Government of India
Ministry of Finance
Department of Revenue
(Central Board of Excise & Customs)
Circular No. 147/16/2011 – Service Tax
New Delhi, 21st October 2011
To
Chief Commissioners of Central Excise & Customs (All)
Chief Commissioners of Central Excise (All)
Director General of Central Excise Intelligence
Director General of Audit & DGST
Commissioners of Service Tax (All)
Madam/Sir
Subject: Commercial construction/infrastructure
development projects of road, airports, dams, tunnels etc, – levy of service tax
on various service providers engaged / associated with such construction work –
regarding;
Reference is invited to the
Circular No. 138/07/2011 – Service Tax dated
06.05.2011 wherein it was clarified that the services provided by the
subcontractors / consultants and other service providers to the Works Contract
Service (WCS) provider in respect of construction of Dams, Tunnels, Road,
Bridges etc. are classifiable as per Section 65 A of the Finance Act, 1994 under
respective sub clauses (105) of Section 65 of the Finance Act and are chargeable
to service tax accordingly. Clarification has been requested as to whether the
exemption available to the Works Contract Service providers in respect of
projects involving construction of roads, airports, railways, transport
terminals, bridges, tunnels, dams etc., is also available to the sub-contractors
who provide Works Contract Service to these main contractors in relation to
those very projects.
- The matter has been examined. Vide the circular referred above, it
was clarified that when the service provider is providing WCS service in
respect of projects involving construction of roads, airports, railways,
transport terminals, bridges, tunnels, dams etc. and he in turn is receiving
various services like Architect service, Consulting Engineer service,
Construction of complex, Design service, Erection Commissioning or
installation, Management, maintenance or repair etc., which are used by him
in providing output service, then while exemption is available to the main
contractor (as per Section 65 (zzzza) of the Finance Act) , as regards the
services provided by its subcontractors, the same are distinctly
classifiable under the respective sub-clauses of section 65 (105) of the
Finance Act, as per their description and that their taxability shall be
decided accordingly. It is thus apparent that just because the main
contractor is providing the WCS service in respect of projects involving
construction of roads, airports, railways, transport terminals, bridges,
tunnels, dams etc., it would not automatically lead to the classification of
services being provided by the sub-contractor to the contractor as WCS.
Rather, the classification would have to be independently done as per the
rules and the taxability would get decided accordingly.
- However, it is also apparent that in case the services provided by the
sub-contractors to the main contractor are independently classifiable under
WCS, then they too will get the benefit of exemption so long as they are in
relation to the infrastructure projects mentioned above. Thus, it may happen
that the main infrastructure projects of execution of works contract in
respect of roads, airports, railways, transport terminals, bridges tunnels
and dams, is sub-divided into several sub-projects and each such sub-project
is assigned by the main contractor to the various sub-contractors. In such
cases, if the sub-contractors are providing works contract service to the
main contractor for completion of the main contract, then service tax is
obviously not leviable on the works contract service provided by such
sub-contractor.
It is hoped that this clarifies the statutory position. The Circular may
please be widely disseminated to the trade and field formations.
Yours faithfully
(Deepankar Aron)
Director (Service Tax)
CBEC, New Delhi
F. No. 137/57/2011 – Service Tax