A Circular has been issued for Composition Dealers (including Works Contractor) to clarify that Composition Dealers are not allowed to effect inter state purchases / procurements and that e-sugam of the dealers would be verified to give effect to this circular and that the registration of dealers under composition scheme, who have effected such purchases, would be cancelled with immediate effect. 

However, for works contractor, to the extent they have paid full rate of tax in respect of such inter state purchases / procurements, this circular will not apply.  But, purchase of capital goods or goods which are not sold in the course of works contract would attract this circular.  We believe that to the extent it relates to Works Contractors, this Circular is bad in law because it goes beyond the statutory provisions which allow interstate purchases by works contract dealers under composition scheme

Following is the summary of the decisions taken on indirect tax issues by the Forum Chaired by Dr. Parthasarathi Shome, Adviser to the Finance Minister for Exchange of Views Between Industry Groups and Government on Tax Related Issues or Tax Related Disputes

The Commercial Taxes Department of Karnataka has issued a new notification, notifying revised list of commodities with regard to issuance of E-sugam for movement of goods in pursuance of sale, job work, entry into the state from outside territory (other states / import into India) or otherwise.  The additional commodities which have been notified under the new notification, apart from those appearing in the earlier notification are

The Hon'ble Supreme Court has in the case of L&T in the context of the VAT laws held that "activity of construction undertaken by the developer would be works contract only from the stage the developer enters into a contract with the flat purchaser. The value addition made to the goods transferred after the agreement is entered into with the flat purchaser can only be made chargeable to tax by the State Government"