. We obtained Civil Construction contract from Coastal Projcets Limited.

Coastal Project Limited obtained the same contract from BHEL. BHEL is deducting Works Contract Tax @ 4% from the Bills of Coastal Limited. Form 156 is issued by BHEL to Coastal Project Limited towards the same.

The problem is as follows,

We CP Pvt Limited are executing the work as sub contractor to Coastal Projects Limited. So whether WCT deducted by BHEL can be utilised by our company against our output tax.

Kindly reply at the earliest as we need to present before department.

Replies (3)

CA vinod

Chartered Accountant

518 Points Joined June 2010

No, you cannot utilise the certificate issued in the name of the principle contractor & there is no concept of issuance of certificate by the principle contractor to sub contractor.

Rajesh Kumar Loya

student

177 Points Joined July 2010

Thank you for your response sir. Presently our company has VAT Liability of Rs.35 Lacs approx and WCT deducted by Coastal Projects Ltd in our Bills amounts to Rs. 90 Lac Approx. As there is no provision for issue of Certificate to Sub contractor. So how shall we reply to Notice. Can we apply Rasthriya Ispat Ltd Case of Indirect Tax Laws as the Turnover has already suffered the WCT.

CA vinod

Chartered Accountant

518 Points Joined June 2010

There is no such provision in karnataka, for deduction of TDS from the amount payable to the sub contractor. So the amount recovered from your bills is not a statutory deduction, these deduction might be on account of clause in the sub contract agreement with coastal projects ltd. Check the relevant clause in your sub contract agreement. Generally the amount deducted by the principal contractor will be refunded to sub contractors when the principle contractor get the refund from the department.

There is no vat liability on the principle contractor as they can avail the exemption from VAT on the works executed by the sub contractor. So you claim amount from coastal and discharge your VAT liability.