DEAR ALL,
We are a Photo Color Lab in U.P. . We purchase photographic paper & their chemicals within the u.p. state which is Vat tax paid goods. We are consuming photographic paper & their chemicals in developing photographs of our customers & billing them for the same as photo price. We are showing entire amount as receipt from services in our books. We are paying service tax on entire amount of receipt.
Now Trade Tax Department wants to impose Vat tax on our purchases of photographic paper & their chemicals after adding presumed profit of 15% presuming it transfer of goods under works contract. The Department is referring a Judgement of Allahabad High Court in the case of Commissioner, Trade Tax , U.P. Lucknow V/s. M/s. Aristo Printers Pvt. Ltd., Ghaziabad. where in Honourable court held Works Contract - printing of lottery tickets - transfer of ink and processing material in printing of lottery tickets is taxable under upvat.
Kindly advice us whether trade tax authorities are right in their demand to impose vat tax on developing of photographs. or what defence we can put before them.
Thanks in advance.
CAclubindia
