Work Contract Service

[sunil jain]

Pl clarify wheher following services would be covered in "Works Contract Service"[WCS] as per new definition in clause 54 of sec 65B.

a.Gift wrapping (as paper etc cost included)

b.Packing service( as paper & small materia cost included)

 c. Tailoring services (as thread, lining, button is included in cost of tailoring charges)

d.Interior decoration services( as fabric, blinds cost is included)

The items like fabric etc is subject to VAT.

The definition of works contract as per clause 54 is

"works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any moveable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property.

The work covered in r/o movable property is mainly repair, maintennace as construction, erection etc are relevant for immovable property and not for movable.

Hence, kindly clarify whether above service provided or recd would be in WCS as in such case liability would arise on reverse charge basis.

R.K. Aggarwal

AI Summary

Works contract classification: determine if supply of goods with services forms a taxable transfer to qualify as works contract service.
Classification depends on the works contract definition: a contract must involve transfer of property in goods leviable as sale and be for activities related to movable or immovable property. Gift wrapping and packing with minor separable materials are not works contracts and can be billed separately; routine tailoring or minor consumables do not generally constitute works contracts; interior decoration involving supply of materials in relation to property qualifies as a works contract. Reverse charge is not automatically attracted for all works contracts and applies only under specified supplier receiver conditions.