service tax on construction

[Pradeep Kumar]

Sirs,

In our Pvt Ltd, company, some construction is going on - repair work as well as new one. Works are carrying out by a civil engineer. All materials will be supplied by him only and finally giving the bill for material cost and labor cost. Both the company and engineer are having service tax registration. Company do not have construction service in their service tax registration certificate.

Now the doubt is whether the company need to add the construction service in their RC, and if so, which category to be added - Construction service OR works contract?

Waiting for experts advice.

[DR.MARIAPPAN GOVINDARAJAN]

In my view it is to be registered under construction service.

[Ganeshan Kalyani]

In my view it should be classified under "works contract service".

[Ganeshan Kalyani]

Please refer

65(105)(zzzza)

[Rajagopalan Ranganathan]

Sir,

Since the contractor supplies the material also provide construction service the proper head will be works contract service as opined by Shri. Ganesan Kalyani Sir.

[Venkataprasad Pasupuleti]

Repairs works involving both labour + materials falls under 'Works contract ' which has suitable valuation of 40/70%.

Construction category does have only valuation of 30/25% abated value option mandating to include the land value in assessable value. This inclusion of land value is absent in case of 'repair works'. hence this category is not relevant.

AI Summary

Works contract service classification advised where contractor supplies materials and labour; it determines service tax valuation and abatement. Where a contractor supplies both materials and labour for repair or renovation, the activity should be classified as Works Contract Service and added to the principal's registration; this classification, rather than Construction Service, governs applicable service tax valuation and abatement because construction abatement methods require inclusion of land value which is not relevant to repair works.