Claim of Input credit and vat liability

[Ashish Verma]

A’ is the principal Contractor who has sub-contracted the work to ‘B’, a sub-contractor. A will discharge all liabilities relating to VAT and shall give Form 409 to ‘B’ who shall be responsible for carrying out the Works Contract. The entire amount of material is to be supplied by ‘A’. Contract Value for ‘A’ : Rs. 100 Contract Value for ‘B’ : Rs. 90 Place of work : Maharashtra ‘B’ sub-lets the work order obtained from ‘A’ to ‘C’ (the company) at a total contract value of Rs. 80. As per as per our understanding, ‘C’ is not an assessable entity for VAT purposes as It is not transferring any goods under Works Contract. ‘C’ further sub-lets the entire work order to ‘D’ at a value of Rs. 70. Please elaborate the WCT/VAT/Service Tax provisions in relation to ‘C’.Is there any provision in service tax where if the principal contractor discharges his liability of service taxthen the sub contractors down the chain do not have to charge service tax ,claim input credit and then adjust their liability against the cenvat available Thanks & Regards  Regards  Ashish Verma  Addl G.M.(Taxation) s discussed the querry is being sent to you.Please clarify at the earliest. Thanks & Regards  Regards  Ashish Verma  Addl G.M.(Taxation)  Parsvnath Developers Ltd  Parsvnath Metro Tower  Shahdara  Mobile no. 9910066045

AI Summary

VAT Exemption for Subcontractor 'C' in Multi-Tier Contracts; Service Tax on Freight in Composite Rates Questioned A principal contractor, 'A', subcontracts work to 'B', who further subcontracts to 'C', and then to 'D', with respective contract values of Rs. 100, Rs. 90, Rs. 80, and Rs. 70. 'C' is not considered assessable for VAT as it does not transfer goods. The discussion highlights that turnover taxed at the subcontractor level cannot be included in the contractor's turnover for VAT, but similar provisions do not exist for service tax. The concept of Cenvat Credit is mentioned to address potential double taxation issues. Additionally, there is a query about service tax on freight in composite rates for building materials sourced from the unorganized sector.