Servicetax on WCT under Composition Scheme.

[sankunni krishnan]

My client is a works contractor opted for composition scheme paying service tax at 4.12% but Aervice Tax audit officers object to it based on Section 2A(I)(i) & (ii) of Service Valuation Rules 2006.They insist that my clients should have opted for composition under State VAT laws also,then only they are eligible for Service Tax Composition Scheme under Notification No.32/07 ST.Is it correct,give detailed reply.

AI Summary

Contractor Challenges Service Tax Composition Scheme Requirement; Cites Independence from State VAT Rules under 2007 Notification. A works contractor opted for the service tax composition scheme at 4.12%, but service tax audit officers objected, citing the Service Valuation Rules 2006. They argued the contractor must also opt for the composition scheme under State VAT laws to qualify for the service tax scheme under Notification No.32/07 ST. A respondent clarified that under the Work Contract (Composition) Rules of 2007, opting for the service tax composition scheme is independent of the VAT law, and there is no requirement to be registered under the VAT composition scheme to qualify for the service tax scheme.