exemption to sub contractor

[Ramesh Patel]

We are registered in Construction service and WCT. We have received sub contract from principal contractor to provide service to CONCOR (Container Corporation)for container terminal connected by railway. My question is wheater service provided for CONCOR contaniner terminal is expemt from tax, and wheater sub contractor is alos exempted from service tax.

[Brijesh Verma]

CONCOR is a government concern but certainly a commercial one. So in my view, if the activities of CONCOR can be classified as commercial one, then there is no exemption. Now as far as sub-contracting is concerned, there is as such no exemption. You charge tax from CONCOR and it will get CENVAT of that tax.

[Ramesh Patel]

Thank u Brijesh But I would like to know is there any provision in service tax that sub contractor is not eligible for exemption for exempted service provided. I have gone through some article which says that prime liablity of service tax is on principal contractor, we are not liable to pay service tax on the service provided. Pls explain and give related case law and rules/section

[NANDKUMAR SAGWEKAR]

01. Sub contractors are not exempt from payments of service tax . 02.please elaborate which service your providing and constitution of service receiver for e.g. in case of GTA services if service receiver is of specified seven categories then liability to pay service tax on receiver refer sec 68 ( 2 ) of Finance Act 1994 and service tax rules Thanks ANAND M SHEMBEKAR CELL NO 9209904370

[NANDKUMAR SAGWEKAR]

01. Sub contractors are not exempt from payments of service tax . 02.please elaborate which service your providing and constitution of service receiver for e.g. in case of GTA services if service receiver is of specified seven categories then liability to pay service tax on receiver refer sec 68 ( 2 ) of Finance Act 1994 and service tax rules Thanks ANAND M SHEMBEKAR CELL NO 9209904370

[Ramesh Patel]

Dear Anand We are providing construction service. Providig service for CONCOR (Container Corporation) container railway terminal.

[Rama Krishana]

considering your activity is in the nature of works contract, the services in respect of "transport terminals" are not taxable at all under clause (zzzza). Therefore it is immaterial that your are a contractor or subcontractor. You have to ensure that your activities are in relation to "transport terminals". Otherwise, you may be liable to pay service tax.

AI Summary

Service Tax Not Exempt for Construction Services to Commercial Government Entity; Verify Service Nature for Tax Liability. A contractor in the construction service sector inquired about service tax exemptions for services provided to a government entity, CONCOR, for a container terminal project. The responses clarified that while CONCOR is a government entity, it operates commercially, so services are not exempt from tax. Subcontractors are generally not exempt from service tax, and the principal contractor typically bears the primary liability. However, if the service relates to 'transport terminals,' it might be non-taxable under specific provisions. The discussion emphasized the importance of verifying the nature of the service to determine tax liability.