Applicability of valuation of CHA service @ 15% in respect of a turnkey contract

[Guest]

Whether valuation of CHA service @ 15% in respect of a turnkey contract of import where lumpsum is charged (trade notice 5/97) is still applicable even after new Valuation of service rules have been notified in 2006

[Guest]

There are number of changes in the law since the trade notice referred in the query has been issued. Technically the service tax should be paid on whole value of the service however, till the trade notice is existing, you may get the salter of such trade notice subject to future risk of litigation.

AI Summary

Valuation of CHA service: old trade notice relief may conflict with new valuation rules; full taxable value may be required. The issue is whether a concessional valuation for CHA services in turnkey import contracts under an earlier trade notice remains applicable after notification of the 2006 valuation rules. The post 2006 valuation framework treats service tax as payable on the whole value of service, although existing trade notice relief may be used operationally subject to future litigation risk.