ONE OF OUR CLIENT IS ENGAGED IN BUSINESS OF PROVIDING FRESH WATER BY TANKERS TO BARGES AND FOR OTHER FABRICATION WORK FOR CONSUMPTION PURPOSE. HE HAS NOT CHARGED SERVICE TAX ON INCOME BILL MADE FOR FRESH WATER SUPPLY BECAUSE HE CHARGES FOR COST OF WATER AND NOT TANKERS. THE RATE CHARGED PER TANKER IS RS. 2800 FOR BIG TANKERS AND RS. 1500 FOR SMALL TANKERS.
HE HAS RECEIVED NOTICE FROM SERVICE TAX DEPARTMENT THAT HE HAS NOT PAID SERVICE TAX ON SUPPLY OF FRESH WATER TO THE BARGES MENTIONING THAT THE SAID SERVICE FALLS UNDER CATEGORY OF PORT SERVICES.
KINDLY GUIDE IN THIS MATTER, WHETHER SERVICE TAX IS APPLICABLE OR NOT?
THANKING YOU IN ADVANCE.
Client's Water Supply Service Deemed Taxable Under Port Services; Pay Tax with Interest to Avoid Penalties Per Section 73(8) CGST Act. A client involved in supplying fresh water via tankers to barges and for fabrication work has not charged service tax, arguing that the charge is for the water, not the tankers. The Service Tax Department issued a notice claiming the service falls under port services and is taxable. A respondent confirmed the department's position, referencing a Board's circular and relevant case laws. It was advised that the client could avoid penalties by paying the tax with interest within thirty days of receiving the notice, as per Section 73(8) of the CGST Act, 2017. (AI Summary)
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