Non Payment of Service Tax

Sumit (CA Practice ) (675 Points)

10 May 2007  
Hello Friends

Hoping for an answer to this question. Kindly give answer with reference to the relevant provisions of the Service Tax Act or Decided Cases.

We are providing the Service which comes under the ambit of Service Tax. We are already registered with ST Deptt. and depositing the service tax regularly to them.

I am giving below the details of the bill raised by us and submitted to our clients:
Eg:                 All figures are just the approximates not real

Wages                                 : Rs.50000
P.F.                                      :  Rs.6000
E.S.I.                                   : Rs.2000
Service Charges                  : Rs.12000
Total of above                    : Rs.70000
Service Tax on above         :  Rs.8400
Total Amount of Bill             : Rs.74800

Now the Director of one of our clients  has issued an order to their Accounts Department to withheld all payments in respect of P.F. & E.S.I. and Service Tax in relation to all contractors providing services in that Organisation.
We have the copy of this order.

They are passing the bill of only Rs.62000/- (i.e. 50000+12000).

Now as per Service Tax Rules, a person has to deposit the Service Tax on receipt basis i.e. in case he received any amount of money from the client he has to deposit the part of service tax to the ST department.

Now my question is whether we are required to deposit the service tax to the ST Deptt. against which we have not received any money or we have to deposit the proportionate amount. We also have the proves in the form of letters issued by them to us in which they are admitting that they are not paying us the service tax, P.F. and E.S.I.

Kindly help me on this matter. Can you also give reference of any legal decision which is alike this.

Thanks and hoping for reply.

Sumit Aggarwal