Bhuwan Ltd. was awarded a contract for providing repair and maintenance services in respect of an immovable property for ₹3,50,000. As per the terms of contract, the material required for repair and maintenance was also

The contract entered into by Bhuwan Ltd., required the provision of both services and materials. Therefore, it falls within the scope of the term 'Works Contract' as defined under Section 65 B (54) of the Finance Act, 1994 and thus, is liable to service tax as declared service under Section 66 E (h) of Finance Act, 1994. In the given case, since the details of material value / service portion are not available, the value of the service portion in the execution of the works contract will be determined as per rule 2A(ii)(B) of the Service Tax (Determination of value) Rules, 2006. It provides that service tax shall be payable on 70% of the total amount charged for the works contract. Computation of Service Tax Liability 70% of the total amount charged 3,50,000 x 70% ₹ 2,45,000 Rate of service tax 14% Amount of service tax payable ₹ 34,300 Note: Since, the question is silent about the point of taxation and the date of contract applicable, it is assumed that point of taxation is after 31st May, 2015 and hence the rate of service tax has been assumed to be 14%. However, the point of taxation may be assumed to be the date prior to 1st June, 2015 and then the rate of service tax would be 12.36% and accordingly service tax payable would be ₹30,282