January 2019

VAT

Janak Vaghani / Ishaan Patkar
Chartered Accountants

7.  The Addi. Commissioner of Sales Tax  vs. Benchmark Engineering Pvt Ltd.(Bom H.C) – Judgment dated 28th November, 2018

 

Whether VAT can be levied on Service Tax, Separately collected, even when the VAT is paid under Composition Scheme?

 

FACTS

The appeal related to the period 2005-2006. The substantial question of law referred to the Hon’ble High Court was whether the Tribunal was justified in holding that for determining the Composition amount in lieu of amount of tax payable in respect of Works Contract Sales, the amount of Service Tax charged separately in the invoice will not be included in total contract value?

 

HELD

The Hon’ble Court upheld the judgment of the Tribunal which had observed that the amount of Service Tax charged separately in the invoice will not be included in total contract value for the purpose of levy of VAT. The Hon’ble Court referred to Trade Circular No.6T dated 14.05.2015 issued by the Commissioner of Sales Tax, Maharashtra State which had informed the trade that the Government had accepted the judgment of the Tribunal in the case of Sujata Painters wherein it was held that the Service Tax could not formed part of Sale Price u/s.2(25) of the MVAT Act, in a transaction wherein the sale price is determined subject to Rule 58 of the MVAT Rules and is not

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