Work Contracts

[Guest]

Dear Sir,

We have awarded an purchase order and work order to same party. They are submitting one supply bill and one services bill.

I am confuse, Is this works contracts or other services. Please explain.

Thanks & Regards,

Sanjay Vasava

[Himansu Sekhar]

The transfer of property of goods is appropriated in this contract. By making two bills means the service has been segregated from the materials. It is very much works contract.

[Himansu Sekhar]

Tax will be at the full rate on the service charges provided the goods are charged vat.

[KASTURI SETHI]

When any service provider is unable to segregate the value of sale and service, the assessee has legal right to classify the service under 'works contract service' and entitled to the benefit of specified service portion and also for RCM, if conditions qualified. When you are able to segregate service portion, pay 100 ℅ ST on service portion. Do not desire for abatement and RCM. I concur with he latest view of Sh.Himansu Sha Ji and Not the first view.

AI Summary

Clarification on Works Contract: Separate Supply and Service Bills Indicate Works Contract; Tax Implications Explained. An individual inquired about whether submitting separate supply and service bills constitutes a works contract. A respondent clarified that separating service from materials indicates a works contract, with taxes applicable on service charges if goods are subject to VAT. Another contributor added that if the value of sale and service cannot be segregated, it can be classified under 'works contract service,' allowing for certain benefits. However, if segregation is possible, full service tax should be paid on the service portion without seeking abatement or reverse charge mechanism benefits.