Applicability of State VAT or CST

[manish dalwadi]

Query:

Ours is Gujarat base Engineering goods manufacturing company say ‘X’ and we export 99% of our final product, and no finished goods sale in Gujarat (except some scrap generated during manufacturing), procures raw material from Maharashtra by placing Order on Maharashtra Supplier say “A”, and instruct him to deliver the goods directly to a job-worker located in Maharashtra say ‘J’ without bringing the raw material in Gujarat. Raw Material supplier ’A’raises Invoice on us mentioning buyer as ‘X’ and consignee as ‘J’ after charging 2% CST against Form-C.

Job-worker ‘J’ sends us the processed raw material to us ‘X’ in Gujarat after charging Job work charges.

1. We have been advised that we cannot purchase the goods against From-C as the delivery does not occasion the movement of goods from Maharashtra to Gujarat. Is this correct?

2. Whether CST charged by supplier ‘A’ of the raw material is correct? Or we have to pay Maharashtra VAT ?

3. Whether the transaction between our company and job worker falls under works contract?

4. What should we do to minimize tax burden ?

I seek your valuable advice in the matter, do reply please.

AI Summary

Engineering Firm's Tax Query: Form-C Invalid Without Interstate Movement; Maharashtra VAT Applies Over CST A Gujarat-based engineering company, primarily exporting its products, raised queries about tax implications on raw materials procured from Maharashtra. The company asked if purchasing goods against Form-C is valid when goods don't move from Maharashtra to Gujarat, whether CST or Maharashtra VAT applies, if the transaction with a job worker is a works contract, and how to minimize tax burdens. Responses indicated that Form-C is not applicable due to lack of interstate movement, and Maharashtra VAT should be charged instead of CST. The complexity of the issue was acknowledged, suggesting expert consultation for resolution.