Vat Payable on URD Purchase even if purchase was for construction of Capital Asset?
Need a solutions for this situation.
A pvt ltd operates in Hotel industry. The comapny is constructing hotel in Bangalore. And made purchase worth 50 lakhs from Unregistered Dealers (URD).
Now the doubt is whether company need to pay the tax to government? Because purchase was for the purpose of construction of capital asset and not for trading purpose.
Looking on to your case.
Answer is simple, Does a Construction of building constitute a Capital asset under defination under Karnataka Value Added tax, 2003
I beleive you have the answer, if the building is not covered under defination of capital asset, the question of purchases under URD will not arise.
Hope i have answered your question pulkit.
CA. Sundeep Kamath
But Sandeep as per Karnataka VAT act the definition of turnover includes purchase from URD. Since its a purchase from URD, it will be considered as turnover and tax will be applicable.
What you say about this?
Pulkit, Clear bi furcation is required as far goods procured for resale, manufacture and capital asset.
My basic question lies is if the Act is silent on coverage of building, why is it necessary for us to expand the defination of capital asset to include or exclude certain items.
I accept your view however, lets not make the conclusion on coverage, and leave the decision to juidicary. My opinion would be that, the defination of URD is covered only for those goods in resale, manufacture or a capital asset defined in the act. However your view point holds true incase of a developer of real state property.