Service Tax on Works Contract
Mahesh Chand Gupta
(Querist) 14 September 2010
This query is : Resolved
Dear Sir,
The audit department of Service Tax wants specific notification/circular/any rule covering exemption of Service tax on Manyawar Shree Kashiram Ji Shahri Gareeb awas yojna circular no. 5376/9-5-08-153lk/08 dated 24.07.08. You may get access to this yojna on internet. Please provide the same for which I shall be highly obliged.Please give you mobile no. and email address so that the matter may be resolved at the earliest possible.
I am a Chartered Accountant practicing in Ghaziabad. I have a problem on Service Tax. My client got a works contract in November, 2008 under Kashiram Yojna of Uttar Pradesh Government. The houses constructed under Kashiram Yojna were distributed to poor persons without any profit. Uttar Pradesh Government gave First contract for construction of houses to different development authorities of the districts. Then development authority sub – contract the work to different contractors who constructed the houses. It was said by the development authorities that this Yojna is functioning on no profit – no loss basis and is for the benefits of the poor so no Service Tax is payable on these works contract. That’s why my client got no payment for Service Tax from the development authorities and not paid Service Tax on these contracts. Now, audit team from Service Tax Department came to my client and said that you are required to make payment of Service Tax for the payments received from development authorities under Kashiram Avaas Yojna. You are requested to provide remedial information. I shall be highly obliged.
Thanks
Yours Faithfully,
Mahesh Chand Gupta
Chartered Accountant.
email – camcg49@gmail.com, maheshjindal2009@rediffmail.com
Mobile. 9871648140, 9212566323
Mahesh Jindal And Company
Chartered Accoutnants,
B – 13, Lohia Nagar Market,
First Floor,
Ghaziabad - 201001
s.subramanian
(Expert) 15 September 2010
Normally service tax is leviable on such work contracts. If the Government chooses to exempt any such contracts from the purview of the Service TAx ACt,it has to be done by a specific G.O. and not without it. Verify if such exemption has been given. Otherwise you have no other option but to pay it.
B.R. BHALLA, ADVOCATE
(Expert) 15 September 2010
In the absence of any valid Exemption Notification from the Competent authority under the Service Tax, I am afraid your client may have to face the recovery, even if the project is on no profit/loss basis. The notification can be issued retrospectively provided the UP Government recommends for issurance of such a notification to the Central Board of Excise & Service Tax.
B.R. BHALLA, ADVOCATE
(Expert) 15 September 2010
Please read "issuance" in place of "issurance" typed in the reply.
Sumit Batra
(Expert) 16 September 2010
No exemption was specifically available to the said scheme. therefore, you are liable to pay tax.
S R agrawal
(Expert) 18 September 2010
Dear Shri Gupta,
In order to resolve your querry, First the classification of Srvice being rendered by your client has to be decided i.e. whether the Service falls in the category of 'Works Contract' or 'Construction of Residential Comlex'. In case your client is liable for W.C.T., and WCT is being deducted, then only the Service shall fall under the Category of 'Work Contract Service', otherwise it shall be clasified under 'Construction of Residential Complex Service'.
In any case since the service is Taxable and no Exemppion is there for Manyawar Shree Kashiram Ji Shahri Gareeb awas yojna, the Service Tax is payable by your client.
