circular 138/07/2011 of service tax, Service Tax

[RAM AVTAR]

We are executing work contract for exempted service (Like Railway, exempted buildings, residential building etc. )From service tax.  We have three options to execute the said contract:

1. Part of the work executed by associate contractor:  There are two type of associate contractor

-          Associate contractor defined in our work order / agreement

-          Associate contractor not defined in our work order/ agreement. 

1. Part / full contract assigned to sub contactor not defined in our work order/ agreement
2. Full contract sub assigned to associate contractor

Please clarify whether in above three circumstances, service tax is applicable on sub contractor / associate contractors.  

Further if subcontractor / associate contractor is liable for service tax, whether main contractor can claim cenvat credit.

Posts / Replies

[pradeep khatri]

Dear Ram Avatar,

As clarified in the above mentioned circular the services provided by the subcontractors / consultants and other service providers are classifiable as per Section 65 A of the Finance Act, 1994 under respective sub clauses (105) of Section 65 of the Finance Act, 1944 and chargeable to service tax accordingly.

Services provided by sub-contractors are in the nature of input services.

Best Regards,

Pradeep Khatri