double payment of service tax - URGENT

This query is : Resolved 

29 August 2009 'Z' is giving a contract to 'X' for Rs.100 with a profit margin of 5%...'X' has sub-contracted to 'Y'. After finishing contract 'Y' raised invoice to 'X' with service tax of 10.3% which comes to 110.3%. Again 'X' will invoice 'Z' with 5% profit margin and service tax of 10.3% on the total which comes to Rs.128.04...

in this case 'Z' is paying service tax twice and is getting input credit one time only....

if it is a direct contract 'Z' has to pay Rs.115.81 only but if it is sub-contract 'Z' has to pay Rs.128.04 with differential service tax of Rs.12.23.

is there anyway to reduce the service tax or one time payment...?????

URGENT

31 August 2009 Bill by Y

Service = Rs. 100.00
S Tax = Rs. 10.30
Total = Rs. 110.30

Bill by X

Cost of Service = Rs. 100.00
Add : Margin 5% = Rs. 5.00
Pre tax price = Rs. 105.00
S. Tax = Rs. 10.82
Total Invoice = Rs. 115.82

Tax payable by X

S Tax Payable = Rs. 10.82
Less : Cenvat = Rs. 10.30
Payable in cash = Rs. 0.52 Only


The invoice vale to Z will be Rs. 115.82 only as against Rs. 128.04, as mentioned in your query.



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