payment of service tax on the material free of cost

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kamini (Querist)
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17 December 2010 Hello sir,
Please clarify that in a work contract in which composition sceme has been aviailed by the contractor(i.e who will construct the building for us)charges service tax from us on the material for which he is completely reimbused by us (i.e RMC,ready mix concrete) which he purchases from different parties himself. So can i argue that he can not charge the service tax from us on the material which we are reimburing for it i.e THAT RMC he addad in his bill on the cost and for service tax purpose he includes that amount also,according to me the notification comes into effect from 07.07.2010 says to include material which is provided otherwise also but not applicable for the contract which has been started before 07.07.2010 so can i argue that he can not charge the service tax for the material for which he got reimbursed. plz ans asap

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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17 December 2010 Your argument will not sustain in view of rule 5(1) of Service Tax (Determination of Value) Rules, 2006.

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payment of service tax on the material free of cost

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