ERRECTION AND COMMISSIONING SERVICES

[SNEHAL SHAH]

Dear sir,

We are the manufacturing of engineering products and this product is heavy machinery type, so we can manufacturing of engineering product, Quality test with assembly and after that dismantles product and send to party site. Our manpower will be errected this Machinery after reach at site ( this errection charge will be paid by party and we can pay service tax on this ) .

Now question is that before 1^st July 2012 we can register with “Erection and Commissioning “Services and paid service tax and charge bill to party for this( This procedure continue last 10Years ). We have required for registration of these services due to material send to party location and we have erecting machinery for final use. This all procedure continue up to 30-06-2012 but from 1^st July onward we have to face some problem from party like party says that u cannot charge refection and commissioning bill against this services because from 1^st July 2012 there is two services introduced “Negative services “& Non Negative services list and as per your product u cannot charge service tax under “Errection and commissioning “Services u can charge service tax under “Works contract “Services.

We can so many efforts for convince to party but party says that u can raise bill against works contract services and as per reverse charge mechanism u can pay 50% and party can pay 50% service tax .

Now our problem is that if we cannot registered with works contract services and we are only registered with Errection and commissioning services , is there any mandatory provision against service tax rules from 1^st July 2012 onward for and errection and commissioning related services u can pay service tax under works contract service rules ? If yes then please provide as per Service tax provision notification and amendment .

Your Expert advice will be required in this issue sir .

Advance Thanks and Regards,

SNEHAL SHAH

AI Summary

Reverse charge on works contract services applies where clause IA(v) conditions are met; otherwise provider bears full tax liability.
Erection and commissioning is not automatically a works contract; separate supply and erection contracts remain non negative taxable services, whereas a composite contract may be classified as a Works Contract Service if contractual tests are met. If classified as a works contract, Clause IA(v) of Notification 30/2012 ST creates a shared reverse charge liability only when its conditions (provider status as individual/HUF/partnership and recipient as corporate business entity in the taxable territory) are satisfied; otherwise the provider must pay the full service tax under Rule 2A.