Service tax on construction water supply

[Guest]

Dear Sir,

So many parties supplied construction water to us.

In the case, can i paid service tax on construction water supply??

If, yes. service tax calculating on full value or not?? Any abatement ??

Please explain, How can pass this type of bill.

Thanks & Regards,

Sanjay Vasava

[Rajagopalan Ranganathan]

What do you mean by ;supply of construction water"? Is it water supplied for civil construction work or otherwise? Please elaborate.

[Guest]

Dear Sir,

Yes we are using the water in civil construction work.

Please suggest.

Thanks & Regards,

Sanjay Vasava

[Ganeshan Kalyani]

Sri Sanjay Vasava Ji, the reply to the query is answered in the issue is given below:

#1Issue Id: - 109628
Dated: 31-12-2015

Thanks.

[Guest]

Dear Sir,

JCB Hiring issue solved.

Please suggest for construction water supply. We are using the water in civil construction work.

Thanks & Regards,

Sanjay Vasava

[Ganeshan Kalyani]

Sir, I reproduce the reply submitted by Sri Kasturi Sir from the issue id -109628 , Only service portion (supply of water) is covered under Section 66 E (i) of the Finance Act.(Declared Services) How service portion is to be computed, it depends upon the nature of the agreement/contract executed between the Service Provider and Service Recipient. No abatement is admissible inasmuch as Service Tax is leviable on only service (supply) of water and service may include rent of water tank also. Reverse charge mechanism will be applicable only if Service Provider is located in non-taxable territory and service receiver is in taxable territory. Otherwise not in normal circumstances.

Thanks.

[Guest]

Dear Sir, Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

Your query is not clear as indicated by Shri Rajagopala Ranganathan.

[Rajagopalan Ranganathan]

Sir,

According to Explanation (b), clause (v) of rule 2A of Service Tax (Determination of Value) Rules, 2006 water is a consumable and it value is to be included in the value of the service provided. Supply of water for civil construction is not exempted under mega exemption Notification No. 25/2012-ST dated 20.6.2012 as amended. Therefore service tax is chargeable on supply of water for civil construction. If your service provider include the value water supplied in the total service charges charged, as per Sl. No. 12 of Notification No. 26/2012-ST dated 20.6.2012 as amended, for construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority then you can pay service tax on 30% of the gross amount charged provided-

(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.

(ii) The value of land is included in the amount charged from the service receiver.

[DR.MARIAPPAN GOVINDARAJAN]

Clear explanation Ranaganathan Sir, Thank you

[Guest]

Shri Rajagopalan Ranganathan sir,

We given to a contract for water supply.

We are using this water in construction work. I required a clarification (Service Tax Pay Or Not) ?? Which category under covered ?

I received a bill with service tax, Service tax calculated on full value.

RCM applicable or Not ??

Please explain how can pass the bill.

Thanks & Regards,

Sanjay Vasava

[Rajagopalan Ranganathan]

Sir,

Since you have received the bill with payment of service tax, you pay the bill amount and take credit of service tax. You cannot challenge payment of service tax at service provider's end. Only service provider has to challenge the levy of service tax on supply of water..

[Guest]

Sir,

It means service tax liability on service provider. We can pay the bill with service tax.

Thanks & Regards,

Sanjay Vasava

[Rajagopalan Ranganathan]

Sir,My reply is 'yes'.

[Guest]

Dear Sir,

One party is supplying water to us for construction work in industry. Bill description written on the bill as Water Supply With Water Tanker.

Somebody advised me is needed to be corrected in bill description as Water Supply With Water Tanker for Industrial purpose.Otherwise we cannot avail CENVAT Credit.

Please explain.

Thanks & Regards,

Sanjay Vasava

AI Summary

Service tax on construction water: taxable supply value includes consumable water; recipient may claim input credit if invoiced. Supply of water for civil construction is taxable as a declared service and the value must include the consumable water component; it is not covered by the mega exemption so service tax is chargeable. For construction-for-sale contracts a statutory abatement may apply if conditions including no prior CENVAT credit on inputs and inclusion of land value in charges are met. Reverse charge applies only if the supplier is in a non-taxable territory and the recipient in a taxable territory. If the supplier's bill bears service tax, the recipient may pay and take CENVAT credit, while challenges to the levy are matters for the supplier.