service tax on construction of labour quaters for tea industries

[ramkishore gupta]

Dear Sir

Please let me know if service tax is chargable on contsruction of

01. Ring well with plinth (including material)

02. over thaching kacha house

03. Constructon of laterine with septic tank

04. Construction of Labour quater

Also let me know is it make any difference if the same is constructed for Govt authority or for Tea Industries unit

Thanks

Ram Kishore Gupta

[KASTURI SETHI]

Service Tax is chargeable. Exemption for Govt. construction is available for only those contracts which were executed before 1.3.15.

[ramkishore gupta]

Sir will all the 4 points mentioned above will be taxable if the same is constructed for tea industries labour or any exemption can be claimed on the same

[KASTURI SETHI]

Any construction which is temporary and not meant for sale for example Serial No.2 is not taxable.

[ramkishore gupta]

Thanks sir for the reply. It will be very helpful to me if you can give the section reference under service tax for exemption for construction of temperory construction not for sale

[KASTURI SETHI]

Over thatching katcha house is not meant for sale. Hence it is out of definition of Construction of Residential Complex and Commercial or Industrial Construction. Read Explanation to erstwhile Section 65 (105)(zzq) and Section 65 (105) (zzzh) of the Finance Act, 1994. These Sections are still valid for statistical purpose. In other words, we can say for convenience of clarification of the concept or definition. Otherwise Service Tax law is very much clear, if any service which does not fetch consideration that is free service and ST cannot be charged. Consideration is a must for qualifying the definition of 'Service' in terms of Section 65 B (44) of the Finance Act. For example ; When 100 flats are to be constructed, first of all the builder constructs temporary accommodation for the staff, that is to be demolished after the construction of 100 flats. That temporary accommodation or Over Thatched Katcha House is not intended for sale. Hence not taxable.

[ramkishore gupta]

Thanks very much Sir for giving your time to my queries.One more query Sir :

Contract taken for plantation of Tree / cutting of leaves for tea industries is that exempted or taxable under service tax .If yes in what ration it is exempted and if fully exempted please give section reference

Thanks

[Ganeshan Kalyani]

In my view the said service is taxable.

[KASTURI SETHI]

Yes. I agree with Sh.Ganeshan Kalyani, Sir. Also see my article on this very issue published under the head, 'Article' in September, 15. Go to my profile and click 'Article'.

[KASTURI SETHI]

Regarding non-taxability of temporary accommodation (Not intended for sale), also read Notification No. 26/12-ST (Serial No.12), the phrase, 'intended for sale' exists there. It implies that even after 1.7.12, if the condition of 'intended for sale' is not fulfilled, no ST is leviable. Over-thatched Katcha House is not intended for sale.

[Ganeshan Kalyani]

Sri Kasturi Sir, i read your article long back and based on that i had replied now to this query. The article is very informative and nice written.

I would like to enrich my knowledge with more such articles of yours.

[KASTURI SETHI]

Sir,

My reply was meant for the querist. Anyhow, it is O.K.

AI Summary

Service tax on construction: temporary, non sale accommodations are not taxable while intended for sale works remain liable.
Service tax applies to construction services unless the work is temporary and not intended for sale; temporary accommodations like over-thatched katcha houses are not taxable because they fail the intended-for-sale criterion and typically do not involve consideration as a service. A notification and explanatory provisions to prior statutory definitions illustrate that the intended-for-sale test remains relevant, while government-construction exemptions were limited to contracts completed before a specified cut-off.