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Purchase of capital goods by a contractor against c form

satyaprakash (Working as an assisstant in a Tax Consulting Firm) (134 Points)

06 June 2013

Hi,

A civil contractor registered under Karnataka VAT Act, 2003 wants to purchase capital goods like concrete mixer, lorry, tipper and cranes for use in execution of contracts work. He wishes to purchase the same at consessional rate of tax against C form. Can he do so? Can authorities reject his claim saying the goods are capital goods and he cannot buy them at consessional rate of tax? Kindly help me in this regard. Please provide section and case law references.

Regards,

Satya

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8 Replies

jafer (studies) (194 Points)
Replied 07 June 2013

To Purchase a capital goods under C form, the following conditions should be satisfied by a dealer

1) He should be Manufacurer and using the machinery for such manufactur of goods which are mentioned in his CST registration certificate and / or should give intimation to the prescribed officer within 30 days of such purchase.

In your case the Dealer is registered with CST , if in the Work Contract, there is a VAT component is paid by the Dealer then he is eligible for purchase under C form.

1 Like

satyaprakash (Working as an assisstant in a Tax Consulting Firm) (134 Points)
Replied 07 June 2013

HI Jafer,

Can you please explain what VAT component you are referring to in your above explanation?

Regards,

Satya

jafer (studies) (194 Points)
Replied 07 June 2013

"Work contract involves material and Labour. Hence, they have to pay Service tax on the Labour part and Vat on the material. Please refer WCT"

If the Work Contract involves materil, for which he is liable to charge and pay VAT, then, he is elible to get machineries using C form. If incase, those capital goods are not listed in the CST reg. certificate, he has to intimate the Corresponding VAT autorities within 30 days of purchases.

Hope it is clear. :-)

1 Like

DHARAMVEER SHARMA (C.A.) (21 Points)
Replied 05 June 2014

In Uttarpradesh Vat Law A Contractor is not deemed like a "Manufacturer" So MAchinery purchased for the use of executing the works is not similiar to machinery used for manufacturing process. Thus a contractor is not allow to purchase plant and machinery agst C form on concessional rate.

Purchased agst C form (on concessional rate 2%) is allowed only when purchased goods is futher-- 1.resold 2.used in mfg process of taxable goods 3.used in distribution of electricity 4. used in communication lines or network. 5.used in mines 6.used as packing material of taxable goods.

In C Form mechanism two states are involved. Seler of goods and purchaser of goods. Thers is a constitutional treaty between the states of India that when a goods is sold from one state of india and thereafter that goods is resold by purchasing state within that state then to avoide cascading effect only second state is empowered to levy and collect tax. first state is empowered to levy tax at concessional rate i.e. 2%. So conclusion is that purchasing state should resold the purchased goods (agst C form) in any way. Otherwise selling state will recover the diff tax with interest and penalty.

As capital goods is not resold by a purchaser so C form is not allowed to issue for purchase of plant and machinery and vehicles.

ANSHU KUMAR SUDHANSHU (Manager (F & A)) (24 Points)
Replied 23 May 2016

You will clearify that a contractor when bid for tender the rate analysh will also included machinery hours so it is also part of delivery work contract. so you will clearify the same.

CA Rahul Jain (Chartered Accountants) (22 Points)
Replied 24 August 2016

Query related RVAT (Rajasthan)

civil contractor registered under Rajasthan VAT Act, 2003 and also in CST Act. he wants to purchase capital goods like shuttring material, concrete mixer, lorry, tipper and cranes for use in execution of contracts work. He wishes to purchase the same at consessional rate of tax against C form. Can he do so?

Kamal Chijwani (2 Points)
Replied 16 February 2017

Hi,

Ouery related with CST purchase

I am a contractor and I am willing to purchase a truck which is having a capacity of 4.5 tonnes, so can i do this transaction at concessional rate?(i.e. @ 2%)

Kamal Chijwani (2 Points)
Replied 16 February 2017

Hi,

Ouery related with CST purchase

I am a contractor and I am willing to purchase a truck which is having a capacity of 4.5 tonnes, so can i do this transaction at concessional rate?(i.e. @ 2%)