Applicabilit of service tax

This query is : Resolved

Nilesh Shravak (Querist)
Follow

27 May 2008 The business of a company is reading the electricity meters and give the electricity bills on the spot with a photo of meter.It is a fixed contract with state owned electricity supply division. Whether the company can charge the service tax to state owned electricity division for the services ?

Satish K Sekhar.ACCA

Satish K Sekhar.ACCA (Expert)
Follow

27 May 2008 Your case is nothing but a functional documentary contract that will lay down guidelines, terms & conditions etc within which you provide services to an entity.Your charging service tax to the electricity depends upon the contract price you have agreed while accepting the contract. If the rates are inclusive of all taxes including service taxes, then you are not entitled to charge service tax seperately over and aabove the agreed price as per the contract. If the contract provides that service tax shall be paid extra then you have the option of charging it from the electricity board. however in my expereince many governmnet orgainsations enters into such contract with clauses that stipulates the contract price inculsive of all taxes and levies and in many cases such governement orgainsations demand the contractor to submit thier bills showing the service tax component seperately on such bills, but within the contract price biforcating the service tax component and price component,in order to book in the government's books of accounts as service tax in put.

Shyam Lal Naik

Shyam Lal Naik (Expert)
Follow

28 May 2008 Your case does not seem to fall under any taxable catagory. Whether your principal is state owned or not does not make any difference.

Upgrade to CAclubindia Pro. Subscribe Now!