EXEMPTION TO CONSTRUCTION RELATED SERVICES PROVIDED TO GOVERNMENT

[Dr. Sanjiv Agarwal]

Services provided to Government, Local Authority or Governmental Authority by way of Construction etc of Civil Structure / Residential Complex (w.e.f. 1.3.2016)(Entry No. 12A of Notification No. 25/2012-ST

Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -

• a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
• a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or
• a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act;

under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:

provided that nothing contained in this entry shall apply on or after  the 1st  April,  2020,

have been exempt from levy of Service Tax vide Notification No. 9/2016-ST w.e.f. 1.3.2016.

Exemption from Service Tax on services provided to the Government, a local authority or a governmental authority by way of construction, erection, etc. of -

• a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
• a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
• a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65B of the said Act;

was withdrawn with effect from 1.4.2015. The same has been restored for the services provided under a contract which had been entered into prior to 01.03.2015 and on which appropriate stamp duty, where applicable, had been paid prior to that date. The exemption is restored till 31.03.2020. [Notification No. 25/2012-ST as amended by Notification No. 09/2016-ST dated 1st March, 2016 refers] The services provided during the period from 01.04.2015 to 29.02.2016 under such contracts are also exempted from service tax. [New section 102 as inserted in the Finance Act, 1994]

The aforesaid exemption provided under Entry 12 (a, c, f) prior to 1.04.2015 has thus been restored w.e.f. 1.3.2016 under new Entry 12A. However, such restored exemption shall be subject to the following conditions-

• Services should be provided under a contract
• Such contract should have been entered prior to 1.3.2015 on which appropriate stamp duty, wherever applicable had been prior to 1.3.2015.
• The exemption comes with a sunset clause that this exemption shall not apply on or after 1.4.2020.

Thus, to claim this exemption, contract or agreement should have been entered into prior to 1.3.2015.

The aforementioned services provided during the period 1.4.2015 to 29.02.2016 have been exempted under special provision for exemption vide section 102 inserted in Finance Act, 1994 by the Finance Act, 2016.

The history of exemption on aforementioned services, in summary is thus as follows –

Period	Under
1.7.2012 to 31.3.2015	Entry 12, Notification No. 25/2012-ST
1.4.2015 to 29.2.2016	Section 102, Finance Act, 1994 as inserted by Finance Act, 2016
1.3.2016 to 1.4.2020	Entry 12A, Notification No. 25/2012-ST as amended by Notification No. 9/2016-ST dated 1.3.2016.