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  • Consumers will get half a percent tax relief in case of payment through digital mode except for specified articles like cement, steel, coal, diesel, petrol, kerosene, motor vehicle, pan masala, tobacco products. This arrangement will operate till the time GST is implemented.


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Gujarat Sales Tax Act - Section 2(29) – Rule 44 - sale price – set-off – packaging material - works contract for supply and installation of machinery - levy of tax on performance test/inspection of goods treating the same as part of sale price – admissibility of set off on packing materials used for delivery of the product

  • HELD - sale price means the amount of valuable consideration paid or payable to a dealer for any sale made including any sum charged for anything done by the dealer in respect of the goods at the time of or before delivery thereof other than the cost of insurance for transit or of installation when it is separately charged.
  • In the present case, the test performed for the inspection was neither done by the assessee nor was charged by the assessee and would therefore not be included in the expression “any some charged for anything done by the dealer in respect of the goods” - when there is no independent sale of packing material but the value of the packing material goes into determining the value of the goods sold, the deeming fiction provided under Section 6(C) of the Act would apply and even the value component of packing material would be taxed at the same rate as the goods themselves
  • Rule 44 envisages the drawback, set off, or refund of tax at prescribed rates of purchase of goods sold in course of intra-state trade etc. In the present case, such conditions are satisfied and therefore the set off would be available – Tribunal order is upheld and revenue appeal dismissed
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Service Tax – demand of service pertaining to construction of railway sidings and sinking of the mine shaft – mining service - Commercial and Industrial Construction services – levy of tax on advances

HELD - advances made cannot be subject to tax if such advances are adjusted against dues for rendering of service as that would amount to double taxation - in the light of entry to tax 'mining service' by section 65(105)(zzzy) of Finance Act, 1994 with effect from 1st June 2007 which was intended to cover all activities relating to mineral exploration and extraction under one head as a consolidation entry, the actual sinking of a shaft cannot be treated as 'site formation and clearance service' but as related to excavation of mineral from the mine. Consequently, the demand for the disputed period is not valid

  • The Railway Act, 1989 provides for railways with public investment and private investment and both function under the same statute – therefore, railway sidings built by the appellant fall within the exclusionary portion of section 65(25a) and are outside the ambit of taxation - liability to tax on the labour portion of work executed is confirmed – assessee appeal partly allowed
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Government Of National Capital Territory of Delhi, Finance Department

No. DTT-x020/18/2016-W-113-O/o CTT/dsVI/281, New Delhi Dt. 29.08.2016


For, All Delhi Government Departments/Directorates/PSUs/Corporations/Boards/Authorities

  • It is to bring to the kind notice of all that Section 36A of the Delhi Value Added Tax Act, 2004 requires every person, other than an individual or HUF, at the time of making payment or credit to a contractor, to deduct TDS © 4%, if the contractor is a registered dealer or @ 6%, in case the contractor is unregistered. The amount so deducted by such person (i.e. the contractee) is required to be deposited to the Delhi Government Treasury within a period of 15 days following the month in which such deduction is made. Failure to deduct TDS entails penalty apart from liability of interest.
  • Under the provisions of the Delhi Value Added Tax Act, 2004 it is the responsibility of every Department in Delhi, assigning the various departmental contracts to the contractor to deduct TDS before the release of the payment to the contractor to whom 'works contract' has been assigned. This is also applicable even in case the work is assigned to specialized government departments in the field of execution of deposit works viz. DTTDC, DSIIDC, PWD etc. Further, the TDS so deducted may be commensurate with the budget allocated and spent under 'Repair & maintenance', 'Capital' head etc. which involves works contract. 
  • In view of the aforesaid mandatory provisions of the DVAT Act, 2004 and the Rules framed thereunder, all Government Departments in Delhi are requested to deduct the TDS before release of the payment in accordance with the provisions of Section 36A of the DVAT Act, 2004 and deposit the same with the Trade & Taxes Department to avoid tax evasion by the executing agencies. Further, as per Section 36A of the DVAT Act, 2004 it is the responsibility of the TAN holder (contractee) for timely deposition of the TDS (VAT). As per Section 36A(8) of the DVAT Act, 2004, if any person fails to make the deduction or, after deducting fails to deposit the amount so deducted as required, such person shall pay, or by way of penalty, a sum not exceeding twice the amount deductible besides tax deductible (TDS VAT).
  • Further, TDS is required to be deposited by 15th of the month following the month in which such deduction is made and file quarterly return by 28th of the next month of the quarter ending i.e. for first quarter - 28th July, for second quarter – 28th October, for third quarter 28th January and for fourth quarter 28th April. Also the agencies/Departments who have not so far obtained TAN number, should immediately apply for registration and obtain the TAN number for complying the provisions of the DVAT Act, 2004.


S.N. Sahai

Pr. Secretary (Finance)

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June 6, 2016[2016] 70 taxmann.com 55 (Delhi)

Facts : Assessee purchased flat in a residential complex for charges inclusive of value of land. Assessee challenged levy of service tax on ground that composite contract (inclusive of value of land) cannot be charged to service tax in absence of any machinery provision for determination of value of service portion. Further, preferential location charges do not amount to service and cannot be charged to service tax

Held :

• Rule 2A of Valuation Rules, does not apply when price is inclusive of value of land : Whilst Rule 2A of Service Tax (Determination of Value) Rules, 2006 provides for mechanism to ascertain the value of services in a composite works contract involving services and goods, the said Rule does not cater to determination of value of services in case of a composite contract which also involves sale of land. The gross consideration charged by a builder/promoter of a project from a buyer would not only include an element of goods and services but also the value of undivided share of land which would be acquired by the buyer.

• No machinery provision to segregate value of land - Mere abatement or circular not sufficient : Neither the Act nor the Rules framed therein provide for a machinery provision for excluding all components other than service components for ascertaining the measure of service tax. The abatement to the extent of 75% by a notification or a circular cannot substitute the lack of statutory machinery provisions to ascertain the value of services involved in a composite contract.

• Preferential charges amount to service : Insofar as service tax on taxable services as defined under Section 65(105)(zzzzu) [Preferential Location or Development of Complex Services] is concerned, there is element of service involved in the preferential location charges levied by a builder. Such charges do not relate solely to the location of land. Thus, preferential location charges are charged by the builder based on the preferences of its customers. They are in one sense a measure of additional value that a customer derives from acquiring a particular unit. Such charges may be attributable to the preferences of a customer in relation to the directions in which a flat is constructed; the floor on which it is located; the views from the unit; accessibility to other facilities provide in the complex etc. Service tax is a tax on value addition and charges for preferential location in one sense embody the value of the satisfaction derived by a customer from certain additional attributes of the property developed. Such charges cannot be traced directly to the value of any goods or value of land but are as a result of the development of the complex as a whole and the position of a particular unit in the context of the complex.

No service tax on composite contracts, where price is inclusive of land : Hence, no service tax under section 66 read with Section 65(105)(zzzh) of the Act [Construction of Complex Services] and Explanation to section 65(105)(zzzh) could be charged in respect of composite contracts. The impugned explanation to the extent that it seeks to include composite contracts for purchase of units in a complex within the scope of taxable service is set aside.

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We are Ahmedabad based professional consulting firm. We are providing various services to Construction, Real Estate and Project Companies in various areas like Indirect Taxation – Service Tax & Multi state VAT consultancy, ERP implementation, Site & Management audit, Designing Tender & other related contractual documents etc.