QUESTION

The assessee had a total turnover of Rs.29.12 lacs during 2015-16, out of which Rs.7.12 lacs services were provided to a unit in SEZ (totally exempt) remaining 22 lacs to other clients (all services of work contract services new) Whether the assessee is liable to pay service tax in the year 2015-16. his total turnover in the preceeding year 2014-15 was Rs.7.65 lacs, hence eligible for Rs. 10 lacs benefit during 2015-16.

ANSWER

FACT OF THE CASE:

Assessee had a total turnover of Rs.29.12 lacs during 2015-16, out of which Rs.7.12 lacs services were provided to a unit in SEZ(totally exempt) remaining 22 lacs to other clients (all services of work contract services new
Whether the assesse is liable to pay service tax in the year 2015-16.

LAW APPLICABLE:

1. Service Tax (Determination of Value) Rules, 2006

2A. Determination of value of service portion in the execution of a works contract.-

A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract:

Provided that where the gross amount charged includes the value of the land, in respect of the service provided by way of clause (8) of section 66E of the Act, service tax shall be payable on twenty five per cent. of the total amount including such gross amount;

(B) in case of other works contracts including completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings not covered under sub-clause (A), service tax shall be payable on sixty per cent. of the total amount charged for the works contract;

Explanation 1.- For the purposes of this rule,-

A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent. of the total amount charged for the works contract:

Provided that where the gross amount charged includes the value of the land, in respect of the service provided by way of clause (8) of section 66E of the Act, service tax shall be payable on twenty five per cent. of the total amount including such gross amount;

(B) in case of other works contracts including completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings not covered under sub-clause (A), service tax shall be payable on sixty per cent. of the total amount charged for the works contract;

2. Notification No. 33/2012-ST Dated 20/06/2012

3. For the purposes of determining aggregate value not exceeding ten lakh rupees, to avail exemption under this notification, in relation to taxable service provided by a goods transport agency, the payment received towards the gross amount charged by such goods transport agency under section 67 of the said Finance Act for which the person liable for paying service tax is as specified under sub-section (2) of section 68 of the said Finance Act read with Service Tax Rules, 1994, shall not be taken into account.

Explanation.- For the purposes of this notification,-

(A) 'brand name' or -------;

(B) 'aggregate value' means the sum total of value of taxable services charged in the first consecutive invoices issued during a financial year but does not include value charged in invoices issued towards such services which are exempt from whole of service tax leviable thereon under section 66B of the said Finance Act under any other notification.'

3. Notification No. 12/2013-ST Dated 01/07/2013

Regarding exemption on services provided to SEZ authorised operations

INTERPRETATION:

The gross value of service provided in the year 15-16 is Rs. 29.12 lacs. Out of which services of Rs. 7.12 is provided to SEZ which is exempted. The services of Rs. 22 lacs are provided for new construction. As per valuation rules the valuation of this service is 40% which comes to Rs. 8.8 lacs which is below the threshold limit of Rs. 10 lacs. Accordingly the same is exempted from payment of service tax.

There is no liability of service tax for the year 15-16 in the given case.

CONCLUSION:

No liability of service tax for the year 15-16. (Reply dt. 13/06/2022)