Service tax

prasad (Querist) 20 May 2010 This query is : Resolved
Works contract service was introduced on 1-6-2007.A composition scheme was introduced and the rate was 2.06% till 28-2-2008.It became 4.12% from 1-3-2008.
Now, if Work executed after 1-3-2008 in respect of contract partly executed prior to 28-2-2008.Is it liable to tax at old rate of 2.06% or 4.12%.Why?

secondly, can composition benefit be claimed on advance received before 31-5-2007 for works contract to be executed after 1-6-2007?

Pls answer

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S R agrawal (Expert) 21 May 2010
Dear Prasad, You have posted ur querry in 2 parts. As regards rate of Service Tax applicable for the contract partly executed prior to 28-2-2008, it shall be chargeable @ applicable at the time of billing and payments received. If the billing has been made and payments received prior to 28.02.2008, the rate applicable would be 2.06%.

As regards benefit of composition on advances received prior to 01.06.2007, it is admissible.

soumitra basu (Expert) 31 May 2010
I agree with Mr. Agarwal. It is the date of the bill which is material for the purpose of rate of service tax but not the date of contract.

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