vat applicability on works contracts under kerala vat act

[Asked by Guest]

Gentlemen

our delhi client having branch in kerala prefered to pay vat under composite tax for works contract. Kindly advise with notification if he has to calculate vat on works contract amt added service tax amt or on works contract value only.

rgds

 

AI Summary

Service tax inclusion in VAT: Kerala clarification conflicts with principle that authorised tax collections are excluded from sale consideration.
The legal question is whether service tax must be included in the VAT base for works contracts. Established principle: taxes statutorily authorised to be collected from purchasers do not form part of sale consideration; the Finance Act authorises collection of service tax, so service tax should not form part of the sale price. A Kerala VAT authority clarification requires VAT after adding service tax, a position the commentator considers inconsistent with the cited precedent and statutory collection authority.