Service tax on construction industry

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shh (Querist)

28 December 2012 Breaking , Drilling , concrete core cutting,
Slab grinding , slab cutting etc
Q- Are the above services taxable under Works Contract Or pure Labour. As no transfer of goods is there- I suppose it is Pure Labour ,Now if Its Pure labour Will Reverse Charge Mechanism Apply on this & on What Rate

Kaushik Vinod

Kaushik Vinod (Expert)

29 December 2012 Hi Shh,

As per Section 65B(54)"works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property;
If no goods is transferred along with labour then no question of works contract and no reverse charge applicable.

Thanks

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shh

shh (Querist)

30 December 2012 Thank you Kaushik

shh

shh (Querist)

31 December 2012 Presently facing a similar situation
Where Material supplied is Worth Rs 1 crore (i.e., Steel ) and the labour cost is somewhat around 15 lakhs.
Now the work contractor (who has opted for composition scheme) has informed us that we will have to pay 4.944% of service tax on total amount including steel cost.
Is there any way out as service tax would be huge cost to company if steel cost is included in invoice.

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