Works Contract

[ANIL MANTRI]

A company procured boiler from a 'X' Company and gets it installed from 'Y' individual. 'Y' also brings some materials along with it for installation of the Boiler and charges service tax as if original works contract (40 percent *12.36 percent *50 percent ). The company who procured the boiler also paid its 50 percent share. My query is whether the cost of Boiler procured from X company will also form the part of Gross Amount Charged and the service tax has to be paid on the same? 

[Madhukar N Hiregange]

The tax in this case is on the individuals activity and not on activity of co. Not to include valuye of boiler purchased by co.

AI Summary

Service tax on works contract excludes separately procured goods' value; tax applies to the contractor's installation charges. Tax liability is on the service provider's activity; the taxable gross amount for the works contract comprises the contractor's charges for installation (including any materials he supplies) calculated under works-contract valuation rules, and does not include the value of goods independently procured by the principal from a third party.