Sercice tax liability if some materials supplied by contractee

[Bhairob Chandra Bor]

Dear Sir,

Kindly clarify whether the gross up is required to calculate the service tax if iron & steel rods purchased by contractee and used in the construction of a building? This iron & steel rods costs are not included in the work contract given to contractor. Company will capitalize that iron & steel costs in the building. If gross up is required then will it be applied for the both the contractor & contractee while calculating the service tax liability? kindly advice.

Thanks & Regards,

bcb 

[Madhukar N Hiregange]

As long as the FOC material is not included in the value of the WC awarded there may be no need to include that value [ rods etc supplied]

under JC the value of the contract and no need to add FOC material. Refer Bayana Builders