Dear Friends,
This is HemantH, working as accountant for Wind Energy development company and we are the people to take the wind Energy project on behalf of customers and we bill for the same.
And we let some survey reports to my contractors and they bill us with servicetax.(eg. 100+10)
And My Question is that weather i can bill the same amount as (100+10) If yes or no kindly clarify the reasons.
Please do the needfull at the earliest
Regards HemantH
Dear Hament,
It is not clear from your question whether your company is engaged in generation of wind energy or development of wind energy plants. You have to first see whether the services provided by your company comes under the definition of Taxable Services as defined u/s 65 (105) of Finance Act, 1994. Secondly, if it comes under Taxable service you have to check that whether you are registered with Service Tax Department, as only a Service Tax Assessee is allowed to invoices with service tax. Without Service Tax Registration if you issue an invoice with service tax, it will amount to an offence chargeable to penalty and other consequences. Hope this would help. For more specific answer give some more details.
Dear Sir,
We Engaged in both Generation and development, and we registered with service tax dept for Work Contract Tax.
And we are giving some work to sub contractors ( Like road survey and evacuvation survey etc) the sub contractor billed us (actual amt + service tax ) ie eg. (100+10)
Here my question is shall i treat the above (from Sub Contractors) as reimbursement to the my customer or else i have bill (110+service tax)
Regards HemantH
Dear Hament,
To my understanding your service is covered under section 65 (105) (zzzza) of Finance Act, 1994. If that is that case you can refer to Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007, which, in a nutshell, provides for an option of payment of service tax at 4 per cent only without taking CENVAT Credit in inputs or input services. Please refer to the link https://www.servicetax.gov.in/workcontract-rules.htm
To determine the taxable value on which service tax has to be paid you can refer to Board’s Curcilar 98/1/2008-ST dated 4th January, 2008. Link:https://www.servicetax.gov.in/circular/st-circular08/st_circ_98-2k8.htm. On reading the plain text of the above circular I am of the opinion that only the value of property in goods involved in the execution works contract has to be deducted. Payments made to sub contractors could be treated as expenses in connection to the principal contract and should be included in taxable value. Though you can claim Credit of Service Tax paid to sub contractors.
Moreover if you read the text given in finance act, 1994 it reads that “Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service.”
What I think is that either you Bill your customers with value of property transferred plus other expenses incurred inclusive of service tax plus your profit and charge service tax on the total amount reduced by value of property (to be clearly shown in the bill) and pay service tax after taking credit of service tax paid on the bills of sub contractors, or you can opt for Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 as mentioned above.
Feel free to ask further if this does not help.
Thanks a lot sir...
Thanks and Regards HemantH
The way to work with contractors is to avail the cenvat credi ton the servic etax billed to you and when you pay ST reduce that amount and pay the net amount. See article on cenvta credit. [ available in the articles section]
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