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58. Determination of sale price and of purchase price in respect of sale by transfer of property in goods (whether as good or in some other form) involved in the execution of a works contract. M. VAT RULES

58. Determination of sale price and of purchase price in respect of sale by transfer of property in goods (whether as good or in some other form) involved in the execution of a works contract.

- (1) The value of the goods at the time of the transfer of property in the goods (whether as goods or in some other form) involved in the execution of a works contract may be determined by effecting the following deductions from the value of the entire contract, in so for as the amounts relating to the deduction pertain to the said works contract:--

(i) labour and service charges for the execution of the works

(From the above clause (i) the words “where the labour and service done in relation to the goods is subsequent to the said transfer of property” are deleted by Notification No. STR-1506/CR-38/Taxation-1 Dt.08.09.2006)

(ii) amounts paid by way of price for sub-contract , if any, to sub-contractors ;

(iii) charges for planning, designing and architect’s fees;

(iv) charges for obtaining on hire or otherwise, machinery and tools for the execution of the works contract;

(v) cost of consumables such as water, electricity, fuel used in the execution of works contract, the property in which is not transferred in the course of execution of the works contract;

(vi) cost of establishment of the contractor to the extent to which it is relatable to supply of the said labour and services;

(vii) other similar expenses relatable to the said supply of labour and services, where the labour and services are subsequent to the said transfer of property;

(viii) profit earned by the contractor to the extent it is relatable to the supply of said labour and services:

Provided that where the contractor has not maintained accounts which enable a proper evaluation of the different deductions as above or where the Commissioner finds that the accounts maintained by the contractor are not sufficiently clear or intelligible, the contractor or, as the case may be, the Commissioner may in lieu of the deductions as above provide a lump sum deduction as provided in the Table below and determine accordingly the sale price of the goods at the time of the said transfer of property.

Table

Serial No.	Type of Works contract	*Amount to be deducted from the contract price (expressed as a percentage of the contract price)
(1)	(2)	(3)
1	Installation of plant and machinery	Fifteen per cent.
2	Installation of air conditioners and air coolers	Ten per cent.
3	Installation of elevators (lifts) and escalators	Fifteen per cent.
4	Fixing of marble slabs, polished granite stones and tiles (other than mosaic tiles)	Twenty five per cent.
5	Civil works like construction of buildings, bridges, roads, etc.	Thirty per cent.
6	Construction of railway coaches on under carriages supplied by Railways	Thirty per cent.
7	Ship and boat building including construction of barges, ferries, tugs, trawlers and dragger	Twenty per cent.
8	Fixing of sanitary fittings for plumbing, drainage and the like	Fifteen per cent.
9	Painting and polishing	Twenty per cent.
10	Construction of bodies of motor vehicles and construction of trucks	Twenty per cent.
11	Laying of pipes	Twenty per cent.
12	Tyre re-treading	Forty per cent.
13	Dyeing and printing of textiles	Forty per cent.
14	Annual maintenance contracts	Forty per cent
15	Any other works contract	Twenty five per cent

(In the above table entry 14 and 15 are substituted in place of following entry 14, w.e.f. 01.04.2005 by Notification No. STR-1506/CR-38/Taxation-1 Dt.08.09.2006)

Any other works contract

Twenty per cent.

* The percentage is to be applied after first deducting from the total contract price, the amounts paid by way of price for the entire sub-contract to sub-contractors, if any.

(For the above note the following note is substituted w.e.f. 01.04.2005 by Notification No. STR-1506/CR-38/Taxation-1 Dt.08.09.2006)

*Note : The percentage is to be applied after first deducting from the total contract price, the quantum of price on which tax is paid by the sub-contractor, if any, and the quantum of tax separately charged by the contractor if the contract provides for separate charging of tax.

(2) The value of goods so arrived at under sub-rule(1) shall, for the purposes of levy of tax, be the sale price or, as the case may be, the purchase price relating to the transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract.

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