Service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

30 January 2013 A private firm engaged in undertaking annual service and maintenance contracts ( civil repairs,white washing, painting etc) and duly registered for payment of service tax and paying service tax regularly for the last five years have been told recently by the Service Tax authorities to pay service tax arrears for the last five years taking into account the cost of Paint and other materials ie., 100 per cent cost. So far they were paying service tax only on 40 per cent of the bill presuming that tax is not payable on the cost of materials.
Is the claim of Department legitimate?

CA Harish Suwalka

CA Harish Suwalka (Expert)
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30 January 2013 if all those materials were used in providing services than, Dept. is correct in adding that in service value..
were they taking benefit of any notification till now, or just paying tax on .40 by their own mind ?