22 April 2009
my co. is a service provider and execute turnkey contract an liable to pay ST. our client wants bill under CS scheme by applying 4 % ST so that his cash outflow is less. we want to raise bill charging full 10 % tax so that input tax credit can be taken. my query is :
can we raise bill by charging 4 % ST as asked by our client and make assessment with ful tax liabilty on taxable value and take input credit . this is beneficial for us. for rest 6% of tax one credit note and one debit note can be issued. can we do this?? any legal problem doing this?? any other way we can do this??
23 April 2009
Reather useing your formula, please use and do rigistered in new service naming Works contracts services in which you can raise and take credit of inputs also. for further assistance , mail me on cabrijbhushan@gmial.com
29 April 2009
My question has not been understood. I explain it in with an example: Company A has got a civil work (work contract) from its client Company B. The value of work or sale value is Rs. 100/ . Cost for the job in the books of A is 110/- i.e it’s a loss job. Cost components are – Material Rs. 80/- and labour component Rs. 30. A got two options i) Raise bill with charging Service tax on full sale value of Rs. 100 @ 10.3 % ie. Charging ST of Rs. 10.3. Take input credit on Rs. 9.68/- on material and labour and pay Rs. 0.32/- to Tax department. ii) Raise bill with charging Service tax on full sale value of Rs. 100 @ 4 % ie under composition scheme ie. Charging ST of Rs. 4/-. Take input credit on Rs. 3.09/- and pay Rs. 0.92/- to Tax department.
B wants A to raise bill with Service tax @ 4% i.e under composite scheme as per terms of contract between them. But A wants to raise bill on B @ 4 % as per his wish and at the same time wants to assess itself under full tax scheme. As a result wants to raise 1st bill on B with ST of Rs. 4. B will pay it. Next step A will raise a supplemnatry bill with Rs. 6/- ST component then as B will not pay it raise a credit note of Rs. 6/-.
In the process A will pay ST department Rs. 10.3 and take input credit though B will pay only Rs. 4/ and take credit of eaqual amount in B’s Book. Crux of question if can A raise bill under Composition schme and assess itself under full tax scheme? Can it be done? Any legal Problem.
CAclubindia
