Applicability of st on sub-contract of construction works

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Ramesh Angadi (Querist)
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06 September 2012 Sir/Mam,
I have a query on the applicability of the service tax on the sub-contract of construction works such as masonry works, flooring works, cutting and binding of steel, preparation of steel structure for roofing etc.
In the present situation, for the above works, steel, cement etc is supplied by the contractor/ builder and the contractor/ builder pays ST on his bills raised by him to the principal builder.
My query is that, since there involves no transfer of materials, the above works will not be covered under works contract and as per the definition of construction works, above works will not be covered under construction services and if we go through the definition of job-work (as per Central Excise Act, since not defined under Service Tax) it says, that the semi-finished/ finished product of sub-contractor/ contractor should be used by the principal manufacturer for manufacture. i.e., to manufacture certain goods as per the definition of central Excise Act, 1944.
Hence, these works may not come under all the above three categories.
The other point to be considered here is that the main contractor will collects and pays ST on his bills raised to principal builder which involves the bills of the sub-contractor also.
Hence, in the present ST Act of negative listing, are these services are taxable under ST and if so in which category...?!
Please clarify the same.
Thank You,

CA Suresh Jain

CA Suresh Jain (Expert)
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07 September 2012 1. You are absolutely correct saying it is not a works contract as it does not involve transfer to property
2. Your thinking is right so far definition of Job work is concerned

3. But, your attention is missed towards the definition of word "Service" which says

""service" means any activity carried out by a person for another for consideration, and includes a declared service"

According to this the work being done is a service which is neither in negative list nor exempted the service tax is payable.

For further clarification please mail the query at sureshjain.nj@gmail.com and pay if you please Rs. 100 to 500 donation to the "KADAM" institute engaged in education to children of construction labours.

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