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CST on Service Tax

MUKESH CHANDRA PATNAIK (Senior Specilist-Finance) (30 Points)

12 April 2011

One of our vendor is claiming CST on service tax. Can the vendor claim the CST on service tax?

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12 Replies

Harpreet (* * * * * *) (1670 Points)
Replied 12 April 2011

How can it possible?????? Tax on Tax (Tax ke uppar Tax).....Who has teached him (Vendor's Accountant) to do like that?????

1 Like

Joey Tribbiani (fdg) (2010 Points)
Replied 12 April 2011

Wah bhai wah,service tax k upar CST.. Someone go and tell him CST is charged on Goods which is defined as

includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities

Whereas service tax is charged on service provided

1 Like

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 12 April 2011

please share the invoice details, i assume you are discussing the WCT on which service tax as well as CST both are chargable.

1 Like

Pralay Chakraborty (Service) (482 Points)
Replied 13 April 2011

Originally posted by : Harpreet
	How can it possible?????? Tax on Tax (Tax ke uppar Tax).....Who has teached him (Vendor's Accountant) to do like that?????

I know this is bit rediculous to charge CST on ST (if it is CST so..)...

but there is a practice to charge TAX ON TAX (Tax k upar tax) in few cases..

But CST On ST is too much...:) :)

Pralay Chakraborty (Service) (482 Points)
Replied 13 April 2011

mridul savio Pinto (articled trainee ) (1477 Points)
Replied 13 April 2011

how can CST BE CHARGED ON SERVICE TAX ? CST IN A INDIRECT TAX WHICH IS LEVIED ON INTER STATE SALES IN THE COURSE OF INTER STATE TRADE /COMMERCE

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 13 April 2011

If the contract is one of WC where both applicable, both the transfer and service are simulatanously provided. Therefore CST on ST not legal.

1 Like

Pralay Chakraborty (Service) (482 Points)
Replied 13 April 2011

I blv WC service covered only specified contract where Vat/Sales Tax paid on Works Contract.

For reference Valuation in Works Contract is as follows:

Broadly, two options are available to service provider –

(a) Calculate value of service as per rule 2A of Service Tax (Determination of Value) Rules, 2006 (in short ‘Valuation Rules) and pay service tax at normal rate on such ‘value’. In such case, assessee can avail Cenvat credit of input services, inputs and capital goods

(b) Pay service tax under ‘composition scheme’ at 3.43%(1/3rd of current rate 10.3%) of ‘gross amount charged for works contract’ (inclusive of education cess and SAH education cess), under ‘Works Contract (Composition Scheme for Payment of Service tax) Rules, 2007’. As per rule 3(2) of Composition Scheme, the assessee cannot avail Cenvat credit of inputs. Thus, the assessee can avail Cenvat credit of input services and capital goods.

In both the cases, Vat/sales tax will not be included in the ‘value’ for purpose of calculating service tax.