TAXATION CLARIFICATION, VAT + CST

[KUSUMBA MAHENDER RAO]

Sir,

balance has handling system works which involves Design,Engineering,procurement&supply of material,erection,testing and commissioning was awarded to a contractor. The above works contract has two parts viz., supply contract and service contract.

Please clarify what taxes to be applied to:

a. Supply contract

b. Service contract

Posts / Replies

[Ganeshan Kalyani]

This is a works contract service. This has been always in debate for taxing works contract service may it be under vat act or service tax. Under service tax there are case law which favours the assesses if the material portion and services are tracked properly. You can prepare service order for service portion and supply contract for material portion separately provided clear bifurcation you do and maintain record in this regard.