Liability of service tax on executing contracts of Army, CPWD & other central, state govt.

[Guest]

pvt ltd company engaged in business of contractor executing works of mainly Army, CPWD & other central, state govt. Does the contracts executed for these departments have liability of service tax. Most of the govt contractors are not registered under service tax nor any govt department asks for compliance of service tax though they ask for all other registrations like IT, ST, vat etc. just wondering if there is any exemption of service tax on works executed for govt depatments.

[Madhukar N Hiregange]

If this is a construction activity then in the majority of cases there would be no liability as the entry specifies that the construction should eb dfor commercial or industrial purposes. However if State Giovt weere to build trabnsport terminals and the same is being erun in a commercial manner then there could be a aliability.

[Guest]

No,exemption of service tax is available on works executed for govt. department

AI Summary

Service tax on government contracts depends on whether construction is for commercial or industrial purposes, otherwise usually exempt. Service tax on construction contracts for Army, CPWD and other government departments depends on purpose: construction is taxable when provided for commercial or industrial purposes, whereas ordinary public works for government departments are generally not liable; an exception arises if a government-built facility is run commercially, in which case service tax may apply. The discussion also records a practitioner view asserting a general exemption for works executed for government departments and notes prevalent non-registration among government contractors.