Liability of service tax on accomodation services

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A Pvt Ltd company is going to execute a contract at a site. as per the agreement, it is the responsibilty of the client to provide accomodation to the people working at site.But the company requested the client that the company will construct its own accomodation at the land belongiing to the client ie erect a temporary shed which will be dismantled once the project is over. the total cost of constructing the temporary structure is Rs 1cr. the client agreed only to reimburse Rs 40 lacs to the company. my query is the company liable to pay any service tax on the Rs 40 lac received from the client. My opinion is that since this being a purely a reimursement of capital expendityre, service tax should not be levied. i need your valuable advice

AI Summary

Company Questions Service Tax on Reimbursed Capital Expenditure for Temporary Structure; Cites Daelim Industries Case for Reference A private company is executing a contract where the client is responsible for providing accommodation for workers. The company proposed to construct a temporary structure on the client's land, costing Rs 1 crore, with the client agreeing to reimburse Rs 40 lakhs. The query is whether the company is liable for service tax on this reimbursement. One opinion suggests that since it is a reimbursement of capital expenditure, no service tax should be levied. Responses indicate that without a service provided to others, there may be no liability, especially considering it is a composite contract, referencing the Daelim Industries case.