Taxability of Construction services and valuation

[ABHISHEK Kumar]

Dear Sir,

Our Client In FY 2016-17, had provided construction service to BIHAR STATE EDUCATIONAL INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED. The agreement was For “Construction of Senior Secondary Schools on Panchayat Level in Bihar”. BIHAR STATE EDUCATIONAL INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED is government company.

Total amount received is ₹ 21,18,643/-.

Department is giving 60% abetment and levies service tax on ₹ 8,47,457.

Our Query is:

1. Can we claim exemption under clause 12A (b) of Notification No. 25/2012-Service Tax. If no

2. Can we claim Small Service provider exemption, since taxable value of service portion is below ₹ 10 lacs.

AI Summary

Governmental authority definition may determine exemption for construction services to a state-owned corporation under service tax rules.
Eligibility for exemption under Notification No.25/2012 (clause 12A(b)) hinges on whether the recipient qualifies as a governmental authority-i.e., statutory creation or government establishment with ninety percent or more equity/control that performs functions under Article 243W-and whether the constructed facility serves non commercial purposes and meets temporal and stamp duty conditions. Separately, the small service provider exemption requires that the provider's aggregate taxable services in the preceding financial year fall below the notified threshold; both entitlements demand examination of the contract, the purpose of works, preceding year turnover, and documentary compliance.