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Works Contact Services

Service Tax - Declared Services - 08 - Chapter 8 Effective date: 1.7.2012 Scope of Declared Service - Section 66E (h) Service portion in the execution of a Works Contract. Meanings and Definitions: Section 65B (54) - "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitt .....

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Sanchar Nigam Limited vs Union of India 2006 (3) TMI 1 - Supreme court. The relevant paras 42 and 43 of the said judgement are reproduced below: 42.Of all the different kinds of composite transactions the drafters of the 46th Amendment chose three specific situations, a works contract, a hire purchase contract and a catering contract to bring within the fiction of a deemed sale. Of these three, the first and third involve a kind of service and sale at the same time. Apart from these two cases, .....

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can it be said that there is a sale of goods when a doctor writes out and hands over a prescription or a lawyer drafts a document and delivers it to his/her client? Strictly speaking with the payment of fees, consideration does pass from the patient or client to the doctor or lawyer for the documents in both cases. 43. The reason why these services do not involve a sale for the purposes of Entry 54 of List II is, as we see it, for reasons ultimately attributable to the principles enunciated in .....

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ontinues to be - did the parties have in mind or intend separate rights arising out of the sale of goods. If there was no such intention there is no sale even if the contract could be disintegrated. The test for deciding whether a contract falls into one category or the other is to as what is the substance of the contract. We will, for the want of a better phrase, call this the dominant nature test. The following principles emerge from the said judgment for ascertaining the taxability of Composi .....

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arate rights arise out of the constituent contract of sale and contract of service. If no then such transaction is a composite transaction even if the contracts could be disintegrated. • The nature of a composite transaction, except in case of two exceptions carved out by the Constitution, would be determined by the element which determines the dominant nature of the transaction. -If the dominant nature of such a transaction is sale of goods or immovable property then such transaction would .....

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is also clear that in pure sale contract, there cannot be levy of service tax and in indivisible contracts i.e. works contracts, Central Government can levy service tax on labour/ skill portion of the contract. • In case of works contracts and service wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the service the dominant nature test does not apply and service portion is taxable as a servic .....

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mmovable property or transaction in money or an actionable claim. Clarification by the Board (Taxation Guide - Guidance Note - 8 - Exemptions dated 20.06.2012) 6.8.1 Would labour contracts in relation to a building or structure be treated as a works contract? No. Labour Contracts do not fall in the definition of works contract. It is necessary that there should be transfer of property in goods involved in the execution of such contract which is leviable to tax as sale of goods. Pure labour contr .....

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