Servicetax exemption for sub contractor.

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ABC firm has taken excavation work of militry Command Hospital  & pipe line for water treatment plant work of Municipal corporation.

ABC  has hired some of the required machineries from XYZ firm on hourly basis.

  XYZ Co. charging machinery hiring bill with Service Tax to ABC firm.

ABC firms refuse to pay the Service Tax to XYZ firm as it is exempted from Service Tax being Govt. or Corporation work for public utility.

Please give your valuable advice  for our guidance whether ABC firm is entitled to have benefit of Service Tax Exemption.

Awaiting for your guidance.

Replies (1)

As per item no 29 h of Mega Exemption notification no. 25/2012-ST, dated 20-06-2012 Work contract service provided by sub-contractor to anaother contractor providing exempted work contract service are exempt from payment of service tax.

In the the given case service of renting of machinery provided by XYZ Ltd. is not a work contract, hence ABC Ltd. is liable for payment of service tax.

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