Applicability of Works contract scheme

[Guest]

A service provider is registered under 'Rep and Maintenance Service 'dealing with materials and labours .Could it opt work contract valuation rule since it is difficult to measure taxable service

[Surender Gupta]

If you establish that your activity is covered by the scope of works contract as defined in section 65(105)(zzzza), you may re-classify your services as most appropriate category.

[Mukesh Kumar]

Generally repair and maintenance service can not be treated as works contract for the purpose of service tax. However, you may consider availing the benefit of notification no. 12/2003 after complying with the conditions of sale of that notification.

AI Summary

Works contract classification may allow reclassification of repair and maintenance services if they meet the statutory definition and notification conditions. Whether a repair-and-maintenance provider supplying materials and labour may adopt the works contract regime depends on fitting the statutory works contract definition; if the composite supply satisfies that definition the provider may reclassify and apply works contract valuation. Generally, repair and maintenance services are not treated as works contracts, though relief under the applicable notification may be available if its sale-of-goods and other conditions are complied with.