04 May 2010
Dear sir i)My co.being a principal contractor has placed PO for Rs.10 crores on a subcontractor for carrying out civil and fabrication works
ii)The price of Rs.10 crore includes service tax
iii)The subcontractor has submitted his certified bills for the service components of civil and fab work and my co. has paid the bills without asking for service tax components which is inclusive in the agreed rate
iv)The subcontractor has furnished the srvice tax regn. no. in his bills
v)Has my co. violates any Service tax rules regarding service tax payments to the subcontractor without asking for detailed break up of service tax components being a principal employer.
vi)What is the procedure to be followed by the co.regarding service tax payments in such cases of all inclusive rate.
Thanx and regards S.K.Majumdar Asst.Manager Internal Audit
04 May 2010
Dear Sir, in this case both, Principal Contractor (PC)and Sub-contractor (SC)is liable to charge and pay service tax for taxable services provided or to be provided by them. To claim CENVAT, it's better for P.C. ask to SC for CENVAT Invoice i.e. proper showing service tax, Education Cess & SHE Cess.So, that he can claim CENVAT and reduce his tax laibility accordingly.
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