Service tax on wct query

You are right in observing that it is not a correct method.

You may calculate for reverse charge mechanism as per your understanding [option spefically provided in the Exlanation to the Notification No.30/2012-ST dated 20 June 2012]

However, it is suggested that you get the invoice changed from the works contractor in proper way, so that there is no mismatch in both of your records, which may create difficulties for both of you in future.

The valuation would depend upon the composition scheme provided under Rule 2A of Valuation Rules under Service Tax and 42(3) of the MVAT Act for VAT liability.

I hope VAT is to be levied on 12.29664 lacs i.e., (gross bill+Service Tax).  Correct me if i am wrong

 Gross Bill Amount -                         1200000/-

 Service Tax 12.36% on 40%                59328/-

 Vat Tax 12.5% on 60%                           90000/-

Total Amount                                           1349328/-

Vat Rate Will be 12.5% or 5% in Ratio of Construction Material Used

Under the Reverse Charge Mechanism, you need to pay 50% service tax (i.e. @ 6.18%) on the service tax portion of the invoice after availing the abatement. You need to pay balance 50% service tax directly through GAR-7 Challan. Service tax is not required to be paid on the supply part of the invoice on which VAT has been charged. Cenvat Credit is available on tax paid in invoice and directly paid in cash.

VAT and ST are simulataneously tobe applied as they are concurrent. Therefore in the values either ofthem is not tobe added to discharge the other.