TaxTMI 
TaxTMI 
I am a sub contractor and were engaged to provide earth work to the main contractor who were engaged in road construction work for the government. As the road construction work is exempted from the liability of service tax. Will the work provided to the main contractor as earth work be also exempted from service tax. I have received a notice for the period 2016-17 by the department to pay the amount of service tax on the gross amount received from earth work.
Exemption to sub contractor from service tax
31 Jul 2021 
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Works contract service exemption may cover subcontractor earthwork for road projects when the activity qualifies as works contract.
Exemption turns on whether the subcontracted earthwork qualifies as Works Contract Service (notably involving supply of materials and transfer of property in goods) and on the exemption's wording-whether it covers construction generally or only services directly constituting construction of roads. Authorities and rulings cited treat earthwork, excavation and site formation as construction-related; if the subcontractor's activity meets works contract criteria and the exemption's scope, exemption may be available, though an alternative view denies relief where the subcontractor's contract is with the main contractor rather than the exempt principal. (AI Summary)
Exemption turns on whether the subcontracted earthwork qualifies as Works Contract Service (notably involving supply of materials and transfer of property in goods) and on the exemption's wording-whether it covers construction generally or only services directly constituting construction of roads. Authorities and rulings cited treat earthwork, excavation and site formation as construction-related; if the subcontractor's activity meets works contract criteria and the exemption's scope, exemption may be available, though an alternative view denies relief where the subcontractor's contract is with the main contractor rather than the exempt principal. (AI Summary)