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Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
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Comments
(nilesh) Posted On: 18 Jun, 2013

We are in the business of power generation thru wind mills.For installation of wind mills at remote / forest location we are buying land and subsequently we build road network to connect these wind mills. Road are most critical requirement as these helps in the movement of men/material/vehicles during installation and also for maintenance. For construction of these Roads we use services of civil contractors. For pure labour work involved in Road construction we issue work order with 12.36% of service tax impact and for the material to be used in Road we issue PO on the contractor with applicable VAT. Please advise 1) whether this treatment is in order or this may be treated as works contract under service tax which may have different treatment all together from service tax point of view . 2) If the service provider is non company what will be impact on us if this is considered as works contract. 3) If this Road contract job is considered as works contract , should we enter into work contract , with both labour and supply cost component. Kindly revert with your advise.

Pure Labour Contracts do not fall in the definition of works contract for the purpose of service tax. To fall in the definition of works contract it is necessary that there should be transfer of property in goods involved in the execution of such contract which is leviable to tax as sale of goods. Pure labour contracts are therefore not works contracts. Since such contracts are not works contract, the reverse charge mechanism is also not applicable and the entire service tax is payable by the service provider only. However, even if a small part of material is supplied by the contractor alongwith services, it will come under the definition of works contract and accordingly reverse charge will be applicable if the service provider is an individual/HUF/Partnership firm/AOP. Also, kindly have a note that the services in relation to construction of roads are exempted under entry no. 13 of notification no. 25/2012-ST dated 20.6.2012; w.e.f. 1.7.2012 if the roads are being constructed for use of general public. Thus, if we can prove that the roads in our case are being constructed for use by general public, we can claim total exemption from service tax.
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PRADEEP JAIN, F.C.A.

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