Applicability of Service Tax on Work Contract

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CA.Satinder Pal Singh (Querist)
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14 May 2008 Whether Service Tax is applicable on Work Contract of a Hydro Power Company being taken by another hydro power company having expertice as work contractor also. whether it is exempted as for infrastrastructe sector project. whether registeration under S.T is necessary and if material is supplied whether vat is applicable in this case and its registeration under vat act of H.P.

Hari Venkata Ramana

Hari Venkata Ramana (Expert)
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15 May 2008 Service tax exemption under works contract service is available only in respect of road, railway, transport terminal, airport and dam. Since this is done a commercial undertaking to a hydro power company intended for commercial use is is taxable.Hence no exemption is available under the cover of infrastructure sector project. Since ST is payable registration is must within 15 days.

a Compositio scheme is available whereby you can pay 4.12 % of gross bill and forget to maintain accounting records etc., provided you should not have paid any tax under any previous category.

VAT it paid on input material can be excluded from gross bill. You cannot avail deduction in respect of input material used in this contract. however you can avail CENVAT credit on capital goods and ST paid on input services.

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