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

Clarification on DVAT registration: Labor contractor may avoid VAT, but independent contractor faces similar VAT liability. A query was raised regarding the liability for DVAT registration for an individual, A, performing job work in the factory of B using B's raw materials for electrical home appliances. A bills monthly based on work completion, amounting to approximately Rs. 4 to 5 lakhs, without a formal contract. The response clarified that if A acts solely as a labor contractor, VAT may not apply. However, if A operates as an independent contractor, VAT liability would be similar to that incurred if the work was done from A's own premises.