S.T. on Repairs & Maint. Building

[RAJENDRA KHOMNE]

Sir,

Good Morning,

We have changed our buildings Tin sheet from contractor. Is it comes in RCM & how many portion of Service Tax we need to pay and can we take credit of paid Service Tax on Challan? or If we paid full service tax and can we take credit? pl guide.

Thanks,

R. M. Khomne

[KASTURI SETHI]

Repair and maintenance attracts 70% service portion under Works Contract Service.

[Ganeshan Kalyani]

RCM is not applicable. Thanks.

[KASTURI SETHI]

RCM is applicable only if service provider is individual, prop.,HUF, AOP, partnership etc. and service receiver is business entity registered as body corporate. It is for Works Contract Service. Somewhat conditions change regarding applicability of RCM depending upon a particular service.

[Ganeshan Kalyani]

Sri Kasturi Sir, yes sir the situation changes when the provider of service is located in non-taxable territory and the recipient of Service is in taxable territory. Thanks.

[CA AJAY KUMAR AGRAWAL]

Dear experts, I would like to add something. RCM will be applicable only it it comes under Works Contract i.e. sheets also have been supplied by the contractor. In that case RCM will be applicable. Regarding full RCM or partial RCM, it depends on the contractor. If contractor is Individual / HUF & the service receiver is business entity registered as body corporate then partial RCM will be applicable i.e. each party will deposit @ 5.25% (70%x50%x15%). In case service receiver is not business entity registered as body corporate, service provider has to deposit full Service Tax i.e. 10.5% (70%x15%)

In case it is purely labour work i.e. repair & maintenance category then full liability is on service providor (contractor) irrespective of the status of both. Kindly share your valuable views.

[KASTURI SETHI]

Sh.Ajay Aggarwal Ji,

I concur with your views to the core. You have explained the legal position perfectly.

[CA AJAY KUMAR AGRAWAL]

Thank you very much, Sir.

AI Summary

Reverse Charge Mechanism applies to certain building repair works, with liability split under works contract rules. Applicability of service tax on replacement of tin sheets depends on classification as Works Contract Service (materials supplied by contractor) versus pure repair and maintenance. For works contract, a 70% service portion is subject to service tax and Reverse Charge Mechanism may apply where the provider is an individual/HUF/AOP/partnership and the recipient is a registered body corporate, producing shared liability; if recipient is not a body corporate, the contractor bears the tax. Pure labour repair places full liability on the contractor. Territorial location of provider can affect RCM.