Valuation liability

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mmenghani (Querist)
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31 August 2012 In case of reverse charge mechanisim when a contractor submits its invoice according to his valuation, will the service recipient be liable to check/verify contractors valuation and then pay service tax as per reverse charge or shall he pay service tax as shown in the Invoice without verifying. Also can he correct the valuation or adopt the valuation rules and deposit tax. Please clarify

U S Sharma

U S Sharma (Expert)
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31 August 2012 its dependent on the contract, if the contract has shown the composition of sub contracts used, then they can
usually its the invoice of the contractor to be paid without any back check up

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RENGARAJ R.K

RENGARAJ R.K (Expert)
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31 August 2012 Good question. No body has raised such a query. No such clarification is received from the service tax dept on this after the introduction of reverse tax for wct. In general, the contractee can see the arithmetic accuracy, rate of Service tax, vat etc., but cannnot alter or adopt the new valuation. For e.g the contractor has collected 60% of the taxable turnover as repairs instead of original work % of 40%. So, he can very well advise the contractor to revise the bill.

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