23 October 2013
Due to labour problem,the project activities of our company was affected and shut down for a month. The Civil contractor raised a bill of ideal charges during the said period for fixed cost and service tax thereon.
Whether service tax is applicable for aforesaid case.
23 October 2013
The taxability depends on the terms of the contract. Any service rendered by a contractor under works contract is subject to Service Tax. The accounting policies and aspects are not material. If the agreement was for rendering taxable service - how the consideration is arrived is not relevant - the services are taxable and the contractor is right in charging service tax on his service invoice.
The company is bound to pay the service provider his share of service tax, pay their own share under Reverse Charge Mechanism and claim Input CENVAT credit.
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