17 December 2010
When service provider i.e. contractor fails to comply with conditions of work order assigned to him, company deducts penalty from its bill amount as per agreed terms. Whether this penalty amount should be reduced from expenses or credited to Misc. Income while accounting? whether ST is payable if this is credited to Misc. Income.?
17 December 2010
In my view, the amount should go to reduce the expense. Because, the net amount is payable as per the terms of the condition of the contract.
If at all it is treated as Misc. income, ST is not payable. The reason being, this is not a receipt against any service rendered.
17 December 2010
Invoice is not provided for net amount, it is provided without deducting penalty amount...so CENVAT credit is also availed on full amount.
17 December 2010
That is only for when bill amount is reduced due to short service provided...in this case service is fully provided but only penalty is charged due to not fulfilment of contract clause say..contractor has not submitted PF challan or ST Certificate as per contract. than...
CAclubindia
