Go AD-Free with CAclubindia Pro and get Daily WhatsApp Updates. Subscribe Now!

Work contract using materials from other state purchase

DVat 3023 views 1 replies

Murali

MANAGER - ACCOUNTS

24 Points Joined April 2011

We are a contracts firm in chennai and generally as per the TNGST act, we are not supposed to engage in Works contract using materials procured from other states. We have to buy the same under a trading agency and resell the same to our contracts firm.

Since we are planning to open up a branch in Bangalore with proper registration under works contract, is it possible for us to buy materials from Gujarat under 2% (C-form) CST and use the same in our works contract without paying material tax to the government. (Under works contract, we presume that we will be under composite tax and we will be paying 2% or 4% works contract tax.) Is it truly possible? One of our prominent cleint under whom we are expecting an order says this is what they have been doing for the past 15 years with all their sub-contractors? Please advice.

Regards

MURALI.

Replies (1)

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

1) you have posted that you are situated in chemmai ( TNGST)

2) you are seeking to get registered under karnataka

3) you wish to buy goods from gujrat against C form ( 2% tax)

4) you have posted the query under DVAT, ( delhi )

5) you did not mentioned the place of execution of works contract

goods used in works contract can not get benefit of concessional CST, i.e one can not issue C forms used directly in works contract. for a works contract execution assesee the goods / inputs are treated as consumables, not inputs, hence no input credit or concessional purchase under CST act 1956 is allowed to works contract.