Mr. A is providing Works Contract Service. He applied for Service tax registration as Interior Decorators and did not inadvertently opt for Works Contract Service during registration within the prescribed time in F.Y.2010-11 and received ST 2 for the same. He charged service tax @ 4.12% on the Bill and made the payment mentioning the codes of Interior decorator as he had not obtained registration under works contract. The Service Tax return was also filed before the due date of filing. A notice was received from the Service Tax Department stating the payment should be made @ 10.30% instead of 4.12% as he had not opted for Works Contract before making Service tax Payment. The total Credits to P & L A/c for the year ended 31.3.2011 was Rs. 50,21,192. Out of the total bill, Rs.49,48,649 was received. The said receipts included Rs.4,97,949 as Consultancy Fees and balance of Rs.44,50,700 for Works contract service. Materials costing Rs.16,32,626 were used in the contract and the cost of labour was Rs.14,38,225 for the said contract. The Net Profit earned during the year was Rs.9,27,747.
While ascertaining the value of Services provided, the value of transfer of property in goods involved in the execution of the said works contract should not be included for charging Service Tax.
- What shall be the value of goods that needs to be deducted while determining the value?
- Can he claim the basic exemption of Rs.10,00,000 for the said Financial Year?
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