Service Tax

Hi,

We are a Limited Company and we have a contract for Fixing of Re-inforcement Bars with a construction company which is further working for DMRC. 

While submiiting our bills to that contruction company we are charging the service tax as per the prevailing rate applicable. Now the construction company is telling to us that the service tax is not applicable on DMRC as per the Section 65 (25b) of the Finance Act (Service Tax) 1994.

Kindly let me know what is the exact procedure or Law.

Whether we can claim service tax with the construction company or not.

Pls do the needful as early as possible with proper sections/rules/notification/circulars numbers.

Thanks in advance.

Regards

Manish Kr. Joshi 

Replies (1)

Section 65(25b) of Finance Act 1994 refers to the taxable service "Commercial & Industrial Construction"  It is defined as

S. 65 (25b) “commercial or industrial construction service” means—
    ...............................

, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams

Since DMRC is a railway, any service in respect of DMRC is out of service tax purview.

Hence, service tax cannot be recovered from the construction company.

Also, since this would be an exempted service for you, you must either take 20% Cenvat credit OR reverse the 10% amount.

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