tag:blogger.com,1999:blog-3202774368551476669.post3373101933122410585..comments2023-09-15T16:21:31.980+05:30Comments on INDIAN CORPORATE LAW: Contracts of Sale, Works Contracts, and TDSUmakanth Varottilhttp://www.blogger.com/profile/12438677982004444359noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3202774368551476669.post-39771242364256184782009-08-12T14:32:36.823+05:302009-08-12T14:32:36.823+05:30As is known, a similar point of dispute has often ...As is known, a similar point of dispute has often arisen in the realty sector. But, that is not in reference to TDS under the IT Act, but is on the question whether a given transaction is of the nature of a ‘works contact’ so as to attract sales tax/VAT, or of a ‘sale’ on which only stamp duty is payable. One will find interesting discussions in court cases dealing with the said controversy.<br />Incidentally, how the referred gray area has come to be exploited by some unscrupulous players in the field may be found highlighted in a couple of feedbacks to Business Line reproduced below: <br />1. "Lacunae in VAT legislation..." (20 June 2009) <br />"Value Added Tax (VAT) has been implemented to avoid cascading effect and usher-in better tax administration to compete in a globalising marketplace. The Government has initiated steps to phase-out Central Sales Tax (CST). It has reduced CST against Concessional Form from 4 per cent to 2 per cent, year on year. It has also abolished ‘FormD’"<br />" ……… Ultimately, it is the consumer, and not the manufacturer or the Government, who loses out."<br />COMMENT <br />In the write-up, no doubt, its writer has focused on certain lacunae in the legislation on VAT, which has presumably the unintended (but not unanticipated) potentials for inequity and irregularities in its administration and enforcement. In doing so, he has confined himself mainly to one aspect-namely, manufactured goods and its consumers.<br />Nonetheless, it is any body's guess as to how many of us are aware, or really unaware (for reasons known only to them), of frauds commonly and unscrupulously perpetrated / perpetuated and foisted upon the hapless consumer public in several other sectors where the VAT law is equally of relevance or comes into play.<br />To mention one, - the notorious realty sector.<br />To briefly pinpoint, but by way a poser so as to provoke one to give one's own thoughts and due consideration:<br />Why a builder, say, of an 'Apartment' building, which he puts up for 'sale' as such, and on which, therefore, the buyer has to necessarily pay a significantly large amount of Stamp Duty, - is at all justified in adding to / or including as a component in, the agreed basic price for the 'Apartment', the element of VAT (that too, on an arbitrary basis)?<br />No doubt, the age old maxim is - IGNORANCE OF LAW IS NO EXCUSE. But, in our times, it has, for almost all purposes, been chosen to be given the go bye. Be that as it may, is it not a matter of common sense, and of larger concern, for one to sit and deliberate - IS IGNORANCE REALLY A BLISS - that too, any longer; and an absolute one at that.<br />2. THIS REFERS TO THE YET ANOTHER RECENT ARTICLE (8 August 2009)- The hassle of pinpointing value addition <br />“Even now, the ultimate customer ends up paying tax on full value harking back to the pre-VAT era.” <br />COMMENT<br />It is not simply just that; as pinpointed in my attached earlier feedback, a buyer of an 'apartment', as one gathers from a personal survey, often, if not mostly, ends up paying (in fact, he does not mind or is bothered about it), both VAT and Stamp duty under what in law is a 'Sale' (of apartment) transaction. HOW IS THAT!<br /><br />vswaminathanvswaminathannoreply@blogger.com