Whether Service Tax is applicable

Queries 1094 views 2 replies

Harismohan

Accountant

177 Points Joined March 2007

If A is providing engaged in providing the service of "Supply of Transit Mixtures and Pumps for Construction Services in respect of Commercial or Industrial Building"

Now, in regards of this services, he is providing 2 types of services.

1. Sypply of Transit Mixtures

2. Supply of Pumps for lifting the concrete.

Service Receiver paid a lumsum amount for supply of transit mixtures he is taking care of diesel expenses for transit mixtures. Service Provider only supply the transit mixture and labors that is driver for that transit mixture and other repair expenses for transit mixture.

In the case of concrete lifting pumps service receiver pay a per cubic rate or hourly rate basis.

Please clarify whether service tax is applicable for this service. If liable in which head. Whether any abatement is applicable. Please clarify. It is most urgent

Thanking You

Replies (2)

PRATIK P MEHTA

Final Student articles

125 Points Joined January 2009

In the Service Tax (Determination of Value) Rules, 2006, after rule 2, the following rule shall be inserted, namely:-

“2A. Determination of value of services involved in the execution of a works contract:

(1) Subject to the provisions of section 67, the value of taxable service in relation to services involved in the execution of a works contract (hereinafter referred to as works contract service), referred to in sub-clause (zzzza) of clause (105) of section 65 of the Act, shall be determined by the service provider in the following manner:-

(i) Value of works contract service determined shall be equivalent to the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract.

Explanation.- For the purposes of this rule,-

(a) gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract;

(b) value of works contract service shall include,-

(i) labour charges for execution of the works;

(ii) amount paid to a sub-contractor for labour and services;

(iii) charges for planning, designing and architect’s fees;

(iv) charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract;

(v) cost of consumables such as water, electricity, fuel, used in the execution of the works contract;

(vi) cost of establishment of the contractor relatable to supply of labour and services;

(vii) other similar expenses relatable to supply of labour and services; and

(viii) profit earned by the service provider relatable to supply of labour and services;