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Applicabiity of service tax regarding works contract

Akansha Malviya (Article Assistant) (6 Points)

13 September 2016

I want to Know , where any real estate company received services from labour contractors who are not registered under service tax , while payments made to that contractors is itself above the specified limit of service tax applicability , whether such contractor will be liable for service tax and if So, what will be the lability shall be held upon service receiver? Explain me the procedure

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (175285 Points)
Replied 15 September 2016

Pure labour charges not classified under Works Contract Service and hence RCM is not applicable. Full ST is to be paid by the Contractor under respective service i.e. whether Residential, Commercial Construction etc. Service receiver is liable to pay 100% service tax to contractor, and liability to collect and deposit the service tax to department fully lies on service provider.

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Akansha Malviya (Article Assistant) (6 Points)
Replied 15 September 2016

Thank You Sir for your response.But what if , Service Provider is not registered under service tax, and amount payable to service provider is itself above the specified limit i.e. above Rs. 10 lacs. what will be the liability of service recieiver in such case?

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (175285 Points)
Replied 15 September 2016

As per act, no liability on service receiver if its pure labour contract. But an inquiry will be followed as you must be deducting TDS u/s. 194C. Based on that inquiry, he will be liable for ST +interest and penalty. So, better to inform him and regularize.

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Akansha Malviya (Article Assistant) (6 Points)
Replied 17 September 2016

Thank you so Much sir for your response. This helps me to proceed further in my organisation .

Thank you.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (175285 Points)
Replied 17 September 2016

Most welcome & Good Luck

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chandra sekar (Manager-Accounts) (387 Points)
Replied 17 September 2016

suppose if it is like that. the raw material supplied by the receiver, and the provider, only processing the same and converting into finished goods na prepared a job work bill, subsequently payment released by the receiver after deducting TDS u/s 194 c. will it attract service tax on part of provider, as the provider processing the same thro his labourers.

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (175285 Points)
Replied 17 September 2016

No service tax is payable on ‘any process amounting to manufacture or production of goods’ by job-worker, as that activity falls under the negative list under Section 66D (f) of the Finance Act, 1944.

S. No. 30 (c) of notification no. 25/2012-ST dated June 20, 2012 exempts ‘carrying out any intermediate production process as job-work in relation to any goods on which appropriate duty is payable by the principal manufacturer’.

It also covers certain other activities of job-work.