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Paying VAT on 80% and Service Tax on 20% of Works Contract Value Complies with Rule 2A: CESTAT in Otis Elevator Case

Update / Judgement Date

21 Apr 2025

Source

Taxscan

Author

Team — WCP Legal Desk

Reading Time

1 min read

Excise, VAT & Custom

CESTAT (Customs, Excise, and Service Tax Appellate Tribunal) ruled that paying VAT on 80% and service tax on 20% of the works contract value complies with Rule 2A in the Otis Elevator case. Rule 2A provides a mechanism for determining the value of services in a works contract involving both goods and services. The tribunal's decision offers clarity on the appropriate apportionment for tax liability in such composite contracts under the erstwhile tax regime.