Demand of service tax
This query is : Resolved
Madhab Chandra Mandal
(Querist)
17 March 2014
DOOSAN Power System India Pvt. Ltd. is a korean company. Providing Engineering Consultancy service for power making power project in India. IOTEP is a construction company took work contract from DOOSAN. IOTEP have appointed several contractor to complete his job.
My client NTIC is proprietorship concern received a work order from IOTEP to supply manpower for an amount of Rs.16,20,000. Later it is extended to Rs.30,00,000 in FY 2010 - 2011 & 2011 - 2012.
NTIC raise the manpower supply bill without adding service tax on the nexus that main company is paying service tax and had not taken input credit of service tax. IOTEP also insist all the subcontractor not to make service tax registration. Accordingly all the sub-contractor did not make service tax registration including my client NTIC.
Now Service tax dept. issued a demand notice to my client NTIC.
Is there any provision in the service tax Act to waive the demand notice?
Please advice me what course of action should I take.
My client NTIC is proprietorship concern received a work order from IOTEP to supply manpower for an amount of Rs.16,20,000. Later it is extended to Rs.30,00,000 in FY 2010 - 2011 & 2011 - 2012.
NTIC raise the manpower supply bill without adding service tax on the nexus that main company is paying service tax and had not taken input credit of service tax. IOTEP also insist all the subcontractor not to make service tax registration. Accordingly all the sub-contractor did not make service tax registration including my client NTIC.
Now Service tax dept. issued a demand notice to my client NTIC.
Is there any provision in the service tax Act to waive the demand notice?
Please advice me what course of action should I take.
CA. RAVIKUMAR
(Expert)
17 March 2014
Hi,
As NTIC is the proprietorship concern and the receiver is the body corporate i.e IOTEP the reverse charge is applicable as per law, hence the NTIC is liable to pay Service tax on 25% of the value of service
If the NTIC comes under Small service provider then he is not required to pay any Service tax but the Service receive has to pay his portion i,e 75%
if you need more information please refer article:
https://www.caclubindia.com/articles/reverse-charge-methodology-under-service-tax-16364.asp
As NTIC is the proprietorship concern and the receiver is the body corporate i.e IOTEP the reverse charge is applicable as per law, hence the NTIC is liable to pay Service tax on 25% of the value of service
If the NTIC comes under Small service provider then he is not required to pay any Service tax but the Service receive has to pay his portion i,e 75%
if you need more information please refer article:
https://www.caclubindia.com/articles/reverse-charge-methodology-under-service-tax-16364.asp
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Madhab Chandra Mandal
(Querist)
17 March 2014
Thanks for reply but 25% will not apply to my client bcz the above fact is in the FY 2010-11 , FY 2011 - 2012
CA. RAVIKUMAR
(Expert)
18 March 2014
Yes, the reverse charge is applicable from 01.07.2012
NTIC is essentially a taxable service provider, The fact that services provided NTIC used by the IOTEP for completion of his work does not in any way alter the fact of provision of taxable service by the NTIC.
Hence NTIC is liable for service tax on full value.
But NTIC can claim the Small Scale service provider exemption
IOTEP is eligible to claim the input tax i.e paid by NTIC
NTIC is essentially a taxable service provider, The fact that services provided NTIC used by the IOTEP for completion of his work does not in any way alter the fact of provision of taxable service by the NTIC.
Hence NTIC is liable for service tax on full value.
But NTIC can claim the Small Scale service provider exemption
IOTEP is eligible to claim the input tax i.e paid by NTIC
Madhab Chandra Mandal
(Querist)
19 March 2014
Thanks Mr. Ravikumar
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