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Taxes are payable or not

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vikas

director

28 Points Posted on 09 October 2010

i have an agreement with the sports authority of india to supply food to the sports person for which the amonnt is fixed by sports authority from time to time depending on the type of sports and the forthcoming events occuring in that sports like CWG,Asiad etc.myself charging the Vat & Service tax on the bill generated as per the clause of outdoor catering and submitted to the concerned authorities.initially they were paying the taxes and now stopped for the last 6 months on the pretext of clause in the agreement which ditacte

that all taxes as applicable to the licensor and licencee will be payable by themselves. i am the licencee there

Since these are indirect taxes and are applicable to the service receiver .please suggest wether i am in a position to receive the taxes or not

Replies (1)

CA Sandeep Kumar

Audit Assistant

804 Points Posted on 17 October 2010

Hi Vikas,

Generally the liability to pay indirect taxes lies on the collector of such taxes or the service provider. So even if the receipient does not agree to pay taxes, the service provider has to has to calculate tax (reverse calculation) and pay taxes to govt as prescribed.

However there is some relief by virtue of this case law.

All India Tax Payers Welfare Association vs. UOI (2006) 5 STT 136 = (4) STR 14 (Mad HC DB)

It was held as follows;

Service tax is an indirect tax. Though liability is on the service provider, the tax can be collected by him from the service receiver.