Service Tax on Sub-contractor - works contract

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This discussion clarifies service tax exemptions for sub-contractors involved in works contracts. It specifically addresses whether a sub-contractor executing part of a contract with a government authority (BWSSB) is eligible for exemption under Notification No. 25/2012. The consensus is that both the main contractor and the sub-contractor can claim exemption, particularly under clause 29(h) if the principal contractor is providing an exempt service to the government.

Sharan KB

Sharan KB (Querist)

09 August 2021 Dear sir/madam,

case goes like this.

1st Leg:
X-company initially enters a contract with BWSSB (Bangalore Water Supply and Sewerage Board) which is Governmental Authority.

2nd Leg:
where X-company further executes sub-contract to Y-company partially.

Questions:
Here who is eligible for exemption under Service Tax under theNotification No. 25/2012-Service Tax dated- 20th June, 2012, para 12A(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

Whether both dealer eligible Service Tax exemption?

Note:
Contract work is underlaying pipeline.
where contract agreement contains as agreement for replacement/rehabilitation does these words constitute as Original works as provided under above cited notification?

Thank You in advance !

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

09 August 2021 Yes, both contractor eligible for exemption.

Sharan KB

Sharan KB (Querist)

10 August 2021 Sir thank very much and please let me know is this comes under 12A(a) above notification?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 August 2021 12(e) will be applicable for you.

Sharan KB

Sharan KB (Querist)

11 August 2021 Respected CA R SEETHARAMAN,

Can you please give me any evidence to justify this matter so that even sub-contractor is eligible to claim under 12(e) of notification No.25/2012.

Thank very much for your valuable opinion sir.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 August 2021 29(h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt[Notification No. 25/2012-ST, dated 20.06.2012]

The above entry makes it clear that if the principal contractor is providing an exempt works contract service [for example providing works contract service to Government] then in such case if some part of the works contract is sub-contracted then the sub-contractor would also be exempt from payment of service tax

Sharan KB

Sharan KB (Querist)

11 August 2021 Dear sir,
Thanks for making it very clear and much appreciated !!

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

11 August 2021 Spending my retired life usefully.

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