Service tax in case of sub- contractor

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 September 2013 Dear Expert

Kindly enlighten to the followings.
We P Ltd co doing operation & maint.work atPower Plant run & managed by M P State Elect Board, We are paying Service tax on our billing ,We have engaged some sub-contractor’s to execute the Job, . Some of our Sub contractors are not charging Service tax in the bill .As because their views is that since principal Contractor ( means we) is paying service tax on entire Contract value, hence they can not charge service tax from us,

Kindly elaborate, Is such type of Rule in Ser.Tax ? that's where principal contractor is paying service on the value hence sub- contractors are not liable for Service tax , Advise urgently please.. If yes pls provide any reference.

CA Suresh Jain

CA Suresh Jain (Expert)
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04 September 2013 The following service provided by the sub-contractors is exempted:-

sub-contractor providing services by way of works contract to another contractor
providing works contract services which are exempt

It does not seem that service provided by you as main contractor is exempted and therefore, the sub-contractor is liable to charge service tax. If is is not charging it is his problem and you should not be worried. You should discharge your part of service tax under reverse charge mechanism.

disclaimer- all answers are given as per the facts narrated by you. Answer may differ after study of full facts/statements/agreements etc. involved in the case