exemption of works contract service provided by subcontractor to maincontractor , who's works contract service is exempted , Service Tax

[Dayananda P]

ours is a partnership firm .  we are providing works contract service ( Original works )  to m/s  'A'  a Body corporate in a specified SEZ .  M/s  'A' got that works order   from m/s 'B'  which is a  company & developer of  a SEZ. . As per form A-1 & A-2  furnished by M/s B' to M/s 'A' , the works contract service provided by 'A'  to 'B' in the SEZ is exempt from service tax .   But m/s 'A' subcontracted the same work to us . we are issuing bill to m/s 'B'  mentioning the work details executed at SEZ area aginst particular work order.

please clarify me whether we can claim exemption from service tax on the works contract & labour contract  service  provided at SEZ ,  to m/s 'B'  on the strength of  sl.no. 29 (h)  of notification no 25/2012 ST  dtd. 20/06/2012 

Posts / Replies

[ROHAN THAKKAR]

Dear Sir,

If M/s A is a body corporate and provides services in SEZ, then they are not required to pay service tax subject to compliance of Notification No. 12 / 2013-Service Tax. One of the condition is that Form A-2 should be received by M/s. A from SEZ unit or developer.

 Now if the said work has been subcontracted by Mr A to you, then you can also claim exemption thereon by virtue of Clause 29(h) of Notification No 25/2012-ST. It reads as under: '29(h)  sub-contractor providing services by way of works contract to another contractor providing  works contract services which are exempt;'

The exemption is not subject to any qualification except that the said service should be exempt for main contractor. I

Thus, exemption can be claimed under Sr No 29(h) of Ntf 25/2012-ST. 

However, as as matter of evidence, kindly enter into agreement with main contractor so as to avoid dispute in future.

Regards

Rohan