civil work contract

[Ram Babu singh]

How to prepare invoice in case of work contract if the value of work contract is not ascertainable?

[Ganeshan Kalyani]

If you are a company then will have charge full service tax on 40% of consideration is value of service in case of original works and for other than for original works 70% of consideration is value of service. In case if you are individual, partnership firm and providing service to company then you will be falling under reverse charge. In this case the valuation of service portion remains same as aforesaid but only 50% of service tax should be charged as it will be covered under reverse charge mechanism

[KASTURI SETHI]

Well explained by Sh.Ganeshan Kalyani Ji.

[DR.MARIAPPAN GOVINDARAJAN]

Whether you are individual or partnership firm?

[Ganeshan Kalyani]

Thanks Kasturi Sir.

[Asish Chattopadhyay]

If materials are supplied free of cost by service receipient whether S.Tax is payable on 40% of contract value as finalized on contractor excluding free supply material value by referring Bhayna Case decision of Delhi CESTAT Larger Bench against which Deptt.preferred an appeal to the honourable Supreme Court decision of which is pending. Regards . A.K.Chattopadhyay.

[Ganeshan Kalyani]

Section 67 says that consideration means amount should flow from recipient to provider of service whereas in case of free supply there is no consideration. Further from Service Tax (Determination of Valuation) Rule it infers that free issue should be included. However Act supersedes Rule therefore Act should prevail over Rule. However till final decision is pending both the parties I.e assesse and department would think for their benefit. Hence I feel that assesse should try to back your contention. And convince department. Thanks.

AI Summary

Service tax valuation in work contracts: standard value allocation and reverse charge treatment; treatment of free-supplied materials remains uncertain. Where total contract value is not separately ascertainable, a defined portion of the contract consideration is treated as the taxable value of service for original and non-original works; individuals or partnerships supplying to companies fall under the reverse charge mechanism with the same allocation principle but modified tax incidence. Inclusion of materials supplied free by the recipient is contested between the statutory definition of consideration and valuation rules, and remains uncertain pending higher court determination.