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Goods imported/ purchased inter-State used in Works contract would be exempt from VAT

Value Added Tax - VAT and CST - By: - Bimal jain - Dated:- 6-5-2016 - Dear Professional Colleague, Goods imported/ purchased inter-State used in Works contract, would be exempt from VAT We are sharing with you an important judgement of the Hon ble Supreme Court of India in the case of Commissioner of Delhi Value Added Tax Vs. ABB Ltd [ 2016 (4) TMI 534 - SUPREME COURT ] on the following issue: Issue: Whether the movement of goods in pursuance of Works contract constituted inter-State trade as we .....

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ibution system and SCADA system. The Delhi Metro Rail Corporation ( the DMRC ) awarded a contract to the Respondent to provide transformers, switch gears, high voltage cables, SCADA system and also complete electrical solution, including control room for operation of metro trains on the concerned section, which were imported by the Respondent from Zurich Switzerland. The Assessing Officer ( the AO ) asked the Respondent to pay VAT under the DVAT Act on the deemed sale made to the DMRC. The lower .....

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he supplier of goods that were imported by the Respondent and hence on account of lack of any privity of contract, the requirements of Section 3(a) of the CST Act were not satisfied in respect of movement of goods from outside Delhi to the required site of the DMRC in Delhi. Similar finding was returned in respect of movement of the goods under import i.e., it cannot be held to have been occasioned by the contract between the DMRC and the Respondent. Decision of the Hon ble High Court: The Hon b .....

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sactions were not covered by the DVAT Act but covered by the CST Act. Being aggrieved, the Revenue preferred an appeal before the Hon ble Supreme Court of India. Held: The Hon ble Supreme Court of India after detailed deliberation held as under: Sale in course of inter-State sale: The High Court found that terms of the contract envisaged inter-State movement of goods. Such movement of goods was within the knowledge of the DMRC, because there was total ban on setting up/working of heavy industrie .....

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