Dear Sir,
In our outset, we would like to introduce about the background of activities of our Company, is engaged in two types of work is being explained hereunder:
1. Design, fabrication, & supply of SS Products or Structures as per specific design desired by customers (i.e. Individual, Pvt. Sector, Public Sector and Government Sector, Contractor & Builder etc.) &
2. Design, fabrication, supply & Installation of Stainless Steel Railing, Cladding, Bus Shelter & Other structural works as per customer specific designed based work contract for Individual, Pvt. Sector, Public Sector and Government Sector i.e. Airport Authority of India, Railway, Indian Post Office, Indian Defense, Army etc.
Our manufacturing unit is situated at Gurgaon in the state of Haryana and trading branches are situated in different states having TIN. Only our factory in Haryana is excisable Unit where approximate 65% manufacturing & fabrication process is being compeleted towards execution of Works Contract for trunkey project i.e. Stainless Steel Structures according to design provided by customer and being sent to different site of project situated in different state on stock transfer basis against Form "F" and remaning 35% work i.e. welding, cutting, polishing etc & installation work is being done at respective site in different states by the team of our site engineers & supervisors.
In contention to get legal opinion, we would like to brief about Works Order for which we are shortly going to bid with Bharti Reality Ltd. Ludhiana (Punjab) for tender price Approx. Rs.50,00,000/- (inclusive of all duties & taxes) for Fabrication, Supply & Installation of Stainless Steel Modular Railings in Mall constructing at Ludhiana as per specification provided with tender documents. To execute this work order, 85% material would be procured from our Haryana factory on stock transfer basis (i.e. against Form- “F”) and remaining 15% material would be procured either by locally or by interstate Purchase.
Our Queries:-
a) To the above scenario, is it possible to go for execution of above work contract under composition scheme?
b) Since all duties & taxes are inclusive in Contract value, can we ascertain tax liability by reverse calculation method under composition scheme?
c) Is stock transfer against Form “F” allowed for execution of work contract under composition scheme since stock transfer in not a interstate purchase?
d) What method is beneficial for us to execute the above works contract towards minimization of tax liability since all duties & taxes are inclusive in order value?
Please advise us legal, favorable & hassles opinion to ascertain to pay minimum tax liability so that we can participate in bidding with our reliable tax structure in Punjab.
Thanks & Regards
S. M. Jha
Mob.No. 09868715026