Erection Contracts WCS

My question is A company take contract from B for erection of tower. For this he bifarcrate contract into two one for supply and one for erection. Under supply contract he supply tower parts and under erection he do erection work relating to tower including assembling of all these supply material.

suppose total contract value is 100 out of which Rs. 70 is for supply and Rs. 30 (Considering rs10 service and Rs20 of cement and angles material cost) used in erection. What amount of ST he will pay under normal way( not under any scheme of composition or abatement). He is register in state under work contract service and paying duty only on erection contract value material used cost that is Rs. 20/-. and under erection commissiong service under ST under normal category simply paying 10% of erection contract value. As the material of tower parts supplied under supply contract is from differect state he is paying 2% CST on that.

Now my question is what liablity it will have when he will be considered for work contract service under Service tax because it will be catagories under WCS w.e.f 2007.

For value whether supply portion will be added or tax will be charged only on erection portion. if only on erection portion will he be allowed to take cenvt of these material ( cement or sarai etc)used. or any kind of cenvat admissible to him. WHat about supply material installed in tower will it be completely ignored. In case he takes cenvat of that supplied material portion which comes under sales invoices.

Please explain contract valuewise

var addthis_config = { services_compact: 'orkut,facebook,twitter,linkedin,yahoomail,gmail,hotmail,google,googlebuzz,more' } Share

I have given my views. Hope this helps.

"Now my question is what liablity it will have when he will be considered for work contract service under Service tax because it will be catagories under WCS w.e.f 2007.

For value whether supply portion will be added or tax will be charged only on erection portion.

For Supply Portion, you need not charge Service Tax

if only on erection portion will he be allowed to take cenvt of these material ( cement or sarai etc)used. or any kind of cenvat admissible to him.

If you are paying tax on the Service portion of Erection, you will be allowed CENVAT only on input services along with CENVAT Credit on any consumables used in providing the service. Please refer valuation rules for arriving the value of service.

What about supply material installed in tower will it be completely ignored. In case he takes cenvat of that supplied material portion which comes under sales invoices."

CENVAT on supply material will not be available.