Civil Works

[N Balachandran]

Sir,

 

We are Manufacturer of Wind Mills having the Manufacturing unit at Pondichery.  We receive the Order from Customer for supply of Wind Mills from Pondichery to Tamil nadu under CST Sale and the Customer also place the work order on our Unit in Tamil Nadu for Civil work and Erection work.   Our Tamil nadu unit execute the Civil works and discharge the service tax liability @ 4.12%  ( Prior to 01.04.2012 ) under Works Contract Service .  The Erection work also done by Tamil Unit  and discharge the Service tax liability @ 10.3% under Erection and Commissioning Service.

Pl clarify, the method adopted by us for payment of Service tax is in line with the provisions or not ?.

Will the dept include the  supply value of Wind Mill which was done from pondy for payment of Service tax under works contract service?.  

Regards

 

N.Balachandran 

 

AI Summary

Works contract service: choice of compounding methods governs taxable base; notional material value may be includable.
Three alternative compounding schemes are available for Works Contract Service: material deduction under the relevant rule, tax on a fixed portion of contract value, or a flat compounding rate; the taxpayer should perform a cost benefit analysis to choose. If materials are supplied free, their notional value is included in the taxable service amount. Reverse charge may apply depending on provider type. Revenue may seek aggregation of supply, erection and civil contract values where the same entity executes divisible contracts, but the taxpayer may still opt for any permitted compounding method and compute tax on the service portion.