serivice tax on railway contractors.

[Guest]

Dear Sir

One of my client (Company) is railway contractor. He get 'work contracts' done for Indian railways. Further his company gives contracts to transports and labour  for above aid works. Now i want to know that is on the basis on reverse charges service tax is chargeable on these transport and contractors or not. Please clarify.

Thanks

[Madhukar N Hiregange]

The principles of interpretation under ST are clear that even though the main service maybe exempt, the subsidiary and separate services would not be considered exempt.

However a sub contracting of the Works contract itself would also be exempt.

GTA + supply of labour if any could be liable on RC/JC depending on the actual terms of the contract.

AI Summary

Reverse charge liability for subcontracted transport and labour may arise despite a works contract exemption. Liability for service tax on subcontracted transport and labour depends on whether those activities are distinct taxable services or part of an exempt works contract; a sub contract of the works contract may remain exempt, whereas a goods transport agency service or supply of labour can be taxable and fall on reverse charge or joint charge depending on contractual terms.