Service tax of Sub Contractor

[Guest]

Dear Sir,

M/s ABC Ltd is getting Govt Road Contract at Kolkata and M/s ABC Ltd given the sub contract to XYZ Ltd. When XYZ Ltd is raised the RA bill to ABC Ltd then Service tax under Work Contract is chargeable in the bill of XYZ Ltd.

Due to Govt Work contract , In hand of ABC Ltd is it Exempted to Service tax .

Kindly give me the proper solution in this regards.

Regards

S M

[Rajagopalan Ranganathan]

Sir,

As per Sl. No. 13 (a) of Notification No. 25/2012-ST dated 20.06.2012 as amended, a road, bridge, tunnel, or terminal for road transportation for use by general public is exempted from service tax. Therefore a service which exempted from service tax by Notification is exempted service whether executed by the main contractor or by his sub-contractor. hence there is no question of payment of service tax on road construction service.

[SURESH ASTEKAR]

In continuation to what Shri.Rajagopalan Ranganathan has stated, it may also be noted that Sl.No.29 (h) of Notification No.25/2012-ST specifically provides exemption in respect of services provided by sub-contractors by way of works contract to another contractor providing works contract services which are exempt.

AI Summary

Exemption for public road construction services extends to subcontractors, so subcontracted road works are not subject to service tax. Services for construction of roads, bridges, tunnels or terminals for public road transportation are exempt from service tax, and that exemption applies whether the work is performed by the main contractor or by a subcontractor; subcontractor services by way of works contract to a contractor providing an exempt works contract service are specifically covered by the exemption.