Exempted from Construction Service, but what about Works Contract Service?
IN yesterday's DDT, we reported a number of service tax notifications issued on 28th June 2010. Of these, two notifications, and 42/2010 provided exemption from payment of service tax in respect of commercial or industrial construction services referred to in sub-clause (zzq) provided within the port/other port or Air port respectively.
It seems while exempting the commercial construction referred to in sub-clause (zzq), the taxability of this service undertaken as Works Contract Service referred to in sub-clause (zzzza) was totally forgotten. Needless to say the construction services undertaken within the port/other port airport may also merit classification under Works Contract and the whole purpose of issuing exemption Notifications, and 42/2010 would be defeated if Works Contract Service referred to in sub-clause (zzzza) is not included in these exemptions.
Similarly, in a recent clarification issued by the Board vide letter dated 24th May 2010, on taxability of construction of residential houses by National Building Construction Corporation Limited (NBCC) for Central Government officers, it was clarified that service tax is not attracted under Construction of Complex Service. However, no mention was made about taxability under Works Contract Service.
Similarly Notification No. , exempts taxable service of construction of complex when provided to Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana . Here also there is no exemption for Works Contract Service.
May be the Board should check twice before issuing Notifications/Clarifications on such services which are also executed as Works Contracts.