Wct with service tax

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Rahul Agrawal (Querist)
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18 January 2012 If WCT is applicable on a company, then how we will treat Service Tax on it..???

Will Service Tax will be applicable on it or not..????

If Service Tax applicability will be there on the company, what Rates of Service Tax will apply on such company..??

Are there any other terms and conditions regarding a company having WCT applicability and how Service Tax will be treated on that company..??

Plz. do Rply, Thanks.

Hari Wadhwa

Hari Wadhwa (Expert)
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19 January 2012 Dear Rahul

The Supreme Court of India, in its various landmark judgments has explained the difference between a normal sale and an indivisible / composite works contract;

“In a contract of sale, the main object is the transfer of Property and delivery of the possession of Chattel as a Chattel to the buyer, where it is not so, it is a contract of Works & Labour” (Hindustan Aeronautics Ltd. 55-STC 314-SC).

Further, if WCT is applicable on contract, No separate service tax or VAT need to be computed on the same.

However, if the contractor chooses to maintain proper books of accounts & opt to pay VAT on the material value & service tax on the labour & other service portion, WCT would not be applicable, even in the case of indivisible contracts.