Service tax categorisation

948 views 3 replies

Sir, We are doing testing and re-painting of LPG cylinders for PSU oil companies like IOC, BPC ETC after entering into an agreement with the company..We do hydrostatic and pneumatic testing for each cylinder received by us and if the tests are passed, then we apply fresh paints to the cylinders and return back to the company. We purchase all the consumables like paints, thinner, teflon tapes etc and the oil companies do not provide us any material. Pl clarify :

1. Under which category does our services fall - Works Contracts or Management, Repairs and Servicing ?(IOCL is insisting us to pay Service Tax under Works Contracts category)

2. The available Abatements in that particular category and whether CENVAT credit can be utilised by us for the Excise Duty paid by us while purchasing Paints ?

Mallikarjuna Reddy, Visakhapatnam

 

Replies (3)
Yes, the services you provide fall under the category of works contract since there is material ( thinner , paints,etc ) + element of service. Service tax is applicable on such transaction. The abatement for 'above' works contract applicable would be 30% ..therefore service tax would be payable on 70%

Thanks for your clarification Sir....

We are paying Excise Duty on purchase of Paints. Am I eligible to use this amount as CENVAT credit under works contracts ?? One of the officers in Service Tax Dept suggested me to do so.

As per my View you can not take cenvat credit on input sed in works contract as you are availing abatement...refer this official link..https://www.servicetax.gov.in/notifications/notfns-2012/st24-2012.htm

 

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