Works Contract Providing Irregation Servicess To Govt Of AP

We are Under Taking the Govt of AP Irregation work under Contract Recently we received a notice form service tax department though we are under Exempt catageory as we are providing servicess in the line of Agriculture/ Irregation Development  (digiging-Creating Canals For Supply of water for the usage of Farmers) Required clarification the same may exempted from service tax are not

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If you look at the service category ' site preparation service' such services provided in relation to agriculture,irrigation....are excluded.

In the case of commercial or industrial construction services,the said structure will be taxable only if it is' used or to be used' for commerce or industry.  So the above project undertaken by AP government can be said to be for philanthropic purposes and not for profit and hence exempt (also refer circular/letter F.No B2/8/2004-TRU dt. 10.09.04).

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