The document discusses the implications of service tax and value added tax (VAT) on works contracts in India. It provides definitions and historical background on works contracts and the relevant tax laws. There are several options for calculating tax liability on works contracts, including itemized deductions, standard deductions, and composition schemes. Composition schemes allow taxpayers to pay a lower tax rate as an alternative to precisely computing taxes. The objective is to simplify tax calculation and reduce inconveniences for both taxpayers and tax authorities.
This ppt is a comprehensive presentation on various aspects for the entities working in the construction domain. Starting from Tendering to Budgeting and going on to indirect tax aspects like VAT and service Tax.
This presentations discusses the finer aspects of how VAT was being levied on Works contract. And the controversies related to the judgement of Gannon Dunkerly, options available for deductions under VAT for composite contracts
This ppt is a comprehensive presentation on various aspects for the entities working in the construction domain. Starting from Tendering to Budgeting and going on to indirect tax aspects like VAT and service Tax.
This presentations discusses the finer aspects of how VAT was being levied on Works contract. And the controversies related to the judgement of Gannon Dunkerly, options available for deductions under VAT for composite contracts
This is a presentation highlighting the intricacies involoved in work contract. A work contract is though a single contract for material and labour but invites the levy of service tax, sales tax, tds and above that reverse charge mechanism. Though a bit complicated yet intresting
Section 65(105)(zzzh) provides for a levy of service tax on services in relation to ‘construction of complex’ and an explanation was added by Finance Act, 2010.
Supreme Court Judgement - L&T / K Raheja (VAT on Builders)sandesh mundra
This presentation takes one through the details of recent Supreme Court Judgement in the case of Larsen & Toubro, which was a review of K Raheja Judgement. The judgement has a severe impact on the tax aspects of builders and real estate developers. It redefines the definition of works contract and levy of VAT on sale of flats and commercial premises
This is a presentation highlighting the intricacies involoved in work contract. A work contract is though a single contract for material and labour but invites the levy of service tax, sales tax, tds and above that reverse charge mechanism. Though a bit complicated yet intresting
Section 65(105)(zzzh) provides for a levy of service tax on services in relation to ‘construction of complex’ and an explanation was added by Finance Act, 2010.
Supreme Court Judgement - L&T / K Raheja (VAT on Builders)sandesh mundra
This presentation takes one through the details of recent Supreme Court Judgement in the case of Larsen & Toubro, which was a review of K Raheja Judgement. The judgement has a severe impact on the tax aspects of builders and real estate developers. It redefines the definition of works contract and levy of VAT on sale of flats and commercial premises
Case Laws on Construction and Works contractsandesh mundra
A compilation of various Judgments of Service Tax and VAT on relevant issues in works contract and construction sector is made. Stands of High court is highlighted on complex issues arising in Constructions and taxation of works contract. A brief description of matter, appellant and petitioner's contemplation and order passed by authorities is also included to add more value.
This judgement takes one through the judgement of Kone Elevators in great detail. Various contentions, arguments and the final verdict of the court have been adequately covered in this judgement.
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The following presentation enumerates the taxing structure for real estate transactions and gst rates along with a comparison of the previous tax structure with the present structure under GST. it also discusses service tax on work contracts, service tax on renting, credit linked subsidy scheme, valuation of taxable supply, input tax credit, exemptions for builders, housing society.
Similar to Implications of Service Tax & Value Added Tax on Works Contract (20)
A compendium of periodical compliances under various legislations, taxation rates applicable in FY 2012-13 and a glance of the previous year's corporate updates.
Implications of Service Tax & Value Added Tax on Works Contract
1. Articles
Nitesh Agarwal*, ACS Vinay Kumar Joshi*, ACS
Partner, RANJ & Associates Hyderabad.
Company Secretaries
Hyderabad.
consultranj@gmail.com
Implications of Service
Tax & Value Added Tax on
Works Contract
The practice of `works contract' is widely prevalent for
executing construction/erection works. Indirect taxation of works
contracts has been a very complex area giving rise to
considerable litigation. Sales tax /VAT and service tax aspects
relating to works contract have been closely analysed here.
PROLOGUE
n India, tax on sale of goods is levied by the States as
I sales tax / VAT whereas tax on rendering of services is
levied by the Central Government in the form of service
tax. Sometimes, there may arise a situation where a
particular work accomplished on behalf of contractee
involves both transfer of the moveable property as well
as rendering of service, such as construction of
buildings, laying down of pipelines, erection of plant
and machinery, etc.
There would be no intricacy in determining the VAT and
service tax liability, if, in such kind of contracts, the material
and service portion are easily divisible. Quandary arises when
the work cannot be vivisected into material and labour
segments. Thus, indirect taxation of works contracts has been
a complex area both under the truculent world of State VAT
and Finance Act.
WHAT IS WORKS CONTRACT?
Works contract involves both, supply of goods and rendering
* The information presented and opinions expressed herein are those of the
authors and do not necessarily represent the views of RANJ & Associates,
Company Secretaries.
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2. Articles
Implications of Service Tax & Value Added Tax on Works Contract
of services. In a normal sale there is a transfer of property in
definite or ascertained goods and such goods remain same In the year 1982 Parliament passed
before and after their delivery. However, in works contracts, the 46th Amendment amending the
goods, before delivery and after the execution of works
contracts are disparate and may differ in form as well. For
Constitution in order to bring many
example, at the site of construction of a building, before the of the transactions, in which
construction commences, the goods like cement, steel, sand property in goods passed but were
etc. are lying but after the construction a building (immovable
goods) comes to an existence. This is the distinction between
not considered as sales for the
a "normal sale" and a "deemed sale". The basic principles purpose of levy of sales tax, within
establishing a works contract are: the scope of the powers of the
u Goods must be involved in the execution of the works
u Property in goods must pass during the execution of works
states to levy sales tax.
not before or after the execution of works
u Some work has to be done on the property of the APPLICABLE LAWS
contractee by the contractor
u There must be dominant intention to effect the transfer of Following is the extract of relevant provisions of tax laws
property in goods in execution of works contract, passing applicable to works contracts:
of the property in goods must not be only incidental to the Value Added Tax under relevant state VAT Act
contract. The power of the States to levy VAT on sales and
purchases of goods is to be found only in Entry 54 of List
TAX ON WORKS CONTRACT : II of Schedule VII of the Constitution of India. VAT is
HISTORICAL BACKGROUND calculated and paid on the material portion of the works
contract.
Madras was the first State which attempted to bring within its For the purpose of our discussion we take the following
tax grid transactions of works contract by amending the definitions under the Andhra Pradesh Value Added Tax
terms- 'goods', 'sale' and 'turnover' in the Madras General Act, 2005: As per Section 2 (34) (b) of the said Act 'Tax'
Sales Tax Act, 1939. The expression 'sale' was amended so means a tax on the sale or purchase of goods payable
as to bring within its ambit transfer of property in goods under the Act and includes a tax on the transfer of
involved in the execution of works contract. The term 'goods' property in goods whether as goods or in some other form
was also amended so as to include materials used in involved in the execution of a works contract." Therefore,
construction, fitting out, improvements etc. section 2(34)(b) is the charging section whereby the
The question as to whether the cost of the goods supplied APVAT Act was made applicable to works contracts.
by a building contractor in the course of construction of As per section 2 (45) of Andhra Pradesh Value Added Tax
building could be subjected to payment of sales tax was finally Act, 2005 'Works Contract' includes any agreement for
resolved by the Supreme Court in State of Madras v. Gannon carrying out for cash or for deferred payment or for any
Dunkerley and Co. (Madras) Ltd.1958 AIR 560, 1959 SCR other valuable consideration, the building construction,
379 where it was held that in a building contract which was manufacture, processing, fabrication, erection,
one, entire and indivisible, there was no sale of goods and installation, laying, fitting out, improvement, modification,
hence, levy of sales would not arise. repair or commissioning of any movable or immovable
Aftermath of the above judgements was a bundle of property.
problems and also complaints from various States that there
was a large scale leakage of sales tax revenue by the Service Tax under Finance Act, 1994
adoption of devices such as hire purchase system. This Service Tax is primarily a tax on services rendered by one
lacuna was referred to the Law Commission of India and it person to another. Service tax is computed on the service
was decided to levy sales tax on transactions of the nature part of the works contract.
mentioned above. Consequently, in the year 1982 Parliament
passed the 46th Amendment amending the Constitution in Section 65(105) (zzzza)
order to bring many of the transactions, in which property in ``Taxable services means services provided or to be provided
goods passed but were not considered as sales for the to any person, by any other person in relation to the
purpose of levy of sales tax, within the scope of the powers of execution of a works contract, excluding works contract in
the states to levy sales tax. respect of roads, airports, railways, transport terminals,
bridges, tunnels and dams."
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3. Articles
Implications of Service Tax & Value Added Tax on Works Contract
Explanation: For the purposes of this sub-clause, "works
contract" means a contract wherein,-
(i) transfer of property in goods involved in the
execution of such contract is leviable to tax as sale
of goods, and
(ii) such contract is for the purposes of carrying out-
(a) erection, commissioning or installation of plant,
machinery, equipment or structures, whether pre-
fabricated or otherwise, installation of electrical and
electronic devices, plumbing, drain laying or other
installations for transport of fluids, heating,
ventilation or airconditioning including related pipe
work, duct work and sheet metal work, thermal
insulation, sound insulation, fire proofing or
waterproofing, lift and escalator, fire escape
staircases or elevators; or
(b) construction of a new building or a civil structure or
a part thereof, or of a pipeline or conduit, primarily
for the purposes of commerce or industry; or
(c) construction of a new residential complex or a part
thereof; or
(d) completion and finishing services, repair, alteration,
renovation or restoration of, or similar services, in
relation to (b) and (c); or the case may be, paid, if any, on transfer of property
(e) turnkey projects including engineering, procurement in goods involved in the execution of the said works
and construction or commissioning (EPC) projects; contract;
(ii) Value of works contract service shall include,-
This is the charging section whereby the works contracts (iii) labour charges for execution of the works;
were brought within the service tax net. (iv) amount paid to a sub-contractor for labour and
services;
DETERMINATION OF VALUE IN (v) charges for planning, designing and architect's fees;
EXECUTION OF WORKS CONTRACT (vi) charges for obtaining on hire or otherwise,
machinery and tools used for the execution of the
It is straightforward to determine the taxable value under works contract;
normal sale but computation of value under works contract (vii) cost of consumables such as water, electricity, fuel,
involves hardship. To negate this, a clarification was provided used in the execution of the works contract;
in Service Tax (Determination of Value) Rules 2006, which (viii) cost of establishment of the contractor relatable to
reads as follows: supply of labour and services;
(ix) other similar expenses relatable to supply of labour
Rule 2A of Service Tax (Determination of Value) Rules 2006- and services; and
Subject to the provisions of section 67, the value of taxable (x) profit earned by the service provider relatable to
service in relation to services involved in the execution of a supply of labour and services;
works contract (hereinafter referred to as works contract (ii) Where Value Added Tax or sales tax, as the case may be,
service), referred to in sub-clause (zzzza) of clause (105) of has been paid on the actual value of transfer of property
section 65 of the Act, shall be determined by the service in goods involved in the execution of the works contract,
provider in the following manner:- then such value adopted for the purposes of payment of
(i) Value of works contract service determined shall be Value Added Tax or sales tax, as the case may be, shall
equivalent to the gross amount charged for the works be taken as the value of transfer of property in goods
contract less the value of transfer of property in goods involved in the execution of the said works contract for
involved in the execution of the said works contract. determining the value of works contract service under
clause (i).
Explanation: For the purposes of this rule-
(i) Gross amount charged for the works contract shall
not include Value Added Tax (VAT) or sales tax, as
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4. Articles
Implications of Service Tax & Value Added Tax on Works Contract
Rule 17(1)(e) Andhra Pradesh VAT Rules, 2005 Itemized Deduction
Following amounts are allowed as deductions from the total This is the normal method of calculating the tax liability,
consideration received or receivable for arriving at the value of whereby the assessee has to maintain detailed record of
the goods used in execution of works contract, at the time of all the purchases and expenses which are eligible as
incorporation- deductions under the works contract. On the basis of the
documents related to material absorbed in a WC an
(i) Labour charges for execution of the works; assesee may pay the VAT and on the balancing figure the
(ii) Charges for planning, designing and architect's fees; service tax liability can be discharged.
(iii) Charges for obtaining on hire or otherwise machinery and
tools used for the execution of the works contract; Standard Deduction
(iv) Cost of consumables such as water, electricity, fuel, etc., As the name suggests, under this method of computation
used in the execution of the works contract, the property of tax liability of a works contract, a specified or standard
in which is not transferred in the course of execution of a percentage of total contract value is allowed as a
works contract; deduction. Such percentage is fixed by the government
(v) Cost of establishment of the contractor to the extent it is depending upon the service component involved in
relatable to supply of labour and services; contracts on a general basis. A standard deduction may
(vi) Other similar expenses relatable to supply of labour and be opted by the Assesee in case the works contract is
services; indivisible in nature and maintenance of detailed records
(vii) Profit earned by the contractor to the extent it is relatable of allowable deductions is intricate. Taxpayers have to
to supply of labour and services; choose between using standard deduction or itemized
(viii) amounts paid to a sub contractor as consideration for the deduction, they cannot use both in a same tax year.
execution of works contract whether wholly or partly;
COMPOSITION SCHEME
Provided that, the contractor VAT dealer shall arrive at the The composition scheme is a scheme whereby the
value of goods at the time of incorporation, tax rate wise, from assessee is given an option to pay the tax at a lower rate
out of the taxable turnover arrived at as above, on prorata in the cases where computing the actual price of the
basis taking the ratio of value of goods liable to tax at different service rendered or goods sold is an uphill task. It is an
rates against the total value of purchases relating to such alternative to method of computing tax liability. The
contract.
Provided further that, subject to the filing of returns and
payment of tax as per clause (d), the VAT dealer shall pay the
balance amount of tax arrived at by following this clause at the
time of finalization of accounts relating to the particular work.
Such additional taxable turnover and taxes payable shall be
declared in the return for the month in which accounts are
finalized.
Therefore, these rules were brought forward in order to aid the
assesee in determining the exact cost of material involved and
service rendered in a works contract, so as to compute and
discharge their liability in relation to VAT & Service Tax Liability
under works contract.
VALUATION OPTIONS AVAILABLE
FOR WORKS CONTRACT
There are various options available to an assessee to
calculate his tax liability in respect to the works contract
undersigned by him. The options are explained as follows:
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5. Articles
Implications of Service Tax & Value Added Tax on Works Contract
Scheme of composition is a mechanism provided to
collect the tax. The objective of such a mechanism is to The Scheme of composition is a
minimize the inconvenience caused to the assessees and
also to the department in computing the figures. It is mechanism provided to collect the
prevalent under the VAT laws of almost all the states at the tax. The objective of such a
same time the scheme is also offered under the service mechanism is to minimize the
tax laws. In order to relieve some businesses of the need
to keep detailed records, the law makes provision for a
inconvenience caused to the
simpler method of accounting for Service Tax and VAT. assessees and also to the
Such a method is called a composition scheme and is department in computing the
available for assessees under the following: figures. It is prevalent under the
Service Tax VAT laws of almost all the states at
Rule 3 of Works Contract (Composition Scheme the same time the scheme is also
for Payment of Service Tax) Rules, 2007 offered under the service tax laws.
``Notwithstanding anything contained in section 67 of
the Act and rule 2A of the Service (Determination of
Value) Rules, 2006, the person liable to pay service Treatment of works contracts (other than for
tax in relation to works contract service shall have the State Government or Local Authority) under
option to discharge his service tax liability on the composition
works contract service provided or to be provided, (a) Any VAT dealer who executes a contract and opts
instead of paying service tax at the rate specified in to pay tax as specified in clause (c) of sub-section
section 66 of the Act, by paying an amount equivalent (7) of Section 4 must register himself as a VAT
to 4 (Four) per cent of the gross amount charged for dealer;
the works contract." (b) The VAT dealer mentioned in clause (a) above
shall pay tax at the rate of four percent (4%) of the
Rule 17 (3) of Andhra Pradesh VAT Rules, 2005 total consideration received or receivable
whichever is earlier.
Rule 17 (4) of Andhra Pradesh VAT Rules, 2005
The Treatment of Apartment Builders and
Developers under composition-
(a) Where a dealer executes a contract for
construction and selling of residential
apartments, houses, buildings or commercial
complexes and opts to pay tax by way of
composition under clause (d) of sub section (7) of
Section 4, he must register himself as a VAT
dealer;
(b) The VAT dealer shall have to pay tax by way of
composition at the rate of four percent (4%) on
twenty five percent (25%) of the total
consideration received or receivable towards cost
of land as well as construction or the market
value fixed for the purposes of stamp duty,
whichever is higher and the balance seventy five
percent (75%) of the total consideration received
or receivable shall be allowed as deduction for the
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6. Articles
Implications of Service Tax & Value Added Tax on Works Contract
purpose of computation of taxable turnover; Comparative Analysis of Tax
whereas 1% is required to be paid on total Liability under each of the three
consideration received or receivable in case of
TOT dealers after the deduction mentioned in Schemes
Rule 17 (5) (b) of APVAT Rules, 2005.
Analysis - I
ADVANTAGES AND DISADVANTAGES Particulars Normal Standard Deduction Composition
OF COMPOSITION SCHEME Scheme Scheme Scheme
Advantages VAT CALCULATION
u It simplifies the calculation of tax liability of a dealer Total Value of
works contract Rs. 35,00,000/- Rs. 35,00,000/- Rs. 35,00,000/-
u It saves a lot of labour and effort in keeping records
u It's not been mandated by the law, hence optional to Value of material
portion transferred
Rs. 24,00,000/-
[6 lacs @ 4% and
Rs. 24,50,000/-
[Let say, 70% of the N.A.
adopt under the contract 18 lacs @ 14.5%] contract value]
u Generally a very small amount of tax is payable under Net amount Rs. 8,75,000/-
this scheme chargeable to
VAT
Rs. 24,00,000/- Rs. 24,50,000/- [25% of total
consideration]
u There will be a simple return form to cover longer
return period VAT % 4% and 14.50% 4% and 14.50%
Disadvantages respectively respectively 4%
u Under this scheme the dealer is not able to claim Total Output VAT Rs. 2,85,000/-
[6,00,000 X 4%
Rs. 2,89,100/-
[6,30,000 X 4%
input tax credit on purchases made by him = 24,000/- = 25,200/- Rs. 35,000/-
Dealer will not be able to issue tax invoices to its 18,00,000 X14.50% 18,20,000 X14.50%
u
= 2,61,000/-] = 2,63,900/-]
customers. Special provisions for claim of set off and Less: Total Input Rs. 2,37,500/- Rs. 2,37,500/-
tax invoice would apply VAT [5,00,000 X 4% [5,00,000 X 4%
u Purchaser shall not get any tax credit for the = 20,000/-
15,00,000 X14.50%
= 20,000/-
15,00,000 X14.50%
N.A
purchases made by him from the dealer operating = 2,17,500/-] = 2,17,500/-]
under composition scheme Net VAT Payable Rs. 47,500/- Rs. 51,600/- Rs. 35,000/-
SERVICE TAX CALCULATION
COMPARATIVE ANALYSIS Value of service Rs.10,50,000/-
portion under the Rs. 11,00,000/- [30% of the contract] -
It might be a predicament for an assessee to opt the best of contract
the above schemes which keeps its tax liability bare minimum. Net amount Rs. 34,65,000/-
To chalk out the finest alternative, let us take the following chargeable to
Service Tax
Rs. 11,00,000/- Rs.10,50,000/- [35,00,000-35,000]
example and calculate the tax liability under the various
schemes provided by the statute: Service Tax % 10.30% 10.30% 4%
Total Output Rs. 1,13,300/- Rs. 1,08,150/- Rs. 1,38,600/-
w Total consideration agreed between the contractor Service Tax
and the contractee for the works contract in relation to Less:
Total Input
Rs. 25,750/-
[2,50,000 X 10.30%]
Rs. 25,750/-
[2,50,000 X 10.30%]
Rs. 25,750/-
[2,50,000 X 10.30%]
installation of electrical devices is Rs. 35 lacs. Service Tax
w Total purchases amounts to Rs. 5,20,000/- Net Service Rs. 87,550/- Rs. 82,400/- Rs. 1,12,850/-
(Inclusive of 4% VAT) Tax Payable
w Total purchases amounts to Rs. 17,17,500/- Total Tax Rs. 1,35,050/- Rs. 1,34,000 Rs. 1,47,850/-
(Inclusive of 14.50% VAT) Payable
w Total input services received from consultancy firm (VAT + ST) [47,500+87,550] [51,600+82,400] [35,000 + 1,12,850]
amounts to Rs. 2,75,750/-
(Inclusive of 10.30% service tax)
w Labour charges for execution of the works In the above hypothetical case, an assessee may opt for the
Rs. 5,00,000/- standard deduction scheme since it portrays the lowest tax
w Market value fixed for the contract amounts to liability. However, the composition scheme may not be
Rs. 39,00,000/- beneficial in all the cases. The fraction of service involved in
the works contract will affect the cost benefit ratio. Hence,
following table may be helpful in calculating the cost benefit
ratio in the various possible cases of works contract:
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2012 CHARTERED SECRETARY 190 ( A -83 )
7. Articles
Implications of Service Tax & Value Added Tax on Works Contract
Analysis - II State of Punjab and Anr. v. Associated Hotels of India Ltd
Material Service Service Tax Service Tax Cost-benefit
1967 20 STC 1 P H: Associated Hotels of India Ltd (AHIL)
fraction fraction liability under liability under (in Rs) owns a chain of hotels, one of the main lines of its business
(in Rs) (in Rs) Normal
method
composition
method
(c-d) activity is to provide residential accommodation and their tariff
(in Rs) (in Rs) for the persons staying in their hotels is an inclusive one for
(a) (b) (c) (d) (e) lodging as well as three principal meals, viz. breakfast, lunch
10 90 9.27 4.00 5.27 and dinner. the petitioners had been filing the returns of the
20 80 8.24 4.00 4.24 turnover under the Act and the Assessing Authority under the
30 70 7.21 4.00 3.21 Act had been treating the service of meals to residents in the
40 60 6.18 4.00 2.18
50 50 5.15 4.00 1.15 hotels as sale of foodstuffs but in their overall charges made
60 40 4.12 4.00 0.12 from the guests had allowed 75 per cent, rebate on a notional
70 30 3.09 4.00 0.81 basis on account of rent of the premises, amenities provided
80 20 2.06 4.00 (1.94)
90 10 1.03 4.00 (2.97) etc. Objecting to the levy of the tax on the so-called sale of
food the company made an application to the Excise and
Taxation Officer, Simla and the plea was turned down. In a writ
From the above table we can roughly say that if the element petition, the Single Judge of High Court opined that the
of service is more than 20% in Works Contract, it will be essential ingredients of a sale as defined in Section 2(h) of the
cost beneficial to opt for Composition Scheme. However, at Act are that there should be an agreement between the
the same time we have to consider the other influencing parties for transferring the title in the goods, that it must be
factors too. supported by money consideration and that in consequence
of the transaction property must pass in the goods to the
NOTABLE JUDICIAL vendee.
PRONOUNCEMENTS The court noted the following facts of the instant case:
Whether a construction contract also involving (i) that there is no splitting up of the charge made
engineering / commissioning be vivisected and from a resident in a hotel,
proportionately charged to Service tax (ii) that a guest in a hotel is not only entitled but is
specifically debarred from claiming any reduction
Daelim Industrial Co. v. CCE 2003 (89) ECC 140, 2003 (155) in his bill if he does not take food in the hotel,
ELT 457 Tri Del: Indian Oil Corporation Ltd. awarded a (iii) the guests to whom the meals are served cannot
contract on a lump sum basis to Daelim Industrial Co. Ltd. under the agreement take away the food for later
(DICL) for construction of a diesel hydro-desulphurisation consumption or giving it away to someone else and
plant so as to reduce the sulphur content in diesel. A show- (iv) he has no right to reject the food.
cause notice was issued by the Additional Commissioner, On these facts the court's view was that no sale of food
Central Excise, Vadodara holding that DICL was liable to pay takes place appears to be unexceptionable and fully
service tax on residual process design and detailed supported by authorities.
engineering, "commissioning of plant" applicable to
"consulting engineers" which was also seconded by the EPILOGUE
Commissioner (Appeals). Moving to the Apex Court, DICL
contented that their contract was a works contract and Taxation of works contract has always posed problems for both,
design, drawing in question (which was less than 7 of the the taxpayers and the administration. Factors such as
total cost of the deal) was incidental to the execution of the percentage of service involved, terms of payment, amount of
works contract and it is not amenable to vivisect the contract CENVAT available, nature and scope of the contract, etc., need
to be split into individual components for levy of service tax. to be strategically considered and various options be weighed to
The Supreme Court, on a close examination of the terms enable the assessee keeping a tab on his tax liability. This
of the contract and on what has been stated above, procedure must be exercised prior to evaluation of tax liabilities in
concluded that the said contract was a works contract on respect of the said works contract and the option so implemented
turnkey basis and not a consultancy contract. Setting shall be applicable for the entire works contract and shall not be
aside the impugned orders, the SC directed the withdrawn until the accomplishment of the said works contract.
Department to return the amounts so far paid by the Therefore, if structured carefully, the options available to compute
appellants, without any delay. tax liability could be a boon for the works contractor. J
Whether serving of meals to the 'resident' visitors of
a Hotel considered to be sale of the food to them?
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