VAT under composition scheme vis a vis service tax

[Rishi Raj]

 

Company has appointed a civil contractor for building and the cost break is given below:

Contract Price                           - Rs. 100 crore inclusive of VAT

Service Tax @ 4.12% on 100  - Rs 4.12

Total                                              Rs. 104.12

 

 

·It seems that contractor has gone for composition scheme under VAT  (U.P VAT) because no VAT component is shown separately in the invoices as required under composition scheme.

·Service Tax has been charged @ 4.12 % applicable for work contract service under composition scheme.

I have following queries to address the issue :

1. Is it possible for the civil contractor to calculate the VAT liability basis actual material value or standard deduction for labour / services cost ( say  30% for civil contracts) inspite of paying VAT at fixed % under VAT composition scheme?

2. What is the rate of VAT in uttar pradesh under composition scheme?

3. In the very case, service tax is being charged on Rs 100 cr which is inclusive of VAT . However the same is to be charged on excluding VAT amount.  How to compute the excluding VAT component which is under VAT composition scheme?

AI Summary

Company Queries VAT and Service Tax Calculations for Rs. 100 Crore Project Under Composition Scheme; Seeks Clarity on Rates A company engaged a civil contractor for a Rs. 100 crore project, inclusive of VAT, with a service tax of 4.12% applied. The contractor appears to be using the VAT composition scheme, as VAT is not itemized in invoices. Queries include whether VAT liability can be calculated based on actual material value despite the composition scheme, the VAT rate under the Uttar Pradesh composition scheme, and how to compute service tax excluding VAT. Responses indicate that under the composition scheme, service tax should also be charged at a composite rate since the VAT-paid value cannot be determined separately.