Service tax paid on catering contract

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HIREN (Querist)
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04 May 2012 FACT OF THE CASE

(1) As per contract company is liable to pay bill amount with service tax to the catering contractor
(2) But bill raised by the contractor does not include service tax amount.
(3) But afterwards during service tax audit at contractor, Auditor told that contractor had to pay tax on the bill raised by such contractor.
(4) Catering contractor has also paid the same service tax and proof for the same also available.

Now my question is that company can liable to pay such amount of service tax which is paid by such contractor if such contractor take its service tax registration after the contract period.

Amol S Joglekar

Amol S Joglekar (Expert)
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04 May 2012 This will depend upon the negotiations that took place between the caterer and the company. (Many quotes carefully include the words taxes extra as applicable) If no such evidence on the part of caterer.... then it will fall under business risk and the caterer should bear the same whether or not he/she took the number before or after.

HIREN

HIREN (Querist)
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04 May 2012 Dear sir I have already drafted that contract clause between company and contractor already include clause that company will be liable to pay Service Tax but at the time of raising the invoice by contractor he has not included Service Tax amount in his Invoice.

Now he is giving separate invoice for service tax amount for the period before he has registered himself under service tax Act i.e. period before taking service tax registration.

So my question is that can company made liable to pay service tax for the period before contractor get himself registered with Service Tax Authorities.

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Amol S Joglekar

Amol S Joglekar (Expert)
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04 May 2012 No. Absolutely not. With effect from 01/04/2011, service tax has become bill wise. So no need to make any payment towards service tax which is not separately shown in the bill; initially.

HIREN

HIREN (Querist)
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05 May 2012 I want to brought following two points to your notice

(1) the period for which I am talking about is 01.04.2011 to 31.03.12

(2) What will be the position of clause in contract between company and contractor. means can conractor take legal action against company as now contractor giving all proof of pmt of service tax to govt and also ready to give invoice for the amount of service tax.

(3) this bill wise service tax pmt if from 01.04.12???????

Amol S Joglekar

Amol S Joglekar (Expert)
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05 May 2012 Better consult a good LAWYER for the interpretation of the CLAUSE drafted by you. The position of service tax has been clarified. Now you need to ensure the other end i.e. clause in your agreement.

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