Question

One of my client has completed the road contract before July 2017. But PWD department has not paid the outstanding amount till August 2018. PWD is following the system of showing the same amount and TDS on the same in the year of payment for both income and vat purpose. Please advise me whether it will create any problem if the said amount is covered in the turnover for the F.Y. 2017-18.

Answer

As the service is provided before GST regime therefore as per Section 142 subsection (11) i.e. as follows:
(a) notwithstanding anything contained in section 12, no tax shall be payable on goods under this Act to the extent the tax was leviable on the said goods under the Value Added Tax Act of the State;
(b) notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the Finance Act, 1994;
(c) where tax was paid on any supply both under the Value Added Tax Act and under Chapter V of the Finance Act, 1994, tax shall be leviable under this Act and the taxable person shall be entitled to take credit of value added tax or service tax paid under the existing law to the extent of supplies made after the appointed day and such credit shall be calculated in such manner as may be prescribed.
Since the appointed date is a cut off date for two regime of taxes. Therefore so far as Indirect tax is concerned the turnover of earlier regime will not be considered in turnover of current regime irrespective of the fact that it is differently treated in Financial Accounts.
In present era also the turnover of Financial account (Income tax) may be differ from the turnover shown in GST. For this you are suggested to prepare reconciliation statement at the time of finalization of accounts. (Reply dt.01/09/2018)