Works Contract

[Ashwani Rustagi]

I need clarification  whether the following service taken from an individual or firm would be subject to service tax under Reverse Charge Basis: 

1. Photocopy machine taken from an individual on monthly rent – monthly rent fixed up to X number of copies, thereafter, extra charges per copy;
2. Employee Uniform purchased from the vendor with company logo;
3. Purchase of company stationary as per our speciation;
4. Purchase of Packing boxes as per our specification & logo.

 Please advise whether the above service would be covered under Works Contract & would be liable to service tax under reverse charge. Also clarify, whether we can take  Cenvat Credit of such service tax.

 Regards,

 Ashwani Rustagi | Financial  Controller | Kadimi Tool - India 
( Phone: 91-124-2439593 | 2 Fax: 91-124-2341092 | Mobile: 91-9810013724 I

* E-mail: [email protected]

 

AI Summary

Control over hired equipment determines renting versus transfer of right to use, affecting service tax and reverse charge applicability.
Tax character depends on control and contractual terms: a photocopy machine left on premises is service-taxable renting if the supplier retains control and provides maintenance and consumables; if the hirer has possession and operates the machine it is generally treated as transfer of right to use (VAT). Uniforms, stationery and packing boxes supplied to specification and branded are treated as sale of goods, not works contract; classification as works contract is the trigger for joint reverse charge.