payment of service tax on maintenance & repair services

 Railwyas is doing overhauling work of diesel locomotives for  Private sector  units uner the registration on maintenanace & repair services which comes sub clause zzg of  clause 105 of finance act 1994 and providing materials to them  during the execution of work and charging them @ 10.3% as service tax on whole amount. But they are not agree to pay on gross amount because as  exemtions rule i. e.  " value of goods and material sold by the service providor to the recipient of service during the course of providing any taxable service , provided that no CENVAT credit has been taken on such goods and material, or CENVAT credit has been taken , such credit is paid before effecting the sale." 

As Railways is using materials during the course of overhauling not the selling purpose as railway has no authority to private agencies.  the question is under this circumtances the railway authority is taking service tax @ of 10.3% on gross amount is correct or material part can be excluded from the gross amount and then will  be charged service tax?


The question does not arise of payment of service tax @10.3% on whole bill amount. The sale of components will attract under VAT of the Concerned state laws & only on jobworks done amount only attracts the Service Tax @10.3%.

Other wise without taking any cenvat input can raise the bill including components & job works can be charged under the works contract or maint ,repairs may attract @ 4.12% of service Tax.

Discuss in this matter and take 2nd opnion of your superintendent of Service tax authority.





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