Service tax liability

[Guest]

 we are a contractor, and get a contract form  a manufcuring company for  Construction  of residential complex( with materials)  for his employees in factory  campus.

 now  Client denied to pay Service tax  on our works bill  client says   as per circular no 108/02/2009

 service tax not applicable  in our case

Please let us in such condition we are liable to pay service tax,  or our serviceprovided   is under exempted caregory?

[Radha Arun]

The circular no 108/02/2009 says that if a residential complex is constructed and then sold, there is no service tax on it, because it is a sale and not a service. In your case you have provided a service and it is taxable.

AI Summary

Taxability of construction services: building a residential complex under contract is taxable unless it constitutes a sale. A contractor engaged under a contract to construct a residential complex with materials for an employer provides a taxable service where the transaction does not amount to a sale; the cited circular applies only when construction results in a transfer by way of sale, and does not exempt pure contractual construction services from service tax.