Contradictory procedure by Govt. Agencies

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This query is : Resolved

Shyam Lal Naik (Querist)

24 March 2009 Govt. departments(neither Service Tax or Central Excise Assessee)outsource various activities to contractors. Many of these activities are Taxable Services.

How ever, when it comes to payment of Service Tax, they put strange conditions, contrary to Service Tax procedures.

In some cases, even, filing of service tax return, is prescribed as a pre condition.

Can, in such circumstances, High Court be approached to exercise its writ jurisdiction to issue suitable direction to Government Companies/Agencies?

Rajesh Kumar

Rajesh Kumar (Expert)

24 March 2009 I am facing the same problem in a large concern with respect to very small service provider. The raise a bill, and the bill shows charge of service tax. However the bill clearly shows that they are not even registered with service tax and certainly not paying service tax. Many of the bills do not registration number, or address etc. on the bill. Some bills is in the form of letter.
As the company has to take credit on the service taxes paid, it is duty of the company to verify that the service tax invoices satisfy the requirement of Rule 11. In case of serious doubt, we do ask for tax payment challans or copy of return filed or copy of registration certificate.
As a rough guess, there are a large number of small service provider who are charging service tax on their invoices but paying service tax. In such scenario some caution is required.

K V Subba Rao

K V Subba Rao (Expert)

24 March 2009 From the view point of Service Receiver who pays Service Tax, there is nothing wrong in enquiring whether Service Provider is registered or not and making remittance to the Govt. After all, it is his (Service Receiver) money that is ultimately being paid.

Regarding variations in standards and procedures followed by various Govt., Agencies, we should learn to put up with all such odds

Shyam Lal Naik

Shyam Lal Naik (Querist)

24 March 2009 In my case, both the service provider and service receiver are large concerns.

The client does not accept invoice under Rule 4A. They put condition of pre deposit of full amount of service tax in cash, prior to releasing the payment.

Viewed from the angle of Cenvat Credit Rules, this leads unlawful collection. This directly violates Article 265 of the Constitution.

Government Companies/Agencies, not being Central Excise assessees are either ignorant of Service Tax Law or they confuse themself with East India Company.

K V Subba Rao

K V Subba Rao (Expert)

26 March 2009 Get in touch with other such "victims" for co-ordinated action

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