sevice tax on scrap sales

[raveena narang]

whether service tax to be pay on scrap arise on errection & commissiong service.. as sales tax is alredy being paid by us on sales of scrap.

[Rajagopalan Ranganathan]

Sir,

       Scrap is liable to duty only when it is generated during the course of manufacture of excisable goods out raw material purchased.  However, the scrap occurred during the course of rendering erection and commissioning service cannot be treated as scrap arises out of manufacturing activity.  Hence no duty is payable on such scrap. 

[YAGAY and SUN]

Dear Raveena,

Service tax is applicable either on services provided or received (under RCM). Scrap/Waste are goods whether manufactured or obtained otherwise.  In our opinion, no service tax would be applicable on sale of such scrap.  However, if there is any involvement of services, say payment of commission for selling of scrap, then, there would be an implication of service tax, accordingly.

Please check the facts at your end.

Regards

Team YAGAY & SUN

(Management & Indirect Tax Consultants)

[Arun Kumar Singh]

No need to pay service tax on scrap sale. Service tax will be applicable on only services provided by you.

AI Summary

Service tax on scrap not payable when arising from erection and commissioning; commission for sale may attract tax.
Scrap from erection and commissioning is not treated as manufacturing scrap and its sale is a sale of goods not subject to service tax; however, if a taxable service element exists (for example, commission for selling scrap) or liability arises under the reverse charge mechanism, service tax implications may apply and should be assessed on the facts.