Service tax on profit earned on Sale of Goods in Transit

[Mukund Honkan]

A co.is undertaking turnkey contracts wherein supply & errection contracts are entered separately.In some instances a company is buying from vendors & directly supplying the same to project sites.Company is paying sercice tax on errection bills & excise on supplies from its manufacturing unit.Can service tax dept charge servicetax on difference in price of supplies ,given to vendor & charged to client, in pretext of co falls under works contracts Mukund M Honkan

AI Summary

Service Tax Not Applicable on Profit from Goods Sold in Transit Under CST Act for Turnkey Contracts. A company involved in turnkey contracts separately handles supply and erection contracts. It purchases goods from vendors and supplies them directly to project sites, paying service tax on erection bills and excise on supplies from its manufacturing unit. The query raised concerns whether the service tax department could impose service tax on the price difference between what is paid to vendors and charged to clients, under the guise of works contracts. The response clarified that no service tax is payable on the profit from the sale of goods in transit under the CST Act.