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Service tax default

prajapath.s.k. (manager accounts) (79 Points)

06 December 2012

Dear ccians,

i would like to know,where in the a pvt ltd.co. providing secutirty service to another pvt ltd., co. is in default i,e not paying tax to the govt. how the service receiver come to know the default .Wha t would be the liability of the service receiver when service provider is in default

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4 Replies

raja sekhar (Accounts Officer) (62 Points)
Replied 06 December 2012

first of all,

since it is a company, reverse charge mechanism does not apply.

so there is no liability on service receiver.

and service receiver can take Credit based on bill submitted by service provider and service receiver need not ensure that the service provider pays the same to central govt. the liability to pay the same lies on service provider only.

central govt, doesn't have any right to challenge service receiver for taking credit, if the service received has a valid bill document stating the details of service tax charged.

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 08 December 2012

Agree with raja shekhar....the service receiver need not worry about payments or defaults made by service provider.

Priyanka Maheshwari (Assistant Manager) (76 Points)
Replied 08 December 2012

Agreed, the service receiver can take credit on the basis of the bills submited by the provider without worrying about the fact whether provider has deposited the money with the govt trasury or not.

prajapath.s.k. (manager accounts) (79 Points)
Replied 10 December 2012

Thank u friends,

my concern is that they may have not deposited the collected tax, how can we make them to comply the law, dont' u think that we are encourging them to evade tax. i feel so.