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S.Thiyagaraja (Querist)
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26 December 2009 A cellphone service provider engages a contractor for maintenance of its cellphone towers. During the period of this contract, the contractor engages a service engineer for a repair work to be done on one of the towers of the cellphone company. After repairing, the engineer issues a bill for Rs.21,000/- including service tax of Rs.1931/- in the name of the contractor. The contractor, in turn, submits the bill to the cellphone company and gets reimbursed. Now the questions are

1) who is liable to deduct tax at source and on whom?

2) who is entitled to take credit of input service tax?

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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26 December 2009 Cellphone serviceprovider will deduct tds out of the payment made to the contractor and and the contractor will deduct tds of the engineer. Service tax credit will be taken by the contractor.

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