Computation of Tax

Published On - February 11, 2016

admin VAT

2015-VIL-27-MSTT
M/s TECHNOCRAT ENGINEERS (vs.) THE STATE OF MAHARASHTRA

Maharashtra Value Added Tax Act – Section 2(24) – Sales – section 2(25) – Sale price – section 42 – Works Contract – Computation of tax – Leviablity of VAT on service tax component – inclusion of service tax quantum in taxable turnover – Composition Scheme

  • HELD – As per Explanation–II of the section 2(25) the sale price shall not include tax paid payable to a seller in respect of such sale. Revenue cannot say that, this word, “tax” is relating only to sales tax – Even if the service tax amount is included in the total consideration of contract receipt it cannot be the receipt of contractor on which tax is leviable
  • In total consideration, the service charges amount will become the part of total receipt by the Contractor but service tax amount on service charges will not become part of total receipt, because appellant contractor wants to pay the said amount to the Central Excise Department – In sub -clause (a) and (b) of sub-section (3) of Section 42, the wording is used “equal to 5%, of total contract value of the works contract of any other case” here the meaning of total contract value is to be determined appropriately
  • The amount against the property transferred in the goods and against the labour charges utilized in the said work, it will become a contract value. The various taxes levied separately, and those are to be deposited with the Govt. authorities will not constitute the total receipt against the said contract value hence element of service tax will not be a part of sale prices even before amendment of 01/04/2015 – The service tax collected separately by the appellant is not includible in total contract value for composition money at 8% – Appellant is entitled for interest for interest under section 52 of the Act on the excess amount liable to be paid to him on account payment made in appeal
  • The matter is remanded to the First Appellate Authority to determine the correct tax liability and to work out interest amount on refund admissible to appellant

Assessee appeal allowed