Gajanan Joshi (Manager (Accounts & Finance)) (81 Points)
20 November 2014A contractor (A proprietorship firm) who is offering a works contract service and issuing separate bills for labour and material and the service tax is charged @ 3.09 % on labour charges.
The Service is received by a partnership firm. and bills are duly paid.
In this case whether the service receiver is liable to pay the short Service tax paid (12.36-3.09) on labour charges??
Manish K.Gandhi
(Superintendent)
(966 Points)
Replied 20 November 2014
The question is if you say activity is works contract why two separate bill i.e. labour and sale bill? As per my opinion,in this situation, it is not works contract. As received by partnership firm (being other than Body Corporate) no service tax liability for works contract under RCM-Notif.30/2012-ST. Then why 3.09% S.Tax.?Somthing is wrong or missing.
Venkatanarayana GM
(Partner associate at Hiregange & Associates)
(1279 Points)
Replied 21 November 2014
If the assessee is in posittion of bifurcationg the material portion and service portion separately and issuing separate bills for material and labour then where is the question of Works contract?
Please kindly charge 12.36% on labour charges and local vat on material portion.
To be on safter side please bifurcate work order as well for both material and labour separately.
Thanks
Gajanan Joshi
(Manager (Accounts & Finance))
(81 Points)
Replied 21 November 2014
ok.
my doubt is from the side of service receiver. if the service provider is raising a bill with only 3.09% of service tax, do the service receiver has any liability for the balance portion i.e. 9.27% ?
can department raise a demand for such short service tax amount on service receiver?
Venkatanarayana GM
(Partner associate at Hiregange & Associates)
(1279 Points)
Replied 21 November 2014
In your case service receiver is partnership firm. Hence, there is no service tax liability under RCM
CA Ayush Agarwal
(Kolkata-Pune-Mumbai)
(27186 Points)
Replied 04 May 2015
I am agreed to above opinion, and this will not be work contract.
Manish K.Gandhi
(Superintendent)
(966 Points)
Replied 05 May 2015
Sh. Gajanan Joshi has asked question in forum but simultaneously he should ask question to the Service Provider for reason behind the rate of 3.09%. Is service provider was treating his service as Manpower and charging only S.Tax 25% of applicable S.Tax and in impression that balance to be paid by service receiver?
In fact when individual/proprietorship/HUF/Partnership firm provide service to Body Corporate in such case only RCM is applicable for Manpower service.
Sh. Gajanan Joshi may get clarification from the service provider.
CAclubindia
