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

Works contract classification: segregation of goods and services determines service tax treatment and availability of specified service portion. Where a contractor supplies goods and services under one contract but issues separate supply and services bills, the contract is a works contract because property in goods is appropriated; if goods are charged to VAT, the service portion is subject to full service tax, while inability to segregate allows classification as works contract service to claim the specified service portion and consider reverse charge mechanism where conditions qualify.