Service tax on non-composite scheme

This query is : Resolved

GOPALA KRISHNA (Querist)
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22 August 2009 We are executing turnkey projects for construction, installation and commissioning of 33KV lines and installation of equipment. The Electricity Board has awarded contract by dividing into two portion, one is for supply portion and second one is for Erection portion. As per service tax law, the supply portion will not attract service tax and erection portion attracts service tax @10.30%. But in Erection portion there is an activity for construction of Sub-stations which the value is included material cost and labour cost.

Now, kindly clarify:
1. Can we avail 33% abatement for erection portion.
2. can we avail composite rate of tax i.e. @4.12%
3. what is the rate of tax to discharge service tax liability on the above contract.

Sanjeev Kumar

Sanjeev Kumar (Expert)
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24 August 2009 on the basis facts delivered by you, Supply portions are NOT liable for Ser. Tax but liable for VAT/CST, as the case may be. point wise clarification as under:-

1. YES, you can claim abatement under service tax and pay full rate of tax but noted you can't claim CENVAT;
2. YES, you can adopt composition shceme without CENVAT;
3. 10.30% or 4%, as the case may be.