Service tax on Labour component by CCL

[SIDDHARTHA NANDI]

In a case of my client , CCL has given service tax @ 12.36 % on 25% of total bill amount , assuming that the 75 % of bill amount is for material component and 25% is labour component for the year 2014 -15 .Accordingly the return was filled . Now service tax department says that there is no such provision of service tax , and he has to pay service tax on 70 % i.e after abatement of 30% . The party is registered under works contract under service tax. Please advice ...

[KASTURI SETHI]

Have you read Rule 2 A of Service Tax (Determination of Value) Rules, 2006 ? Read word for word and thereafter that elaborate your query. What is exact nature or work performed ?

AI Summary

Service tax valuation dispute: whether labour allocation or statutory abatement governs the taxable base and liability. Dispute over the proper taxable value under service tax for a works contract registered party where the assessee treated a portion of the bill as labour component and the department contends valuation should be determined after applying the statutory abatement; the determinative question is whether direct allocation of labour or the prescribed valuation rule governs the taxable base, with advice to consult the Determination of Value rules and clarify the nature of the work.