Service tax on site preparation & clearance work contract

[Guest]

Dear Sir,

Please explain service tax on Site preparation & Clearance work contract.

I have received same work invoice with service tax calculating on gross value. Is it ok or not??

Thanks & Regards,

Sanjay Vasava

[YAGAY andSUN]

072

65(105)(zzza)

Site formation and clearance, excavation and earthmoving and demolition

Notificatios

Circulars

[Ganeshan Kalyani]

The said service does not fall under exemption list , not fall under reverse charge, not even in negative list of service. Hence it is taxable service under forward charge. Thanks.

[YAGAY andSUN]

If the service provider has not crossed the Threshold limit then charging Service Tax is not O.K. otherwise it is O.K.

[Ganeshan Kalyani]

Yes, the service tax calculated on gross amount is correct. Since he has charged full service tax please check whether he has got registration number and the same is mentioned on the face of the invoice.

[Ganeshan Kalyani]

Mentioning certain information on face of invoice is essential , inter alia registration number. Also the registration number mentioned on the face of invoice can be checked in https://cbec-easiest.gov.in/EST/AssesseeVerification.do

[Ganeshan Kalyani]

The location of service provider and service receiver is also important. See place of provison of service rules. May reverse charge also become applicable.

[YAGAY andSUN]

It is settled legal position that charging of service tax without getting the registration certificate is an offence and this is the basic requirement to check the registration certificate at the time of negotiating for Service Order. Such checking should be done either at the time of negotiation or under Risk Management Policy of the company.

[Ganeshan Kalyani]

Agreed. But there are situation when the service requirement is very urgent and thus the service receiver agrees to create service vendor account in his books of account without getting service tax registration certificate copy. Later on after service is availed then the provider delays or gives various reason on not to give a copy of registration certificate copy. The problem arises then.

Hence the check points is necessary to be checked upon.

[YAGAY andSUN]

Generally the service recipients do not conduct any businesses with the service providers, if they are not registered with the Service Tax Department as the Policy of Risk Management System to mitigate /reduce the risk at very first level. They insist to the service provider either to provide declaration that they had not crossed the threshold limit or get the registration with the Service Tax Department.

[Ganeshan Kalyani]

Agreed but there are so many unorganized sector where internal policy of risk management is not in place. Also where the businesses are carried on in a rural area or remote area, the receiving of service by factory set up there in critical situation is essential. At that time it is practically not viable to check for compliance first and then get the service. But the production is essential and therefoe availing service is on top priority. Thus checking of check point as states in my previous reply is essential.

[YAGAY andSUN]

Being a profession we know if not in compliance mode, what happens? Provisions of Finance Act are stringent. Rate of interest is high. Then why to take chances, when by adherence with the compliance makes life easy in tax matter?

[Ganeshan Kalyani]

Good thoughts expressed. In fact this should be punch line of every business / assessee.

[YAGAY andSUN]

Along with thoughts, our Karmas (Work) are also pure, superb and authentic.

[Ganeshan Kalyani]

Self praise 

AI Summary

Debate on Service Tax Applicability for Site Preparation: Forward Charge and Registration Threshold Explained. Compliance Risks Highlighted. A forum discussion revolves around the applicability of service tax on site preparation and clearance work contracts. Participants debate whether service tax should be calculated on the gross value of invoices. It is clarified that such services are taxable under forward charge unless the provider has not exceeded the threshold limit for registration. The importance of checking the service provider's registration number on invoices is emphasized. Concerns about compliance, especially in urgent or rural situations, are raised, highlighting the necessity of risk management policies to ensure tax compliance and mitigate risks.