Service tax on works contract service

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

03 May 2013 Dear Experts,

We had done a contract of fire fighting instalation for our building for more than 1 Crore in 2011. and made running payments to contractor around 90 lacs upto 31/3/13. He issued invoice of Rs.56 Lac in March 12. Now he want to do balance invoice. My questions are:

1. Wheterh reverse charge will be applicable on old contracts i,e contracts prior to July 2012.

2.Whether we need to pay service tax on all balance payments under reverse charge.

3.Can the contractor issue separate invoices for material and services..

4. If yes in point 3 what about our service tax liability under reverse charge.

Thanks a lot in advance to all experts

CA S K MISHRA

CA S K MISHRA (Expert)
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04 May 2013 It is not clear from queries the status of contractor( service provider) and service receipient.

The applicability of Reverse charge depend upon the status of service provider & receipient.

1.Depend on status of the assessee

2. Depend on status of the assessee

3. Yes

4.Depend on status of the assessee

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2013 Dear Sir
Service recipient is company and provider is a partnership firm... Further the agreement was lumpsum with material agreement.

CA S K MISHRA

CA S K MISHRA (Expert)
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04 May 2013 1. Reverse charge is applicable on balance portion of the work.

2.Yes

3. Splitting of invoice is not possible in the instant case,as you may be paying WCT on invoice amount.However, if the service provider can split the material & service component, than service tax is payable on service component only.But no abatement is available.

4.Service recepient liability is 50%.This is a works contract.This is covered under reverse charge category. As such there is an abatement of 60% on works value.You have to deposit service tax @12.36% on 40% value x 50%.

Querist : Anonymous

Querist : Anonymous (Querist)

04 May 2013 Thanks sir maximum resolved just one confusion if provider bills seprate for services by charging 12.36 then also we need to pay 50%?

CA S K MISHRA

CA S K MISHRA (Expert)
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04 May 2013 If the Service provider, gives separate invoice for material component(VAT Invoice) & service component( service tax invoice), then it will not be treated as composite Works contract and it does not falls under reverse charge categories.

The service tax liability is on the Service provider.

Querist : Anonymous

Querist : Anonymous (Querist)

05 May 2013 Dear sir contract was with material lump sum contract and we have deposited ext on advance payments will it make any difference in above?

Querist : Anonymous

Querist : Anonymous (Querist)

05 May 2013 Ext wrongly written it is wct..