23 July 2025
You're absolutely right to bring up the Negative List and exemptions under service tax. Let's clarify the situation in the context of erection and construction work for a Government authority under service tax regime (pre-GST).
✅ Basic Rule: Negative List & Mega Exemption (Pre-GST Service Tax Regime) Under the Finance Act, 1994, after the Negative List-based regime was introduced from 01 July 2012, certain services were either:
Wholly excluded (Negative List – Section 66D), or
Specifically exempted (under Notification No. 25/2012-ST, aka Mega Exemption Notification).
✅ Relevant Exemption for Construction Services to Government (Pre-GST) As per Notification No. 25/2012-ST, effective from 01 July 2012, the following was exempt:
Clause 12(a):
Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of –
(a) a civil structure or any other original works meant predominantly for use other than commerce, industry, or any other business or profession;
🔍 What This Means in Simple Terms: ✅ Exempt if: You’re providing construction/erection services to Government or governmental authority, AND
The constructed structure is meant for public use or non-commercial use, such as:
Schools
Hospitals
Roads
Public infrastructure
❌ Not Exempt if: The construction is for commercial purposes, like:
Government guest houses rented commercially
Industrial parks
Shopping complexes for revenue generation
⚠️ Beware of These Points: Even if the recipient is Government, the end-use of the project matters.
If it is used for business or commerce, service tax is applicable, even if it’s a Government authority.
Exemption depends on the nature of service and purpose, not just the identity of the recipient.
✅ Conclusion Yes, erection and construction work for Government authorities was exempt under Notification 25/2012, provided the work was for non-commercial use.
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