Service Tax applicable on Errection or Commission of plant, Service Tax

[Vivek anandhan]

Dear Experts

We are the service provider of errection or commission of plant/machinerry. It is composit service involved electrical items as well as manpower. We are not availing input credit for items used for errection or commission.

Above service providing through contractor. 100% of work done through contractor. Contractor billing on us separtly for service and material. We are raising service invoice on our Customer with small margin. Whether we have to calculate service tax on entire value(composit value) or any abatment available for exclude material cost.

Kindly clarify

Posts / Replies

[KASTURI SETHI]

SH.VIVEK ANANDHAN JI,

From your query ((100% through Contractor and manner of raising invoice), it appears that manpower is under the supervision and control of Contractor. So as per definition of 'Manpower Recruitment or Supply Agency Services' manpower has not been supplied. The whole liability of discharging ST is on contractor. NO RCM. No abatement in respect of this service.

Secondly, If your service is provided with material, then it would fall under the category of 'Works Contract Service' and you will be entitled for abatement of 60% from the gross receipt under Notification No.24/12-ST dated 6.6.12 effective from 1.7.12. (Rule 2 A of Service Tax (Determination of Value Rules), 2006. Pure labour cannot be classified under WCS.

 

 

[KASTURI SETHI]

If service is provided without material, it would fall under the erstwhile category of, "Erection, Commissioning or Installation Services" and no abatement is admissible.

[Ganeshan Kalyani]

Sir I agree with the views of Sri Kasturi sir.

[Vivek anandhan]

Sir,

Thank you for your clarification

It is clear that we can collect ST on 40% of contract value as per the notification 24/12-ST dt.06.06.2012.

Requested you to confirm that this is effectiv notification, since this notification is not reflected in the effective notification list in TMI.

[KASTURI SETHI]

Sh.Vivek Anandhan Ji,

Notification No.24/12-ST dated :- 6.6.12 is in force.Rate of abatement for original works has been same since it inception. Highlighted portion is relevant for you.