Repairs to homes are taxable

CHATROOM/ Tax must be paid on the gross amount, including material used and services rendered

We manufacture construction chemicals (company's turnover is below Rs1cr/year); on the material (water proofing chemicals etc.) sold we charge VAT from the client and the returns are duly filed.

Now we wish to provide application services of our product, eg. mixing chemical with cement and applying the same on the leaked terrace of society. Now how should we bill the client? We provide no other service (hence below Rs 4 lakh). Can we show separate bills for product and application (on which we pay no service tax as it is below Rs 4 lakh)?

Any service of repair provided to a residential complex (comprising more than 12 residential blocks) is a taxable service, as per Section 65 (30a) and 65 (91a) of the Finance Act, 1994.

When you render such a service, any material that you supply is a cost incurred by you on your own account and so, the entire value of the service, i.e., the gross amount charged, including the cost of materials supplied, is to be reckoned for computing your turnover and payment of tax, as per Section 67 of the Finance Act, 1994, read with Service TaX (Determination of Value) Rules, 2006.

You may avail abatement of 67 per cent (notification no 1/2006-ST dated 1.3.2006). Then, you may show the gross value received for the composite service rendered, the abatement of 67 per cent and taxable value at 33 per cent of gross value and service tax at 12.24 per cent of taxable value in your invoice.

We manufacture and sell 100 per cent cotton terry towel and fabric in the domestic market under Exemption Notification No.30 /2004 dt. 9.7.2004 and do not pay excise duty. We also sell against Annexure I, CT-1, CT-2 and CT-3 without excise duty but avail Cenvat credit of excise duty paid on input and service tax on input services. We export under duty drawback (DBK) all industry rate (AIR) of 5 per cent or under DEPB scheme. We procure 100 per cent cotton yarn from different spinning mills on excise duty payment as also without excise duty payment (under Notification 30/2004) but always get dyes and chemicals on payment of 16.32 per cent excise duty. It is very difficult to keep raw material separately for exempted goods and where we have availed duty drawback.

We can not make use of clause (b) of sub rule (3) of Rule 6 as the excise duty on our product is only 4.08 per cent and if we pay 10 per cent cost of exempted goods, then it is much more than duty applicable. What is a simple method to get refund on excise duty and service tax paid on various inputs as well as capital goods and spares as we can not utilise the credit balance lying with us? How to keep separate records and inventory as input received under one invoice is used for exempted goods and for dutiable goods like export under DEPB, Annexure I, CT-1, 2 & 3. Should we export under DBK or DEPB scheme? Can we fulfill our export obligation against EPCG license on sale against Annexure I, CT1, 2 and 3 also?

You can start clearances for exports on payment of duty under claim of rebate of such duty under Rule 18 of Central Excise Rules, 2002. Secondly, you may shun CT3 and pay duty on your clearances to EOU on duty payment and claim refund of terminal excise duty, in terms of Para 8.4.2 of Foreign Trade Policy.

Your DBK-customs allocation claims under AIR or your DEPB claims will not be prejudiced by whether you get your inputs duty free. They will be prejudiced only if you get them against Annexure 1 under Rule 19 (2) of Central Excise Rules, 2002. You may opt for DBK or DEPB depending on whichever scheme gives you more money after deducting the transaction costs. Deemed exports (detailed in Para 8.2 of Foreign Trade Policy) and physical exports can discharge export obligation against EPCG license and not other clearances.

Regarding maintaining records, I suggest you may approach a suitable consultant who can study your systems and advise.

I am working with a private company as advisor on a retainership. It is a regular 5 days a week job. It is the only job I have taken up after my superannuation. Please advise if I am required to pay service tax.

As you are not hired as an employee, you are rendering service as an independent entity. Now, if you are rendering any taxable service such as management consultancy, consulting engineer service, management, maintenance or repair service, public relations service, scientific or technical consultancy service, technical inspection and certification service etc., you will have to take registration if you draw more than Rs 3 lakh per year and pay service tax when your aggregate remuneration crosses Rs 4 lakh an year.

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