Service tax on sub-contractor

This query is : Resolved

VIKAS SHARMA (Querist)
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22 January 2010 Dear Experts,

I am aware that the Board has issued a master circular in which it has been clarified that a sub-contractor is essentially a service provider, hence liable to pay ST and the main contractor shall take credit of the same.
My query is, if the service provider (sub-contractor) is able to prove that the main contractor has paid service tax on total value of work done including the value of his (sub-contractor's) services, then:
1. Whether the deptt. can still issue SCN?.

2. How far the plea that there is no loss to the revenue hold good in this case?

3. Whether the interest, penalty will be levied?

SIDDHARTHA SANKAR ROY

SIDDHARTHA SANKAR ROY (Expert)
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23 January 2010 If it can be proved beyond doubt that the subcontractor's service tax liability has been discharged by the principal contractor over and above their own service tax liability then ultimately the decision will go in favour of the subcontractor even though the Department may issue SCN demanding duty, interest etc .Court has given several favourable decisions in such cases.