Service tax on Interior Designer in case of Turnkey project

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 June 2010 Mr. A is enagaged in providing services of Interior Designer.
'B' has given a contract to 'A' to design a house. B has given Rs. 10 lacs for design a house, out of which 'A' made payment for purchase of Raw Material, Labour and other necessary exps. 'B' has given Rs. 1 to 'A' as a fees for designing.
My query is as follows :
1. Whether 'A' has to pay service tax on whole amount i.e. 10 Lac + 1 lac ? under the category of Interior designer?
2. Whether 'A' has to registered under works contract scheme ?
3. Whether 'A' may claim benefit of "Pure Agent" under determination of value 2006, rule 5(2) by making an agreement ? Any implecation thereof ?

or any other suggestions

Pl reply as urgent as possible.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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10 June 2010 In this case I want share 2 Points

1.Serivice provider and receiver relationship should be exist for charging service tax,So in this case first we need to see ultimate agreement with service reciver

2. Works contract applier where the contract is indivisable as Material and Labour but as per your query clarly showing the material value and designing

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

11 June 2010 Thank You very much for your reply.

But do you have any specific agreement for pure agent.
Suppose we go for 'pure agent' by making agreement. It is best option available rather then go for work contract ?

Whether it is possible that Dept may take view that this all expenditure you have incurred is nothing but to give service effectively and all are reimbursed by the client so you have to pay service tax on all the amount fees + reimbursement ?

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annapurna

annapurna (Expert)
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15 June 2010 The deductions from gross amount will not be available for payments to sub consultants, associate consultants/ workers engaged by the interior decorator for rendering specified services, payment to secretarial staff engaged for the above purpose, office administration expenses like rent, electricity charges, telephone charges, fax charges, postage, etc. The total fee will form part of the gross amount to be chargeable to service tax. In the total amount the deductions can be availed for the material used in such contract as per Notification 12/2003.