Service tax vat applicability for contractors

Service tax on works contract (construction works) is applicable At 4.944%.  Therefore the sub-contractor's claim of service tax is correct.  Provided pls ensure that the sub-contractor is a corporate entiry, if not he has to charge only 2.472% (i.e., 50%) and balance 50% has to be paid at your end.

Understand under construction of complex you are remitting servicce tax @ 3.09%.

You can avail cenvat credit of service tax paid to the sub-contractor.

As regards APVAT, if the sub-contractor is doing works contract the liability to pay VAT is with the sub-contractor and main contractor need not pay any further taxes on the value of sub-contract, once again.  [Therefore, the sub-contractor portion can be claimed as exemption by the main contractor].  Refer caselaw: 17 VST 1 (SC)