Category - Business auxiliary services

[Guest]

Our client unit is engaged in the works contract of anodizing and powder coating the aluminium structural supplied by their client in different size and quantity and it has to be done according to the specification of colour selected by the customers. The unit is executing works contract which are chargeable under regular rate of tax @ 4% by virtue of serial no.3 of 6th schedule under Karnataka Vat Act, 2003 with effect from 01.05.2006. The taxes are levied primarily and exclusively on transfer of the property on goods involved in the execution of works contract. Whether such type of activities coming under the purview of BAS under serial no. (v) production of processing of goods for on behalf of the client?

[Madhukar N Hiregange]

in my view this can come under BAS. ON the value of servcie ( gross - amount on which VAT paid) is liable. POssible defense is that in a composite contract no st pyable relying on decision in case of daleim

AI Summary

Business auxiliary services classification can render processing of client goods subject to service tax, net of the VAT component. Anodizing and powder coating performed on client supplied aluminium structures can be treated as Business Auxiliary Services for service tax purposes; tax is payable on the value of the service after deducting the portion of the gross amount on which VAT was paid. A potential defence is to argue the work is a composite works contract to resist separate service tax treatment for the processing activity.