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Circular No.199/09/2016-Service Tax
F. No. 137/51/2016-Service Tax
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
Service Tax Wing
REE
New Delhi, the 22"! August, 2016
To
All Principal Chief Commissioners / Chief Commissioners of Central Excise/Service Tax
Principal Directors General/ Directors General of Goods and Service Tax/ Central Excise
Intelligence/Systems/ Audit/ Tax Payer Services/Performance Management
Chief Commissioner AR CESTAT
All Principal Commissioners/Commissioners of Central Excise/Service Tax
All Principal Additional Directors General/ Additional Directors General Audit
Madam/Sir,
Subject: Services provided to the Government, a local authority or a governmental
authority with regard to water supply
I am directed to inform that it has been reported to the Board that in some cases
contractors providing the service of construction of tube wells for the Government have been
considered to be liable to pay service tax.
2.0 The matter has been examined. The following exemptions are available in this
regard:-
2.1 Vide Serial No. 12 (e) of notification 25/2012-Service Tax dated 20-6-2012-
“Services provided to the Government, a local authority or a governmental authority by way
of construction, erection, commissioning, installation, completion, fitting out, repair,
maintenance, renovation or alteration of pipeline, conduit or plant for (i) water supply
(ii) water treatment, or (iii) sewerage treatment or disposal”.
2.2 Vide Serial No. 25(a) of notification 25/2012-Service Tax dated 20-6-2012-
2.2.1 In the period 1-7-2012 to 10-7-2014
“Services provided toGovernment, a local authority or a governmental authority by way of
carrying out any activity in relation to any function ordinarily entrusted to a municipality in
relation to water supply, public health, sanitation conservancy, solid waste management or
slum improvement and up-gradation”.
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2.2.2 In the period 11-7-2014 onwards
“Services provided to Government, a local authority or a governmental authority by way
ofwater supply, public health, sanitation conservancy, solid waste management or slum
improvement and up-gradation”.
3. Thus, it follows that, among others, exemption is available to the following services
provided to the Government, a local authority or a governmental authority, by way of-
(a) construction, erection, commissioning, installation, completion, fitting out, repair,
maintenance, renovation or alteration of pipeline, conduit or plant for (i) water supply
(ii) water treatment, and
(b) water supply -
4. The phrase “water supply” is a general phrase. Basically it will involve providing
users, access to a source of water. The source may be natural or artificial like tanks, wells,
tube wells etc. Providing users access to such a source will involve construction of the source
(if artificial) and the transmission of water to the user. It will involve activities like drilling ,
laying of pipes, valves , gauges etc, fitting of motors, testing etc, so as to eventually result
in the supply of water. Similarly the word plant has to be understood and interpreted with
reference to the context. A plant for water supply need not necessarily involve a huge
assembly of machinery and apparatus, for the reasons explained earlier.
5. Thus the exemption under the entries at Serial No. 12(e) and 25(a) of notification
25/2012-Service Tax dated 20-6-2012, will cover a wide range of activities/services provided
to a government, a local authority or a governmental authority and will include the activity of
construction of tube wells.
Yours faithfull
(Sreeparvathy\S.L)
Officer on Special Duty
Service Tax Wing
Phone- 01123092275
sreeparvathy.sl@gov.in
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