Service tax not collected from the service reciever - got penalty

Kindly consult some tax expert CA to proceed with your case. Since, you already under the second stage appeal, its better for you to show him everything about your appeal filed alongwith relevant papers to justify your case based on contentions you mentioned for non levy of service tax.

 

There is no provision in law which forces customer to pay service tax if you failed to charge service tax to your customer on whole amount earlier and still, if your want to recover, you must need to convice your customer peacefully for recovery of additional service tax not charged earlier.

 

Thanks and Regards,

Manoj B. Gavali

 

 

Principally, the worker being employee of the assessee, the assessee is required to contribute and deposit PF/ESI amount from his pocket, however he is recovering the same from the service receiver and getting financial benefit, hence the same is includible in gross value of service in terms of Section 67 of the Finance Act’1994 read with Rule 5(1) if Service Tax (Determination of Value) Rules’2006. Also it is clarified in CBED circular No. B11/1/98-TRU dated 07.10.1998, amount of PF/ESI is to be covered in taxable value of service. Also, in para 22.4 of Circular F.No.B1/6/2005-TRU dated 27.07.2005, it is clarified that,

 

“22.4:-  Service tax is to be charged on the full amount of consideration for the supply of manpower , whether full-time or part-time. The value includes recovery of staff costs from the recipient e.g. salary and other contributions. Even if the arrangement does not involve the recipient paying these staff costs to the supplier (because the salary is paid directly to the individual or the contributions are paid to the respective authority) these amounts are still part of the consideration and hence form part of the gross amount. “

In recent judgment in case of Neelav Jaiswal & Brothers Vs. CCE, Allahabad [2013 (3) ECS (212) (Tri-Del)], it is held that,

 

“M/s Hindalco consideration for such taxable service provided by the appellant had remitted to the appellant not only the amount agreed to between the parties for remunerating the personnel so deployed but also the amount of provident fund payable by the appellant to Provident Fund authorities, in terms of the appellant's statutory obligation. Both these amounts therefore constitute the gross amount charged by the appellant for the taxable service provided to M/s Hindalco Industries Ltd., since the taxable service was provided for a consideration in money. Both these amounts therefore constitute the gross amount charged by the appellant for having provided the taxable service.” [Para7]

Thus, value of service cover salary/wages of worker, PF/ESI/Insurance and whatever other perks(even in case paid directly to workers by service receiver) on which service tax is required to be paid. 

The excuse that service tax is not charged and collected can not be accepted, any how.

Manoj and Manish Sir Thanks to your help.

My intention is not to evade the service tax. I have not collected the service tax from the company by mistake. I was not even instructed neither by the company finance secretary nor by the auditor. Now the amount grow to more than 1 crore with penalty. I cannot pay this HUGE amount. I got monthly salary for providing the man power service, nothing more than this.

Is there any possibility to reclaim the service tax now from the company which I haven't collected in the past?

Will I be arrested? The case is infront of the Tribunal for compliance.

What are the other options?

I have no immovable property and my movable property is only worth 5 lakhs. The company is taking advantage of my poor condition to evade the tax.

I don't think for chances of arrest after initiation of adjudication process and at appellate stage. Better to approach learned consultant/lawyer. Last option is to approach court for insolvency.

Depending on the other facts of the case, there are chances that penalty can be dropped by the Hon'ble Tribunal. And yes, you may recover service tax from the recipient company, if not charged and collected earlier, depending on the terms and conditions of the contract. Kindly mail me at servicetaxexpert @ yahoo.com for further clarifications, if any.

I entered in to an agreement of receiving a service.the amount payble by me was fixed in agreement.i was thinking that the amount is inclusive of taxes.nothing is mention whether this amount is inclusive of taxes or exclusive of taxes.now after service has consumed vendor is demanding service tax extra.is there any case law or ruling to save me? plz comment