Recovery of Service tax paid under RCM

This query is : Resolved

Goverdhan Kedia (Querist)
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19 August 2020 A Govt. company has awarded the work of legal consultancy to a Law firm. In the work allotment order it has been mentioned that fees is inclusive of all taxes and duties. Later the law firm submitted their bills for full amount of the contract value after completion of work. The applicable due service tax under RCM on invoice value was paid by the Govt. company to service tax and also makes the payment to the law firm after deduction of applicable TDS on invoice value.

Later, during audit the same has been found that the contract price is inclusive of all taxes. As such auditors has asked why the due taxes was not deducted from invoice.

Since the duty of payment of taxes is of the service recipient as such whether the organisation can claim the taxes paid as service tax from the service provider as because the same is mentioned in the contract allotment letter.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 August 2020 The organisation can claim the taxes paid as service tax from the service provider as because the same is mentioned in the contract allotment letter.
The contract value is inclusive of tax hence recovery of tax paid is in order.