Valuation of service tax

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sandeep k panchal (Querist)
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18 October 2013 my friend is a electrical contractor, he quoted a tender in a govt. co., works mention in the tender is like recondition of earthpits which includes erection, commissioning, fabrication, some civil work and material (like pipe, iron plates and civil material), now per his logic this work includes 70% material and 30% services and he charged service tax on (30%+3% cess) of gross amount. he did write or wrong please clarify.
(he registered under 3 services i.e. works contract, maintenance & rep. and business auxileary)

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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18 October 2013 i) Seems it is a 'works contract' covered under notification 24/2012 ST. If so ST has to be paid @ 12.36% on the 60% of the entire contract value OR

ii) Look whether the case can be fit into notification 25/2012 ST so as to claim exemption from service tax.

sandeep k panchal

sandeep k panchal (Querist)
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19 October 2013 thank you sir,we can't opt 2nd option for him.

i )now what we do. can we seem this service as election, commissioning and installation and get registered with new service. OR if we prove that total material cost is almost 70% and mention in bill separately. can it work

ii) (but if our contract include maximum value of material of gross contract value and we could't specify value of material then why we pay service tax on 60% of total amount. ) please guide.

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