service tax liability on sub contracting work contract

[gopesh agrawal]

work of main contractor (i.e.work contract) is exempt from service tax under mega exemption notification ( goverment infrastructure development work) now work contractor want to sub contract some work, wheather sub contractor is liable for services tax.please provide solution with legal support.

[Venkataprasad Pasupuleti]

If sub-contracted portion amounts to 'Works contract' i.e. scope of sub-contract involves labour + materials/goods, then sub-contractor also exempted vide Entry No. 29(h) Notification No. 25/2012-St dated 20.06.2012 (Mega exemption).

Otherwise may be liable.

[YAGAY and SUN]

We endorse the very view of our learned friend.

[Ganeshan Kalyani]

Serial number 29 (h) of Mega exemption notification number 25/2012 reads as ' (h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt;'

[gopesh agrawal]

Thankyou so much to all for your valuable comments.

AI Summary

Works contract exemption extends to subcontractors where subcontract involves labour and materials; otherwise service tax may apply.
Where the subcontracted activity qualifies as a works contract - a composite supply of labour together with materials/goods - the subcontractor's services are exempt under Entry No. 29(h) of the mega exemption notification; if the subcontract does not amount to a works contract, the subcontractor may be liable to service tax.