Service Tax Applicable or Not.
This query is : Resolved
09 April 2009
Dear Experts.
We have awarded a contract for border fencing job in Indo-Bangladesh Border. Now my query is whether the service will be applicable or not as the end user is ministry of defence/Home Ministry. Our CA has suggested us that service tax will not be applicable. Kindly help us in this matter.
Regards.
PRADIP PANDEY
We have awarded a contract for border fencing job in Indo-Bangladesh Border. Now my query is whether the service will be applicable or not as the end user is ministry of defence/Home Ministry. Our CA has suggested us that service tax will not be applicable. Kindly help us in this matter.
Regards.
PRADIP PANDEY
Madhukar N Hiregange
(Expert)
09 April 2009
My view is that your activity comes under works contract - erection installation and commisisoning. Under this heading there appears no exclusion for non commercial activity.
Though unlikely if your activity comes under commercial construction then services provided to GOI should not be liable.
Though unlikely if your activity comes under commercial construction then services provided to GOI should not be liable.
Madhukar N Hiregange
(Expert)
09 April 2009
My view is that your activity comes under works contract - erection installation and commisisoning. Under this heading there appears no exclusion for non commercial activity.
Though unlikely if your activity comes under commercial construction then services provided to GOI should not be liable.
Though unlikely if your activity comes under commercial construction then services provided to GOI should not be liable.
09 April 2009
I agree with the views expressed by Madhukarji.
The question is whether such activity would be covered under WCS as defied under Service Tax Act. The only possibility that comes across my mind is that the activity may primarily fall under " Erection, Commissioning & Installation Service " and hence under WCS as because Erection, Commissioning & Installation has been defined under Sec 65(39a) of the FA 1994 as any service provided by a commissioning and installation agency in relation to (i) erection, commissioning or installation of plant, [ machinery or equipment or structures, whether prefabricated or otherwise]...
Now as we can conceive of border fencing, it involves some amount of civil work which acts as the base with some prefabricated angles fitted on it on which barbed wires are meshed around. Now, the question is whether prefabricated sets of angles can be termed as structures and the process of putting them into the civil base constructed can be though of as installation ?
In my opinion the activity would primarily qualify as Erection Commissioning and Installation and if any supply of material is also involved in the contract then it would be WCS and therefore GOI would be liable.
The restriction of end use i.e whether used for commercial activity or not is applicable in case of commercial& industrial construction only.
The question is whether such activity would be covered under WCS as defied under Service Tax Act. The only possibility that comes across my mind is that the activity may primarily fall under " Erection, Commissioning & Installation Service " and hence under WCS as because Erection, Commissioning & Installation has been defined under Sec 65(39a) of the FA 1994 as any service provided by a commissioning and installation agency in relation to (i) erection, commissioning or installation of plant, [ machinery or equipment or structures, whether prefabricated or otherwise]...
Now as we can conceive of border fencing, it involves some amount of civil work which acts as the base with some prefabricated angles fitted on it on which barbed wires are meshed around. Now, the question is whether prefabricated sets of angles can be termed as structures and the process of putting them into the civil base constructed can be though of as installation ?
In my opinion the activity would primarily qualify as Erection Commissioning and Installation and if any supply of material is also involved in the contract then it would be WCS and therefore GOI would be liable.
The restriction of end use i.e whether used for commercial activity or not is applicable in case of commercial& industrial construction only.
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