Circular No.79/9/2004-ST dated 17/09/2004

[sarveshwar mundra]

One of my client is a contractor doing civil construction work for Ordinance Factory.  According to aforesaid circular , Government constructions normally would not be taxable, if it is used for residential, office purpose or for providing civic amenities.  However, Superintendent, Service Tax insists for levying service tax  on construction works after an abatement of 67% on gross amount of contract works. kindly let me know the correct position of leviability of Service tax  on construction work of Ordinance Factory.

AI Summary

Contractor Disputes Service Tax on Government Construction Project, Questions Applicability Despite Superintendent's Abatement Proposal A contractor working on civil construction for an Ordinance Factory inquired about the applicability of service tax, citing a circular indicating government constructions used for residential, office, or civic amenities are typically not taxable. However, the Service Tax Superintendent insists on applying service tax after a 67% abatement on the contract's gross amount. One respondent clarified that the circular pertains to erection and commissioning activities, not the queried construction, and no exemption applies. Another respondent suggested that non-commercial government constructions should not attract service tax and advised questioning the superintendent's insistence if no formal demand was issued.