service tax on supply of tangible goods

[vijay reddy]

is service tax leviable on "supply of tangible goods to the contractor who is performing the works contract which is exempted under Mega Exemption Notification 25/2012-ST"?(its just like a sub contract for supply of tangible goods) if ST is not liable then please provide the case law.

[KASTURI SETHI]

No exemption was available to the service, namely, "Supply of Tangible Goods" in the situation explained by you. I think you are referring to Serial No.29(h) of Notification No.25/12-ST. Supply of tangible is out of definition of "Works Contract Service" - exemption is available to sub-contractors engaged in works contracts and not to other service. "Supply of Tangible Goods" does not fit into "Works Contract Service"

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Sethi.

[Ganeshan Kalyani]

Supply of tangible goods attract VAT.

AI Summary

Supply of tangible goods excluded from works contract service; service tax not leviable while VAT applies instead.
The supply of tangible goods to a contractor performing an exempt works contract does not constitute Works Contract Service and therefore is not covered by the sub contractor exemption; such supplies are treated as goods and fall under the goods tax regime (VAT) rather than service tax.