Can main contractor charge customer for VAT & Service Tax on Customisation work cost which is excecuted b his subcontractor. Eg: Main contractor A agreed with customer that total customsiation cost is say, Rs 180,000. This work is fully subcontracted. However, now in the demand notice the are adding around 8% VAT and 8% Service tax on Rs 185,000 due to which Total customisation cost now comes to Rs 211,000 (Rs 15 K for VAT and Rs 11 K for Service tax). Is this correct? Since main contractor is invoicing customer, whatever charged by subcontractor to them after adding their margin, we believe maincontractor should not charge customer for VAT & Service tax. Please clarify
CAclubindia
