Service Tax applicable on Errection or Commission of plant

[Vivek anandhan]

Dear Experts

We are the service provider of errection or commission of plant/machinerry. It is composit service involved electrical items as well as manpower. We are not availing input credit for items used for errection or commission.

Above service providing through contractor. 100% of work done through contractor. Contractor billing on us separtly for service and material. We are raising service invoice on our Customer with small margin. Whether we have to calculate service tax on entire value(composit value) or any abatment available for exclude material cost.

Kindly clarify

AI Summary

Service tax on plant erection: Contractor liable, 60% abatement for works contract with materials under Notification No. 24/12-ST. A service provider inquired about the applicability of service tax on the erection or commissioning of plants, which involves both electrical items and manpower, and whether they can exclude material costs from the taxable amount. An expert clarified that since the work is conducted entirely through a contractor, the service tax liability falls on the contractor, with no reverse charge mechanism applicable. If the service includes materials, it qualifies as a 'Works Contract Service,' allowing a 60% abatement under Notification No. 24/12-ST. Without materials, it falls under 'Erection, Commissioning or Installation Services' with no abatement. The notification is confirmed as effective.