TaxTMI 
TaxTMI 
2025 (8) TMI 1836
X X X X Extracts X X X X
X X X X Extracts X X X X
....ormula of 85% of the gross value as value of goods and balance 15% of the contract value as labour and other charges as per the formula prescribed by the State of Karnataka VAT Laws. 2. Appellant is engaged in works service contract and also registered as a dealer in terms of Karnataka Value Added Tax Act, 2003 and also under service tax. As per KVAT Act, appellant paid VAT on 85% of the contract value by considering it as "Value of Goods" on which State Government levies VAT and paid service tax on balance 15% of the contract value by considering as service. However alleging short payment of service tax, show cause notice was issued on 23.04.2013 for the period from October, 2011 to September, 2012 and Adjudication authority as per the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rges". As per rule 3(2)(m) of the KVAT Rules, 2005, the deduction towards "labour and other charges" is either on actual basis or based on ad-hoc basis as prescribed by the State Government. Further as per Rule 3(2)(m) of the Karnataka Value Added Tax Rules, 2005, such amount is calculated as the rate specified in column No.3 of the Table below towards labour charges and other like charges that are incurred in execution of a works contract when such charges are not ascertainable from the books of accounts maintained by the dealer. Accordingly at Sl. No.8, fixing of sanitary fitting for plumbing, drainage and the like is fixed as 15% towards labour and like charges. Sl. No. Type of contract Labour and like charges as a percentage of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e tax in relation to works contract service shall have the option to dis-charge his service tax liability on the works contract service provided or to be provided, instead of paying service tax at the rate specified in section 66 of the Act, by paying an amount equivalent to 2 [four per cent. ] of the gross amount charged for the works contract. Explanation :- For the purposes of this rule, gross amount charged for the works contract shall not include Value Added Tax (VAT) or sales tax, as the case may be, paid on transfer of property in goods involved in the execution of the said works contract. (2) The provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the execution of works contract under this clause. 7. The Learned Counsel for the Appellant also draw our attention to the clarification issued by the Board vide Master Circular No. 96/7/2007- ST dated 23.08.2007 where to a specific question whether spare parts sold by a service station during the servicing of vehicle is liable to payment of service tax, whether exemption can be claimed on the cost of goods consumed during the course of providing service, it is clarified that service tax is not leviable on a transaction treated as sale of goods and subject to levy of Sales Tax/VAT. Whether a given transaction between the service station and the customer is a sale or not, is to be determined taking into account the real nature and materi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the execution of works contract, or (v) such amounts calculated at the rate prescribed in column (3) of the Table below, if they are actually incurred towards 'labour charges' and other like charges and are not ascertainable from the books of accounts maintained and produced by a dealer before the assessing authority." 14. The learned counsel for the appellant has challenged the fixation of the percentage on account of labour and other charges in the table under sub-cl. (v) of cl. (n) of sub-rule (4) of R. 6. The said table is applicable in cases where the amounts actually incurred towards 'labour charges and other like charges' are not ascertainable from the books of account maintained and produced by a d....