Painting work of single residential unit

[Siva Rama]

Dear sir,

I am a painting contractor. I takes contract for painting of single residential units (otherwise than part of a residential complex) only.

In order to avoid to the complication of work contract, I have enters into pure agent agreement with my customers where in the agreement, it is clearly specifies that I will purchase materials paint on their behalf. Material bill I purchase from third party will be billed in the name of my customer not mine. I dont make any profit on material purchased. But all the payments i.e material portion, labour portion, profit on labour portion comes to my bank account.

So my contract is purely labour contract. No material part. Labour portion and profit on labour will exceed service tax turnover limit.

Question 1

Can I enter into pure agent like this to make my turnover only Labour portion.?

Question 2

Under what category, I will take Service taax registration.

00440290 - Industrial or commercial service - Not possible because my service is for residential building

00440334-Construction of residential complex - Not possible because my service not to a complex comprising more than 12 residential units. My service is for single residential unit.(as mentioned above)

00440245 - Maintenance or repair service - Not possible because my service is not maintenance or repair service.

00440410 - Works contract service - Not possible because there is no transfer of property in goods

00440060 - Manpower Supply - Not possible - I am not just supplying manpower. Labourers are working under my supervision. Only labourers who painting work are sent to site to paint.

Please advice

Question 3

Painting contract is given by to me by house owners.

Under Mega exemption - it is mentioned that Services by way of Construction, erection, commissioning, or installation of original works pertaining to a single residential unit otherwise than as part of residential complex is exempted from Service tax.

By general definition of Commercial or industrial construction service Section 65(25b), Construction of residential complex service Section 65(30a), and work contract service section 65(105)(zzza)- All these services includes Completion and finishing service. My painting work is completion and finishing service and thus my work falls in services by way of construction for mega exemption.

So am I not eligible to get exemption under mega exemption?

Kindly advise how to interpret exemption.

Regards,

Siva

AI Summary

Pure agent treatment requires supplier de-linking from material purchases to exclude material value from taxable turnover.
A painting contractor may obtain pure agent treatment only if purchases of materials are de-linked from the contractor - material bills must be in the customer's name, there is no markup, and material amounts must not be credited into the contractor's bank account. The activity is to be classified as labour/Other Than Negative List (erstwhile BAS) rather than Work Contract Service. The contractor is not eligible for the mega exemption claimed, as older definitions cited no longer govern exemption scope.