Practical Accounts And Taxation
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The assessee was involved in providing works contract service. It chosen for discharging service tax liability on the works contract service under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 which contended that the value of material supplied by the service recipient free of cost would not be included in the gross value of works contract.
As per the department the value of material supplied free should be added in the gross value of works contract for which the assessee filed an appeal in the Tribunal against the same.
The Tribunal stated that the value of goods used by the service provider or supplied by the service recipient free of cost should be included in the gross value of works contract for the purpose of service tax. Hence, the value of free material shall be included in the gross value of works contract for calculating service tax.
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