Notification 15/2012

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 August 2012 My Client is engaged in the business of Interior decoration services and is covered under the Works Contract.Currently he has opted for Composite scheme under both Vat & Service Tax Rules.The new notification under the 15/2012 says that the liabilty to pay service tax is of 50% of Service Provider & 50 % of Service Receipient.My Query here is that no where the notification specifys whether it applicable for COmposite dealer or Non Compisite Dealer or Both.So Can any one please give an advise (or) opinion on the same if the same notification is applicable for Composite Dealer?

Amol S Joglekar

Amol S Joglekar (Expert)

09 August 2012 The question of composite is for VAT. We are talking of service tax. Abatement for works contract is given even in new regime with effect from 1 7 2012. now what is the query?

CA NIKHIL OZA

CA NIKHIL OZA (Expert)

10 August 2012 No Yet Clarification has been provided by cbec.•
The reverse charge method is extended to the works contract services to the extent of 50%. Thus, 50% service tax is payable by the recipient and the remaining by the provider of works contract service. But how the value shall be calculated for the purpose of paying the service tax? Whether it will be calculated separately by the service provider and service recipient? No clarification available. Further, what is the logic behind fixing the liabilities of two persons in respect of one amount? Simply increasing the costs and tension on part of both the parties involved therein..But In My opinion whatever amount so calculated by Works Contractor under any Composition Scheme Half Of it should be paid by service recipient..

Amol S Joglekar

Amol S Joglekar (Expert)

10 August 2012 Principle of NATURAL JUSTICE suggests that any act (Service Tax in pour case) can not direct the people how the contract should be negotiated. So, because service tax says so 50% MUST be given by so and so... NOT POSSIBLE. What service tax dept is aiming at is if not paid by the service provider, the dept can always have the right to recover it from service receiver.

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