Works contract taxation: service portion is taxable when transfer of goods is leviable as sale; pure labour is taxable as service.

Taxation focuses on the service portion of a works contract, defined by transfer of property in goods in execution of construction, erection, installation, repair or similar activities, where the goods component is leviable as sale. Composite transactions are generally governed by the dominant nature test except for works contracts and specified catering services; if separate and discernible contracts exist the service component can be segregated and taxed. Pure labour contracts are not works contracts and are taxable as services on full value; administrative guidance addresses specific contract types and valuation of the service portion.

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