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Service Tax - works Contract

Dhiraj Bagri (Manager - Finance & Accounts) (174 Points)

03 April 2011

Dear Sir

I need your view on following issue: -

There is a XYZ company which acts as a works contractor but it has taken the service tax registration of Erection & commissioning.Also, I would like to mention here that we have received all the payment and bookes sales in the FY 2010 - 11

We have also imported an elevator on which CVD has been charged.

Now my query is

1). If we pay service tax @ 10.3% can we take the benefit of CVD under the service tax certificate of erection & commissioning?

2).Further even though we are registered under erection & commissioning can we take the benefit of works contract composition scheme and take the benefit of CVD?

Thanks in advance.

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7 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 03 April 2011

please regularize the registration 1st, get additional services added in your R/C, then take cenvat credit of capital goods,

Dhiraj Bagri (Manager - Finance & Accounts) (174 Points)
Replied 04 April 2011

Thanks for the reply

But there is a concern that we have already received the whole payment by July'10 and booked the total revenue by dec'10 and we paid the service tax in Mar'11 only on the service part @ 10.3%. We imported the elevator in Mar'11 and paid the Custom duty and CVD in Mar'11.Then if we include the works contract in registration certificate in Apr'11 is it possible to get the Credit of CVD now?

Thanking you

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 April 2011

here in past u have done works contract and paid tax on it, how did u been able to file the return?

u can avail the input credit on capital goods without any prob as u are already registered with service tax, its mere amendment of RC.

Dhiraj Bagri (Manager - Finance & Accounts) (174 Points)
Replied 04 April 2011

Sharma Ji,

Return has been filed based on the Erection and Commissioning Certifictae. I think there should not be any issue wrt the same.

Further, if we include the Works Contract in our certificate in Apr'11 (This month) will there be any effect on the payment of service tax that we already made (in Fy 2010 - 11) and the return we already filed (in FY 2010 - 11)?

If there is any case law or reference to the same then plz let me know bcoz same will help me immensely .

Thanks in advance

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 April 2011

u can ask for back dated effect of inclusion of works contract. it can be made in previous return period, as the return of last half is not done, but do it before submission of return of march.

Dhiraj Bagri (Manager - Finance & Accounts) (174 Points)
Replied 04 April 2011

Sharma Ji,

Since registration is being done online hence I think there is no possibility to change the nature from back date.

Thanking you

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 04 April 2011

if you are reluctant about not to visit the service tax office, then sometime they may visit you and trouble would start from there,

you have applied for online registration, thats submission of forms only, not the registration, registration was done by department after getting your related documents in hand.

service tax officials are also human beings and they also are able to understand the practial problams of the indutry, however they are bound to rules framed by central govt.

during amendment u can ask them to give restopective effect in last return period verbally, and i dont think they would deny coz its not a loss of revenue, only delay in submission for amendment of RC, which may be condoned by R/O easily as the return due date is 25th april 2011 ( still have 20 days time in hand)