Sales Tax Instructions

Sales Tax Instructions, 2009
SUBJECT:- CHARGEABILITY OF SALES TAX ON GENERAL REPAIR
WORKS CONTRACTS
Military Engineering Services (MES) has approached the Central Board of
Revenue to clarify the status of chargeability of sales tax on contracts awarded by MES
to various contractors for general repair works in defence organizations. These contracts
have been classified as under:
a) Term Contract (TC): General repair like masonry, carpentry, plumbing,
electrification, water supply maintenance, sui gas maintenance and replacement
of un-serviceable items, furniture maintenance.
b) Decoration Contract (DC): White washing, painting distempering.
2. The issue has been examined in the light of relevant provisions of the
Sales Tax Act, 1990. As regards the question of leviability of sales tax on the service
charges of the services mentioned above, it is stated that the services of construction and
civil works do not attract the levy of sales tax. Therefore, no sales tax would be leviable
on the service charges of the following activities:
(i) Masonry
(ii) Carpentry
(iii) Plumbing
(iv) Electrification
(v) Water supply maintenance
(vi) Sui gas maintenance
(vii) Replacement of un-serviceable items
(viii) Furniture maintenance
(ix) White washing/painting/distempering
3. As regards the question of leviability of sales tax on goods consumed
during the execution of the services mentioned in above para, it is clarified that no sales
tax shall be leviable on the said goods provided:
(a)
(b)
(c)
The sales tax has been paid by the contractor at the time of procurement of
goods;
No supply of same state goods takes place and the goods supplied are
consumed in civil works/repair e.g. paint consumed in white washing.
No value addition is made as far as the goods are concerned: the contract
consists of charges for services rendered and value of goods on actual
basis.