My client is a contractor. His works involves aluminium fabrication and tress work etc.He does not supply any material for rendering his service but supplies only labour. The material has to be provided by his customer.
Since no mateiral supply is invoved i got his registration in service tax under 'Commercial or industrial contstruction' and not under works contract.
Recently he gave his bill to a company in which he charged the company 12.36% as service tax charge. The company's accountant says we cannot pay you 12.36%, we can only pay you 6.18% because your liability to pay service tax is only 50% and rest is our liability we can pay it at our end. He made notificatoin 30/2012 as reference.
I referred the notification which gives 50% exemption in the case of works contract.
What is the remedy available to my client ?
1) Change the registration from commercial or industrial construction to works contract registration and avail the 50% benefit under notification ?
2) Bill the customer only for 50% of the service tax ? ( But in this case the customer will give me a single chalan which shows lumpsum remittance of service tax for all contractors, which will result in my service tax return throwing up an error message because the amount given in the chalan given as reference will not match with my actual liability which is 50% of the service tax of my bills, because chalan given by company is for lumpsum for all contractors together in one go)
3) Insist that the company should pay me 12.36% of bill amount as service tax ?
CAclubindia
