Materials used in the job under port services

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Dear Experts

I am running ship repair services inside the Mumbai Port Trust ( We are the registered in MBPT to do ship repairs within the premises of MBPT). Accordingly we registered ourselves under port services category. We do repairs which include materials in that. Since these are job work we cannot charge materials alone in the bill. But we know the quantum of materials used in each and every job value. Accordingly we charge 12.5% vat on the materials used in the job value, remaining value taken as Services, we charge 12.36% service tax. But Service tax dept urges us to pay the service tax on the total value i.e including material value. Their contention is that we cannot take material execmption of Notificataion No 12/2006. Since we are registered under MVAT, we have to pay vat also. But after paying vat on materials, we have to pay 12.36% on the total cost, including mtrls cost + mvat paid. Is Service tax deptt right in saying or what we follow is right?  Advise me

AI Summary

Dispute Over Service Tax on Ship Repair Materials: Notification No. 12/2006 vs. VAT Practices A ship repair service provider at Mumbai Port Trust is facing a dispute with the Service Tax Department regarding tax on materials used in repairs. The provider charges VAT on materials and service tax on labor, but the department insists on taxing the total invoice, including materials, citing Notification No. 12/2006. Experts in the forum advise that service tax should not apply to materials if VAT is paid, referencing cases like Hindustan Aeronautics vs. CST. They suggest maintaining documentary evidence of material use and pursuing the matter with appellate authorities if necessary.