Applicability of works contract

[Guest]

In some states as per the local VAT act the contracts are treated as works contract some of them are as under: Painting / polishing contract Civil work like construction of buildings roads Construction of bodies of motor vehicles and construction of trucks Tyre retreading Dyeing and printing of textiles Annual maintenance contracts for Xerox / printers / computers / airconditioners Fixing of marble slabs polished granite stones and tiles In all the above listed cases the deduction for material and labour is prescribed as per vat act Now for the purpose of service tax whether the above listed will be treated as works contract

[Mukesh Kumar]

No, only the specified activities defined under section 65(105)(zzzza) would be classified as services involved in execution of works contract. For all other categories of services you have either of the two options (1) since the other category of works contracts are not included within the scope of clause 65(105)(zzzza) the same are not taxable at all. (2) you may classify the service within the particular classification heading after examining the nature and scope of such service.

AI Summary

Works contract classification: only activities within the statutory definition qualify; others may be non taxable or reclassified. Only activities expressly falling within the statutory definition of works contract under section 65(105)(zzzza) qualify as services involved in execution of a works contract for service tax; VAT treatment or prescribed material-labour deductions do not determine service tax classification. If an activity is not covered by that definition, it will either be non taxable as a works contract service or must be classified under the appropriate service heading after examining its nature and scope.