Tele : 23019638

E2 Works (PPC) Sub Dte

Dte of Works, E-in-C's Branch
Integrated HQ of MoD (Army)
Kashmir House, Rajaji Marg .
New Delhi 110011.

A/95533/22-20/Pol/E2W (PPC)

' S Dec 15

List 'A' and 'B'

APPLICABILITY OF SERVICE TAX ON WORK CONTRACTS

1. Reference following E-in-C's Branch letters: -

(a)

No 66546/Manual/449/E8 dated 08 May 15.

(b)

No 66546/Manual/458/E8 dated 04 Jun 15.

2. Government of India : Ministry of Finance (Department of Revenue) vide

Notification No 14/ 2015 Service Tax dated 19 May 15 had increased the rate of
service tax to 14b/o wef 01 Jun 15.
3. As per the 'Manual on Contract' Appendix 8.1. Annexure XVI regarding Special
Conditions for Reimbursement/ Refund on Variation in "Taxes Directly related to
Contract Value". the rates quoted by the Contractor shall be deemed to be inclusive
of all taxes (including Sales tax/ VAT on materials, sales Tax/ VAT on Work Contracts,
turnover tax, Service tax, Labour welfare cess/ tax etc.), duties, Royalties, Octroi and
other levies payable under the respective statues. No reimbursement/ refund for
variation in rates of taxes, duties, Royalties, Octroi and other levies, and/ or imposition/
abolition of any/ existing taxes, duties, Royalties. Octroi and other levies shall be
made, except as provided in sub para (b) of Annexure XVI to Appndix 8.1.
4. In view of the above, the liability of payment of service tax shall be borne by the
contractor. This increased liability would result in higher quoting in tenders by the
contractors, which if not properly accounted for in the AEs and sanctioned will result
in increase in number of FC cases. Therefore, after due deliberation, it has been
decided that the appropriate percentage of applicable liability towards service tax are
to be included in Market Variation (MV) before being applied in the RIC/ AEs. All cases
under process should include updated MVs.
5. All zones are directed to revise the MV percentage accordingly and circulate
in their AOR for correct preparation of AEs and to avoid FC/ RAA cases. The revised
MV should take into account the actual rates and should not merely result in an
increase by a certain percentage.

ASaViiir Dube)
< Col
Dir (PPC)
For E-in-C

Copy to:QMG's Branch / DG LWE

HQ of MoD (Navy) / Dte of Wks
'A' Block New Delft
HQ of MoD (Air Force) / Dte of Wks
Vayu Bhawan. Rafi Mara
New Delhi - 110106.
HQ IDS / Works Dte
HQ SFC
C/o 56 APO
PIN - 908547
Coast Guard HQ
National Stadium Complex
New Delhi - 110001.
QMG's Branch / ADG TE
Dir (Works), HQ DGQA
Room No 153, 'H' Block
New ne!hi - 110011
HQ CME Pune
Pin - 908797
Cie 56 APO
CME / Faculty of Construction Management
Pin - 908797
neo 56 APO
Internal
E2W (Army) E2W (Navy'
E2W (Design) E2 (Est)

E4 (Utility'

gin 191911 E6 (Arch)

E8 (Contract)

Aomation Celi - For uploading on the MES website please

Col Rajat
Baijal

Digitally signed by Col Rajat Baijal

DN: c=IN, st=KASHMIR, o=E-IN-C
Branch Army MOD,Automation
Cell EINC, ou=nonnic-mail-admin,
cn=Col Rajat Baijal,
email=autocell-einc-army@nic.in
Date: 2015.12.14 15:41:09 +05'30'