Servicex Tax / VAT Implication

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parag (Querist)
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13 February 2010 Dear Expert,

I am woking in a company and our company is providing free Lunch & Dinner to the labour staff. Few Months ago our admin dept has decided to outsource the same and had awarded a contract to the party. But the said contractor has remained failed on all front and hence, once again admin dept has taken charges. Later on admin dept found that the said contractor has not paid some of the bills of LPG, Provision Items etc. Our admin dept has decided to pay on behalf of the contractor and recover the same from his bill. Before making payment of these bills, I want to know that whether it will create implication of Services Tax / VAT on our company? Please reply at the earliest. I will be very thankful to you.

CA Chitresh Gupta

CA Chitresh Gupta (Expert)
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13 February 2010 Dear Parag,

The service tax or Vat are indirect taxes and these has to be charged on bill itself.

By paying the bill your obligation is over, it is the duty of the vendor to charge and deposit the service tax and vat under the Law.

If something to the contrary is written in an agreement with the contractor or vendor with you then it will be as per the agreement terms.

Regards

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