Service tax and ap vat on works contract

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

08 October 2014 I am an engineer doing petty works of construction supervisions. My gross receipts Rs.50,000/- per month generally for the last 3 years. I am filing my incometax returns and paying tax. This year in August 2014, a big hotel gave a contract work of interior works for which they agreed to pay me Rs25.00 lakhs and they will also pay service tax on the above. My doubt is :
1. Shall I have to get registered for this with Service tax department?
2. If yes, next year I may not such works again. So what Shall I do.-cancel the registration ?
3. IS there any AP VAT registration required.Their accountant says, if I register under Form 250 on works contract-he says composite tax, I shall have to pay 5% VAT ( Andhra Pradesh) on Rs.25.00 lakhs. Even then Am I required to pay Service Tax.
4. I will have to use materials on my own keeping the standards given be the Hotel. Material bills will be in my name.
Please clarify on the above issues.

Can I ask the hotel to reimburse me the VAT paid by me.

Annu Agarwal

Annu Agarwal (Expert)

09 October 2014 I think i will be able to answer your query partly.
1.Yes you have to register under service tax as the value of services provided by you is more than 9,00,000.
2.In case you do not have any work in succeeding years you can simply file nil return or you can surrender your RC.
3.In AP Vat every dealer opting to pay tax by way of composition on work contract is required to get registered under AP vat.
As far as the contention of accountant of paying vat of 5% on 25 lakh i think it is 4% on 50% of the value of contract i.e. 5%on 12.5 lakh.
Please confirm the same with him.
Also service tax is paid on the service portion in case of work contracts.
4.You can always charge the hotel for vat as the goods shall be finally transfered to the hotel.

I hope the answer was of some help.
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