Understanding applicability of VAT or CST on inter-state works contracts

0 comments Sunday, September 18, 2011
In this article an attempt has been made to clarify the position in regard to the levy of VAT or CST on inter-state works contracts.

The State Governments have the power under entry 54 of the State List of the Seventh Schedule to the Constitution of India, to levy tax on the sale and purchase of goods within the jurisdiction of such States. In works contracts there is a deemed sales of the goods incorporated in such contracts  to the contractee, hence the tax on such deemed sales of goods can also be levied by States if such deemed sales happen within the jurisdiction of the States.
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