Clearify Service Tax

[subhash komalwar]

Dear sir,

               We are the Borewells & Tubewells contractors since 25/11/2010 out the earth drilling work in all formation of earth in Chandrapur & Gadchiroli districts of maharastra state of zilla parishads under state govt. scheme & Private work as well for the purpose of Drinking water only.

              So kindly clarify to us whether the services which are rendered to excavate the borewells & Tubewells incluidng Installation of Hand Pump over said Borewells & Tubewells may be govt. or private for Drinking water only, are liable for Service Tax or otherwise please.

Thanking you

AI Summary

Works contract classification determines whether service tax or VAT applies to borewell and tubewell drilling services.
Classification depends on whether the borewell/tubewell work is labour-only or includes materials and completion as a single contract. Labour-only supply is treated accordingly; where drilling plus materials constitutes a turnkey works contract, service tax applies and VAT implications arise. The provider may either treat it as a works contract and pay service tax or apply state VAT in which case service tax is not applicable. Verify state VAT rates and any exemptions for drinking-water projects in drought or backward areas.