Liability - Central works contract Under DVAT

[Atul Anand]

Our company is registered under DVAT and we are engage in Works Contract Activity. I want to know what is the liabilty in the case of Central Works Contract. This is our liabilty to deposit Central works contract Under DVAT Act or Party's liability. We have some contract with Indian Oil and Indian Oil cleary told to us raise the bill without works contract tax because Indian Oil will deposit works contract tax

[Surender Gupta]

I think the activity shall be subject to WCT in the state in which contract is being executed. For the material transferred from one state to another, you need to pay CST as sale in the course of interstate trade.

[Guest]

Works contract is taxable in the State where agreement is executed/contract is executed and local tax as applicable in the State. Where the contract involves movement of goods in pursuance of the ale, then CST is applicable. Though there is a provision of TDS under VAT Act too mandating the payer for deduction/remittance of tax on the payment made to contractor, the prime responsibility of reporting the sale and tax liability, filing of return, payment of tax after adjusting TDS falls only on the person executing the works contract.

AI Summary

Works contract tax liability remains with the contractor; payer may deduct TDS and CST applies for interstate goods. Works contract tax is payable in the State where the agreement is executed or the contract performed; movement of goods across States triggers Central Sales Tax treatment as interstate sales. Although the payer may be obliged to deduct and remit tax (TDS) under the VAT regime, the primary duty to report the sale, declare tax liability, file returns and pay tax after adjusting TDS remains with the person executing the works contract.