Digging of ringwell

[ramkishore gupta]

Respected All

I would like to know weather service tax is applicable on the amount paid to me for digging and making of a new well paid by some private business entity for the welfare of public

[KASTURI SETHI]

The activity of digging well (digging of water sources) is covered under the main definition of 'Site Formation and Clearance, Excavation, Earth moving and Demolition Services' under the erstwhile Sections 65(105)(zzza) and 65(97a) of the Finance Act but excluded due to Exclusion clause- hence it was not chargeable to Service Tax prior to 1.7.2012.

After 1.7.12, it is exempted only if this service is provided to Govt., local authority or Govt. authority for irrigation purpose. (Notification No.25/12-ST dated 20.6.12 as amended Serial No.12 (d)} You have provided service to private business entity and it is not for irrigation purpose. Hence not eligible for exemption.

[ramkishore gupta]

Any abatement available if contractor do digging work for well and also provide material for constructing the well

[KASTURI SETHI]

No abatement is available.

AI Summary

Exemption for site formation services limited to irrigation work for government; private contracts remain taxable and no abatement. Digging and construction of wells are classed as Site Formation and Clearance, Excavation, Earth Moving and Demolition Services. Post-amendment exemption applies only when the service is provided to a government or local authority for irrigation; services to private entities not for irrigation are not exempt. No abatement is available where the contractor also supplies materials for the well construction.