Whether liable to service tax or not?

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

20 January 2014 Local Authority has floated tender for Const. of affordable houses for Economically Weaker, Low Income Group section. Local Authority has given work order for Const. of Houses & other infrastructure works. Land owner is Local Authority, Contractor has to construct building only & hand over to Local Authority. Local Authority will distribute the houses to the beneficiaries.

In this case whether Service Tax is applicable or not, the point of taxation whether Local Authority should collect tax at the time of sale?

Contract has submitted the tender alongwith service tax cost, as per our understanding work awarded by local authority is exempt from service tax. Whether contractor's claim for service tax is tenable or not?