We are supplying ele. goods to power utility.For delay in delivery ,we have to pay penalty.So we are reducing ex.works price by penalty as per Victory Ele. Ltd. case (2013 (12) TMI-81 - CESTAT, Chennai) & then pay E.D. on it .
1)are we correct ?
2)have the purchaser to pay service tax or not under entry. no .57 for tolerating an act of delay in delivery in this situation?
3) If we do not reduce ex-works price by penalty amount, then also purchaser will deduct penalty. Have purchaser to pay service tax or not under entry. no .57 for tolerating an act of delay in delivery in this situation?
Service tax applies to purchaser for tolerating delivery delays, even if ex-works price is reduced, under entry no. 57. A supplier of electrical goods to a power utility queried about the applicability of service tax when reducing ex-works price due to delivery delay penalties, referencing a 2013 case. The discussion involved whether the purchaser must pay service tax under entry no. 57 for tolerating delivery delays. Responses indicated that service tax is payable by the purchaser in both scenarios: whether the supplier reduces the ex-works price or not. The conditions for service tax applicability include having a service provider, a service receiver, and consideration. The discussion emphasized that service tax is due when these conditions are met. (AI Summary)
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