Dear Mr Malhotra,

The answer to your question would depend on whether Work order and payments are done by CPWD or by Central Workers Education Board.

In case of CPWD:

I think this will fall under the definition of government as specified in section 65B (26A) which says that

"Government" means the Departments of the Central Government, a State Government and its Departments and a Union territory and its Departments, but shall not include any entity, whether created by a statute or otherwise, the accounts of which are not required to be kept in accordance with article 150 of the Constitution or the rules made there under;

If it falls under this definition then clause 12 of mega exemption notification no. Notification No.25/2012-Service Tax, dated 20.06.2012 as amended by Notification No. 6/2015 would apply, which says that

12. 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 -

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;

(d) canal, dam or other irrigation works;

(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or

(f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;

All other things being satisfied your case will fall under this entry and no service tax would be payable. Hence, you will not have to reimburse service tax to contractor.

In case of Central Workers Education Board (CWEB):

As I understand from http://www.cbwe.gov.in/about-us.aspx website that it is society register under Societies registration Act, 1860. If the Work order is issued by CWEB and payment also done by them, then service tax would be payable and you will have to reimburse it to the contractor on production of relevant proof and documents.