If a contractor is doing solely painting work (a painting contractor), he is not eligible to take exemption mentioned in serial no 14 of mega exemption because of the following reasons.
- Serial number 14 of mega exemptions says, Services by way of construction, erection, commissioning or installation of original works pertaining to – (b) a single residential unit otherwise than as a part of residential complex
Serial No. 14, is different from serial no 12, 12A and 13. In Serial number 12,12A and 13 the words “ completion, fitting out, repairs, maintenance, renovation or alteration of” is there, which is missing in Serial No 14.
Since painting work (Whether in the nature of work contract or pure labour charge) is a completion work, we can say that, it is not eligible for mega exemption under serial number 14, if it is rendered for single residential unit.
- Mega exemption serial number 14 says Construction of “original works”.
Definition is given for “Original works” in Mega exemptions notification. It is says – For the purpose of this notification, unless the context otherwise requires ..(y) Original work means has the same meaning assigned to it in Rule 2A of the Service Tax (Determination of Value) Rules, 2006
Service Tax (Determination of Value) Rules 2006, under Rule 2A says how to determine the value of services involved in the execution of a work contract. And in simplified scheme, it says,
Value of service portion as 40% of total amount charged in the case of original works
Value of service portion as 70% for other than original works including among other things completion and finishing services.
So completion and finishing service under any circumstances, whether it is for new construction project or or in relation of repairs or maintenance, is not original work. So mega exemption benefit.
My question
A contractor has taken contract for construction of single residential unit.
He will do the following works
Earth work excavation, Foundation, Basement, Superstructure, Roofing, Partition walls, Flooring, Plastering, Steel Reinforcement, Painting. That is he is doing full work from basement to completion/finishing. This is a single contract.
On reading of difference between serial no (12,12A and 13) and 14 + meaning of original work, it is not possible to take benefit of mega exemption notification14 on completion and finishing part of full contract value by the contractor who has taken full contract for construction of single residential unit.
From which stage, completion and finishing to be reckoned. There is no definition for completion and finishing work.
Please advise.
Regards
Siva
CAclubindia
