Service tax coverage on steel fabricators

[Atul Gupta]

Dear Friends,

My client is a steel fabricator. He has contracts with supply of material and without material. In case, his contract involves material as well as labour, it will fall under work contract services. But in case, the material is not involved, only labour part is involved i.e erection / installation services then in which category of service will he be covered? I am confused between the following services:

1. Erection, Instalation & Commissioning.

2. Repair & Maintenance Services

3. Business Auxilliary Services

Please share your views and suggestions.

Thanks & Regards

[NEERAJ KUMAR, RANCHI]

In my opinion this will fall under BAS.

[ROHAN THAKKAR]

• If the Steel fabrication is done on behalf of the client, then the said service will fall under ‘Business Auxiliary service’.
• However, where the services provided is not behalf of the client, but the services are provided in independent capacity, in such as case, the service of steel fabrication will fall under ‘Erection, Commissioning and Installation service’
• The term fabrication is an industrial term refers to building metal structures by cutting, bending, and assembling.’
• "Erection, commissioning or installation" means any service provided by a commissioning and installation agency, in relation to,—

(i)  erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise;                     or

(ii)  installation of—

       (a) electrical and electronic devices, including wirings or fittings therefore; or

       (b) plumbing, drain laying or other installations for transport of fluids; or

       (c) heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work; or

       (d) thermal insulation, sound insulation, fire proofing or water proofing; or

       (e) lift and escalator, fire escape staircases or travelators; or

       (f) such other similar services;';

• The term ‘management, maintenance or repair" means any service provided by—

(i) any person under a contract or an agreement; or

(ii) a manufacturer or any person authorised by him,

 in relation to,—

       (a) management of properties, whether immovable or not;

       (b) maintenance or repair of properties, whether immovable or not; or

       (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicle

Explanation.— For the removal of doubts, it is hereby declared that for the purposes of this clause,—

(a)  "goods" includes computer software;

(b)  "properties" includes information technology software 

 

Thus, looking to above provision, in my opinion, the above service falls under ‘Erection, commissioning or installation ’

 

Regards,

Rohan Thakkar

[Mahir S]

Yes, the activities undertaken by your client definitely falls under the category of Erection, Instalation & Commissioning services.

AI Summary

Erection, Installation and Commissioning services cover steel fabrication involving labour to install or commission assets; BAS applies if done on client's behalf. Where only labour is provided to erect, install or commission plant, machinery, equipment or structures (including related sheet metal, pipe work, HVAC and similar work), the activity is classified as Erection, Installation and Commissioning services; repair and maintenance covers contractual maintenance or repair of properties or goods; Business Auxiliary Services may apply where fabrication is undertaken on behalf of the client as an ancillary business support.