RELEVANT PROVISION

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ANAND SHARMA (Querist)
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16 June 2010 SIR,

PLEASE SPECIALLY WRITE THE RELEVANT PROVISION OF THE ACT.

OUR COMPANY IS CONTRACTOR IN IOCL. WE SUB CONTRACT THE WORK TO A SUB CONTRACTOR. WE TOOK THE CENVAT CREDIT OF SERVICE TAX (AFTER RECEIVING THE TAX INVOICE & PAYMENT OF SAME BILLS TO SUB CONTRACTOR).

NOW SERVICE TAX DEPARTMENT CHECK OUR RECORD FOR CENVAT CREDIT TAKEN BY US FOR CROSS VERIFICATION FOR PAYMENT OF SERVICE TAX. DEPARTMENT FOUND THAT THE SUB CONTRACTOR DID NOT MAKE THE ANY PAYMENT OF SERVICE TAX TO GOVERNMENT.

SERVICE TAX DEPARTMENT IS NOW SAYING THAT AS OUR COMPANY TOOK THE CENVAT CREDIT SO OUR COMPANY IS RESPONSIBLE FOR PAYMENT OF SERVICE TAX. THEY TELL US ABOUT THE RULES 9, 6 & 3 OF THE ACT.

PLEASE CLARIFY THE MATTER THAT WHO IS RESPONSIBLE FOR PAYMENT OF SERVICE TAX WITH RELEVANT PROVISIONS.

REPLY URGENTLY.

Shyam Lal Naik

Shyam Lal Naik (Expert)
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16 June 2010 You are well within your right to take the Cenvat Credit and utilise the same in terms of Rule 3 and 4 of the Cenvat Credit Rules.

No where an obligation has been casted upon the service receiver to verify the payment of tax by the service provider. The Rules/Law if any quoted by the department is without substance.

It is the department's duty to recover the tax and interest from the sub contractor.

The sub contractor is liable to pay the tax in terms of Sec 68(1).