11 January 2013
Our Co. is engaged in the business of maintenance of Flats ,building and common service of a particular commercial building Co. is incurring regular repair and maintenance exp.for upkeep of building and paying AMC charges to various vendors for maintenances of : • Lifts • Centralized Air conditioning plants • Genset.etc.
Our query is whether provisions of works contract act are applicable on the co. and it has to pay Service tax under Reverse charge mechanism if yes at what rate. I
The term Works Contract has been defined in Section 65B(54) as follows :- "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property;
The above Services are works contract if they satisfy the 65B(54) and Joint reverse charge is applicable if these service has been provided by Individual,HUF,Partnership Firm and AOP . 50% of the tax is paid by the Service Provider and 50% by the Service recipient. For Valuation of Works Contract See Rule 2A of Valuation Rules,2006.
Please refer to the definition of Management Maintenance or repair service under section 65(105)zzg which is as follows
“Management, Maintenance or Repair” means any service provided by— (i) any person under a contract or an agreement; or (ii) a manufacturer or any person authorised by him, in relation to,— (a) management of properties, whether immovable or not; (b) maintenance or repair of properties, whether immovable or not; or (c) maintenance or repair including reconditioning or restoration, or servicing of any goods, excluding a motor vehicle;
If the services provided by your company falls within the definition you can also take a stand that it is under management maintenance or repair service.
If that is the case then reverse charge mechanism would not apply
CAclubindia
