Service Tax on purchase of strones and sand

[paresh ayadi]

Sir,

We have given contract to one party for providing us stones and sand at our site...

Whether any service tax liabilities on us under RCM ???

[Ganeshan Kalyani]

Sir no service tax on purchase of stone and sand. Any transport or commission paid to the supplier / agents service tax will apply. Thanks.

[paresh ayadi]

Ok Thanks Sir.. What if Contract is composite contract for supply and transportation ?? Whether it will become works contract ??

[Ganeshan Kalyani]

Sir there is works contract when material is purchase and incident to that transportation facility is extended. the transport charges will become your purchase cost of main material being purchased. This is my view. Thanks.

[paresh ayadi]

Sir,

it means it is probable that we may have to pay Service Tax under RCM (Works Contract) ??

[Ganeshan Kalyani]

Sir there is no service tax when material is purchased and the supplier delivers the material at your door step and no separate charge is made for such delivery. This is because the cost of transport is inbuilt in the cost of the material purchased by you. Thanks.

[paresh ayadi]

OK got it sir..Thanks..

AI Summary

Service tax on purchased materials: inbuilt transport charges generally do not attract reverse charge, separate transport charges may. Service tax on purchase of stones and sand depends on contract terms: where materials are purchased and delivery is provided with no separate delivery charge, transport costs inbuilt in the price form part of the purchase and do not attract reverse charge; separately invoiced transport or commission services remain taxable and may attract service tax under reverse charge. Composite contracts combining supply and transport may be treated as works contracts, with incidental transport absorbed into material cost and not separately taxable.