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

[YAGAY andSUN]

No service tax is payable on sale of goods on profit under Transit Sale under CST Act.

AI Summary

Service tax on transit sale profits excluded when resale qualifies as a transit sale, not part of works contract taxation. Whether profit on resale of goods supplied directly from vendors to project sites as part of turnkey arrangements attracts service tax is considered. The key operative point: no service tax is payable on profit earned on sale of goods when the transaction qualifies as a Transit Sale under the Central Sales Tax regime; the resale margin is not liable to service tax as part of a works contract.