Vat applicability on 3rd party manufacturing

[GOPI AGARWAL]

We are having manufacturing activity on behalf of Principal Manufactured goods are handed over to the Principal Manufacturer at the manufacturing site only.

We are receiving conversion charges which having Fixed Cost towards Rent-Labour charges etc and Variable cost i.e Electricity , DG power, LPG and Repair Maint and Consumable etc.

We are also sourcing Spares and Consumable interstate also against Form-C.

We need guidance on the below points:-

1. What is the implication of Tax Liability on Interstate purchase.

2. Whether Input against spares, LPG can be adjusted with Un- Registered purchase

Thanks

Gopi Agarwal

AI Summary

VAT on third party manufacturing: interstate purchase liability and input adjustment for unregistered supplier purchases. VAT applicability is queried for a contract manufacturing arrangement where conversion charges include fixed and variable components and spares/consumables are procured interstate against Form C. Two issues are raised: the tax liability on interstate purchases and whether input tax adjustment/credit for items like spares and LPG is available when purchases are from unregistered suppliers.