Supply of Goods

[P Ovhal]

Supply of goods transactions on which VAT is not chargeable, service tax shall be applicable?

[YAGAY andSUN]

Service tax is applicable on taxable services.  Goods can't be treated at par with the services.  But in some case Both are applicable.

[CA Rachit Agarwal]

VAT is chargeable on sale of goods.

However where there is composite that is supply of goods and services, then service tax will apply and follow Works Contract Composition Rules, 2006.

[DEV KUMAR KOTHARI]

Every supply of goods is not necessarily chargeable to VAT, a sale of any item may be exempted. It is not correct to say that if there is no VAT then there will be Service tax. Exemption of VAT can be in relation to particular dealer, buyer, or particualr goods.

VAT is on sale of goods chargeable to VAT and service tax is tax on taxable services rendered.

 

So check chargeability under relevant provisions.

[CA Rachit Agarwal]

Dear Mr. Kothari

Definitely VAT is chargeable subject to provision of relevant VAT Act.

However when I have used the word VAT, it is very common to understand that VAT rate may be NIl, 1%, 5%, 12.50%, 13.50%, 18% and 20% or other rates.

AI Summary

Clarifying Service Tax vs. VAT on Goods Supply: Understanding Composite Supplies and Works Contract Rules 2006 A discussion on the applicability of service tax and VAT on the supply of goods where VAT is not chargeable. Participants clarified that service tax applies to taxable services, not goods, unless it's a composite supply involving both goods and services, which would follow the Works Contract Composition Rules, 2006. It was noted that not all goods supplies are subject to VAT, as exemptions may apply based on the dealer, buyer, or goods. The importance of checking the chargeability under relevant provisions was emphasized, and it was highlighted that VAT rates can vary widely.