Construction of Jail

[DEEPAK SHARMA]

Dear Forum

One of the my client is a contractor duly registered under service tax department, having a contract of construction of disctrict jail at allahabad, you are requested to guide me that whether service tax is applicable on the construction of jail as, it is government enterprises.  

[YAGAY andSUN]

Dear Deepak,

Since, construction of jail do not fall under the definition of :- 

 1) Commercial or Industrial Construction service and :

2) Construction of Residential complex, therefore, no service tax would be leviable on such construction.  

As the jail is used for keeping the criminals and convicts for punishments for their misdeeds and crimes and to keep them out of civilised society, therefore, such structure would not fall in the ambit of Civil Structure.  

Further, such structure would not be used for commerce and Industry.  Therefore, with reference to any building or structure, it is necessary to ascertain what is the primary intention/use/occupation and then it should be decided whether the building or structure would fall within the scope of the definition under the act.

The following buildings and structures will not fall with in the scope of the levy under Service Tax, namely:-

1. Housing complexes meant for residential purposes
2. Old age homes rund by state
3. Court Rooms/Court Complexes
4. Government Hospitals
5. Military Structures
6. Jails/Reformatories

Hence, construction of jail or reformatories are not liable to be taxed under Service tax laws, Finance Act, 1994.

Best Regards,

Pradeep Khatri

 

AI Summary

Service tax exemption for jail construction: prison building works fall outside taxable commercial or residential construction services. Construction of jails and reformatories does not fall within taxable Commercial or Industrial Construction service or residential complex construction; therefore such prison construction is not liable to service tax. The primary test is the building's intended use-structures not used for commerce or industry and serving public/state functions (for example, courts, government hospitals, military structures, old age homes, jails/reformatories) are excluded from the levy under the Finance Act.