Works Contract case

[Srivatsan Krishnamachari]

Dear Experts,

Kindly clarify my below point :

a) Works contract under composition scheme : we are undertaking contract under WCT composition scheme. Where as in my supply, excisable material also involved. Now i wish to raise Excise invoice for the excisable material based on the cost +10% basis to avoid excise litigation and for the total value of bill with WCT and for service tax 40% value of the woks contract under 60% & 40% basis since ours is Original works. Please let me know this process is OK, if not, kindly suggest to meet all tax complications like WCT, SERVICE TAX & CENTRAL EXCISE.

Thanking you in Advance.

Srinivas

AI Summary

Service tax on works contracts cannot be combined with excise duty; liability depends on whether goods are cleared separately.
Both taxes cannot be imposed on the same transaction: works contracts are taxable as services and attract service tax; central excise applies to manufacture and clearance of excisable goods when such goods are sold. State WCT/VAT is distinct and must be complied with separately. Liability depends on whether goods are cleared as sales (excise) or the activity is a works contract service (service tax) and on applicable exemption thresholds for manufacturers.