Demand to company forservice tax under rcm paid by provider

This query is : Resolved

Pradip (Querist)
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28 December 2014 Dear Sir,

We are manufacturing company. After RCM notification 01-07-2012, from 01-07-2012 to 31-03-2013, our company has not deposited service tax on 75 % labor bill as per RCM notification. Please note, our company have paid service tax @ 12.36% on 100 % labor bill to our labor contractor and he has already deposited service tax @ 12.36% on 100 % labor bill instead of 25% labor bill. Please also note that our company has not taken credit of that service tax against its central excise payment on manufactured goods .
Now Excise auditor has issued memo to our company to pay service tax on 75% labor bill along with interest and penalty.
Sir, please inform us, should we pay that demand?
If yes, then how our company / labor contract get refund from service tax department?
If no, please provide us judgment / appeal order / notification on this.

Thank you.

Pradip

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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28 December 2014 No need to pay service tax again refer point 11 of link provided. you should have availed cenvat credit.

https://www.caclubindia.com/articles/critical-analysis-on-reverse-charge-mechanism-in-service-tax-21728.asp#.VJ-ZZsAA

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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28 December 2014 In suggested that to get all service tax challan(s) from labour service provider and amend the agreement with the labour supplier by including the clause the of payment of taxes will be bear by service provider, if presently not included.

Then you can raise your objection based Apex court ruling in case of RASHTRIYA ISPAT NIGAM LTD. v. M/S. DEWAN CHAND RAM SARAN.
In this case it was held that service tax are in the nature of Indirect Taxes and burden of taxes can shifted on the contractual agreements between the parties

Pradip

Pradip (Querist)
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29 December 2014 Thank you Sir !!!

But they need judgement after RCM applicable. So Sir I request you, if possible, please provide me recent Casw laws or Judgement which covered after RCM.

Thanks once again.

Pradip

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 December 2014 Recently CESTAT, Mumbai has also in the case of UMASONS AUTO COMPO PVT LTD (2014-TIOL-126-CESTAT-MUM) held that once the amount of Service tax is accepted by the Revenue from the provider of the service, it cannot be again demanded from the recipient.

No agreement to shift liability It is to be understood that it is a statutory obligation on the Service Recipient to pay Service Tax, whether under full or proportional reverse charge and not contractual; in the sense that even if the Service Provider and Service Receiver enter into a contract which has the effect of shifting the liability of payment of Service Tax from one of them to another, then such contracts might be void; the liabilities of both the Service Provider and Service Receiver are statutory and independent of each other; liability cannot be shifted by mutual agreement.

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