Please advise on applicability of servicetax on toll plaza building constructions. we are engaged in road construction on BOT basis and also constructing toll plaza Please advise whether the construction of toll plaza is exempted from service tax or not
23 November 2011
As Per F.No.B1/ 6 /2005-TRU DATED 27.07.05 14.4 At present, services rendered for construction of commercial or industrial buildings is taxable. However, construction of roads is not liable to service tax. A point has been raised that if a commercial complex is constructed which also contains roads whether the value of construction of roads would be liable to service tax. 14.5 If the contract for construction of commercial complex is a single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the value of construction of roads. 14.6 When services provided under a contract consist of a number of different elements, a view has to be taken on the basis of the facts and circumstances of each case as to whether the service provider has made a single overall supply or a supply of different services which are to be treated differently.
On the basis of above circular we can say that if there is single contract for construction of road and toll plaza then it should be considered as contract for construction of road and accordingly service tax should not be levied. On the other hand, if there is different contract then service tax shall be levied on construction of toll plaza.
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