Service tax on basic amount rate diffrence

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vinay (Querist)
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03 November 2012 Sir,
we purchase capital goods on behalf of our customer as per their design & artwork,as these capital goods are being usable for only for that of customer's particular product manufactured by us.
as invoice of these capital goods in our company's name ,we avail credit of capital goods 50 % in current year & remaining 50% in next year.

after completion manufacturing of customer's product., we collect capital goods purchased cost( Invoice Grand total Value)by issuing debit note with attaching capital goods supplier's invoice copy as proof.i.e.Basic Value + 12.36% Excise + Vat

but we pay to supplier from whom capital goods purchased , after deducting basic rate difference amount. for instance suppose basic rate is say 103 Rs. + 12.36 % Excise+ 5% Vat , we pay as under

Basic 100 + 12.36% Excise on 103 Rate + 5% Vat on 103. thus we get 3 Rs.Rate difference benifit in basic value only.

will this basic rate difference benifit attract service Tax liability.are we liable to pay service tax on such basic rate difference amount benefit ,because till date we have not paid any service tax on such rate difference benifit value

pl.advice with if any rule or notification in this regard.

regds
Vinay Karnik
Ahmedabad

Amol S Joglekar

Amol S Joglekar (Expert)
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03 November 2012 Yes. It will attract service tax. Any value addition made by service provider (you) shall be exigible to service tax.

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