WORKS CONTRACT ACT

[S.C. WADHWA]

Dear Expert,

1	We have recently got constructed one new factory in Haryana.
2	Now office has to be developed with material cost to ₹ 1.50 crore.
3	We will supply the developing material duly vat tax paid directly to the developer.
4	Developer will raised us his bill approx ₹ 28 lacs plus service charge applicable at the time of completion of his work.
	QUERY
	Whether there is any liability of service tax on us regarding supplying of developing material to developer directly. In this case whether WCT applicable.
1	Please give your expert opinion whether we have any liability of service tax
	and WCT. If yes at what amount.

AI Summary

Service tax liability: supplying materials with VAT paid does not trigger reverse charge; contractor charges service tax on services.
Supply of construction materials to an independent developer with VAT paid at purchase does not create a reverse-charge service tax liability on the supplier; the contractor provides the taxable construction service and charges service tax on his bill. Where materials are supplied separately and VAT paid, the arrangement is not a composite works contract for WCT, so WCT does not arise on the material supplier. The supplier cannot claim service tax input credit for the contractor's service. Retain VAT invoices and contractor bills to substantiate the separate supplies; comply with TDS obligations as applicable.