Notification12/2012 point 12(e) vs rule 6(e)

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sanjay rameshbhai solanki (Querist)
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08 February 2016 According to mega exemption notification12/2012-st point 12 (e) water & sevrage treatment are exemption from service tax

We have done work of gujarat water supply and sewage board under sub contract

Now our audit is ongoing by service tax department
according to service tax auditor main contractor is exemtated but sub contractor is taxable

they applied rule 6(3) for service tax payment @6 % & change form 01 jun 2015 @7% of work done

Guest

Guest (Expert)

08 February 2016 Dear Mr Solanki, The case is quiet complicated. If in the agreement between Govt and the Main contractor, if there is a clause which states that the Main contractor should get government approval for appointing sub-contractor, then there is a chance of winning the case saying that sub-contractor is not liable for ST. But Department will certainly issue show cause notice and start assessment because they have strong point in their favour. Still there is good chance of winning the case for the company also.

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sanjay rameshbhai solanki

sanjay rameshbhai solanki (Querist)
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08 February 2016 your mean to say according service tax auditor sub contractor is liable to pay service tax ?

Guest

Guest (Expert)

08 February 2016 Yes sir. But there in some cases, where the matter went till high court, exemption available to main contractor was also transferred to sub-contractor. But that benefit was not given by Service tax department. He won only in High Court / supreme court. The winning is dependent on the wordings of the agreement, documents that the company have, the quality of argument before the ST Department & the Appellate Tribunal.

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sanjay rameshbhai solanki

sanjay rameshbhai solanki (Querist)
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08 February 2016 any example case about it you have ? please share if you have so we will get more idea about it and can take benefits of it.

Guest

Guest (Expert)

08 February 2016 I have seen an Old Orissa High Court judgment where benefit of main contractor was transferred to sub-contractor - dont remember the case name - I have to search and get back. But the wordings of the judgment may not apply to everyobdy. To apply such judgment your facts should be same as the facts of that judgment and the context should be same. Only after comparing your case with that case anyone can tell if that will help you or not

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Guest

Guest (Expert)

08 February 2016 pls check the mail I have sent you

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