Liability for DVAT registration

[BAL KRISHAN GARG]

Dear All Members, A is doing job work in a factory premises of B on the raw material provided /related to B in electrical home appliances alongwith his labour and billing is being made on the basis of completion of work by A and his labour on monthly basis . My query is whether he is liable to be registered under DVAT ? Billing will be approxmately Rs. 4 to 5 Lacs per month basis .although there is no agreement between A and B but the understanding is that payment will be made on piece rate basis and there is no work contract between them . if yes , on what rate of dvat he is to made upon B .I will be highly oblidge . Thanking you , BAL KRISHAN GARG

[Rama Krishana]

There may be different situation for each fact. Where as the job worker is performing the activities as a labour contractor only, he should not be liable to any VAT. But if he is acting as independent contractor than mere using the premises of the supplier should not be considered as a factor for VAT. He should be liable to VAT in the same manner as he would have been liable if he had performing the activities from his own premises.

AI Summary

VAT registration liability depends on whether a job worker is a labour contractor or an independent contractor. Liability to register for VAT depends on whether the person performing work on another's materials is a labour contractor or an independent contractor: mere provision of labour as a labour contractor does not attract VAT registration, whereas an independent contractor is liable for VAT and must be registered and taxed as if operating from his own premises; the applicable rate and tax treatment turn on that factual characterisation.