26 January 2009
I do trading of services in metal finishing business. My business is registered under Service tax - BUSINESS AUXILIARY SERVICES. I get material from customer, get it processed at outside and return the material to customers. I pay service tax when I get services and I collect service tax from my customers. Practically, I am a middle man. As per notification of March1, 2005, payment of service tax is expeted for manufacturers registered under Central Excise for using service in manufacture of exciseble goods . If I get declaration from my customer not to charge service tax, I have to bear service tax paid on work done outside. In this case, I loose business. If I charge service tax from the manufacturers of exciseble goods, do they get credit of service tax paid to me? Example: A is my customer. B is my supplier. I get material from A for processing. I give it to B for processing. B does the work and bills me for Rs. 100/- + tax Rs. 12.36 = Rs. 112.36 I give back the material to A with bill of Rs. 120/- + tax Rs. 14.83= Rs. 134.83. I pay the tax amount Rs. 14.83( collected) - 12.36( paid on purchase of services) = Rs. 2.47 A is registered under CE and in this case, shell A get credit of Rs. 14.83 paid to me as service tax?
If this is the case, your customer cannot avail CENVAT credit on Service Tax paid to you.
It is possible for you to get the refund of Service Tax paid to the government as per the provisions of sec. 11B of Central Excise Act, because you have collected and remitted the service tax which you ought not to have done.
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