Trading Activity

[CLARENCE PEREIRA]

We are manufacturers of steel doors & windows and pay excise on our products. We also avail service tax credit.

We also procure steel doors from the market and sell the same as a trading item. We do not charge any excise duty as there is no modvat credit availed and there is no manufacture involved.

What is the status of service Tax reversal prior to 01.04.2011 & after 01.04.2011. i remember seeing some article on Service Tax on Trading in Budget of Feb 2011.If applicable method of calculation of service Tax may kindly be shown.

[Mahir S]

No service tax is leviable for such normal purchase/sale and such trading activity.

However, prior permission from the Excise department is necessary for procuring steel doors from the market and selling the same as a trading item; if it is brought and sold from the factory premises.

Forget Service Tax, think about Central Excise laibility for trading carried out from  factory premises.

AI Summary

Service tax on trading: ordinary purchase-resale not leviable, but trading from factory premises may trigger excise obligations.
Service tax is not leviable on ordinary purchase and resale of goods held as trading stock, so routine trading does not require service tax reversal. However, trading conducted from factory premises requires prior excise permission and may attract central excise liability, shifting the compliance focus to excise obligations rather than service tax.