WE ARE A BUILDER. WE HAVE GIVEN OUT A CONTRACT FOR CONSTRUCTING COMMERCIAL COMPLEX TO A CONTRACTOR. WE WILL BUY IN OUR NAME & PROVIDE HIM INPUTS LIKE CEMENT, STEEL, SAND ETC. ETC. THIS CONTRACTOR GIVES US HIS BILL FOR LABOUR ONLY AND CHARGES FULL SERVICE TAX. WE PAY HIS BILL INCLUDING SERVICE TAX. NOW PLEASE GIVE ME YOUR VALUABLE GUIDANCE ON FOLLOWING : (1) CAN WE TAKE CREDIT OF HIS SERVICE TAX AND ADJUST IT AGAINST PAYMNET OF SERVICE TAX COLLECTED BY US ON RECEIPT OF INSTALLMENT AGAINST SALES FROM A CUSTOMER ? (2) COMPLEX IS NOT YET COMPLETED AND ALSO WE HAVE NOT OBTAINED 'COMPLETION CERTIFICATE' FROM THE COMPETENT AUTHORITY. BUT STILL BOOKING OF SPACE IS GOING ON AND WE TAKE PART PAYMENT FROM THE CUSTOMER AND ALSO SERVICE TAX AMOUNT @4.35% (30% OF 14.50%). (3) SINCE, WE HAVE SUB LET THE CONSTRUCTION WORK TO A CONTRACTOR, ARE WE THE SERVICE PROVIDERS & ( RESPONSIBLE FOR COLLECTING SERVICE TAX )TO THE CUSTOMERS WHO BOOK THE SPACE & MAKE THE PAYMENT TO US INCLUDING SERVICE TAX ?
18 February 2016
1. Full Credit of Service Tax portion on Labour Charges paid to the Sub Contractor can be taken subject to the condition that you pay ST on abated portion of 70% also at the rate of 6%. By adopting this option, you can also get cenvat credit of duty paid on cement, steel and other building materials. Else only proportionate st paid on input services can only be taken. Rule 6(3) & (3A) of cenvat credit rules will throw light on the above 3. Still you are service provider
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