My company is engaged in making of Biris. The conversion charge i.e. rolling wages of biri is paid through contractors. Recently the Central Excise & Service Tax Commissionerate, Bolpur conducted Excise Audit and they are treating the Contractors as an individual supplying manpower for the purpose of biri-making and therefore presuming the Contractors as a manpower supply agency. As per Notification No. 30/2012 dated 20.06.2012, my company is required to pay service tax under Reverse Charge Mechanism on 75% of the total conversion payments. The demand raised is 2.5Cr.
What can I do to get out of this or prove that only 50% of the total conversion payments is required to be paid by my company.
Thank You.
CAclubindia
