Service tax on overhauling

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KUMARDIPTI GHOSH

COMMERCIAL EXECUTIVE

28 Points Posted on 16 October 2012

Dear Sir,

I work in an engineering firm. One of our vendor has done a overhauling job (sort of maintainance job with manpower and spare parts) at our client site on behalf of us. Our vendor is not registered under comppany act although our company is registered. so the vendor raised a bill on us charging 25% of total service tax as per recent s.tax rules. My question is that originally what should be the liability of service tax for us as service tax recepient and what will be on vendor's part as service provider. I also like to know that is there any difference between works contract and overhauling.

This is very urgent. plz help

Replies (4)

CA Unnikrishnan Nair N

Chartered Accountant

2114 Points Posted on 16 October 2012

Under service tax ,any activity involving supply of service and goods is works contract if the same is liable to vat. In this case 70% of gross amount is value of service upon which 12.36% is tax. Payment is under reverse mechanism in the ration of 50:50.

sourav jain

INTERNAL AUDITOR

142 Points Posted on 17 October 2012

I dont think its a works contract , in works contract transfer of goods is must

Consumable used for providing service is not transfer of goods hence will not be termed as works contract

KUMARDIPTI GHOSH

COMMERCIAL EXECUTIVE

28 Points Posted on 17 October 2012

So then what will be the tax liability in the case of overhauling? wheather it will be 50-50 between provider and recepient or 100% towards service provider. Overhauling is one time maintainance job where labour and few spare parts involved.

sourav jain

INTERNAL AUDITOR

142 Points Posted on 17 October 2012

As you said that the vendor charged you 25% of service tax which seems to be the case of manpower supply service So i Must tell that manpower supply service is only applicable when the manpower supplied is under the pay roll of service provider and operational supervision is done by you

so u must ensure your term between you and your service provider