Reverse charge mechanism

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2012 Dear All,
I work in a manufacturing industry manufacturing dairy products. We hire labour contractors in our factory who is not charging any service tax in their bill as they are availing basic exemption limit criteria. My question is whether we had to deposit 75% of tax value of their bill which is not charged by them?
Again we do not have any output services where we can take the CENVAT credit of tax paid as above, if any. Then how the amount of tax will be adjusted from us. Should we bear additional expenditure on the amount of bill of contractors. plz reply

neeraj

neeraj (Expert)
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15 October 2012 Yes u have to deposit ST.
U can avail credit to pay Excise means u can adjust ST against Excise duty payable

Querist : Anonymous

Querist : Anonymous (Querist)

15 October 2012 Dear All,

As I had stated earlier that I cannot adjust the CENVAT Credit of tax paid as our item is not taxable to Excise Duty as well.
Hence please reply with a concrete point (if possible provide suitable notification)

CA.Ganesh

CA.Ganesh (Expert)
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27 October 2012 You have to pay service tax under reverse charge mechanism.

If you are manufacturing any excisable goods or providing taxable services, you can claim refund of service tax paid as above

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