Treatment of service tax by sub-contractor

[Guest]

Construction of a building work order received from Principal Contractor i.e. SBH, Hyderabad to Main Contractor (ABC Partnership firm) and the same work handed over to Sub-contractor (XYZ Partnership firm).

Now my question is -

1. How to file service tax return by Main Contractor & Sub-contractor? Explain briefly with examples.

2. If Principal Contractor deduct the Service tax liability from each running bill, what is the treatment of both the contractors i.e. Main Contractor & Sub-contractor?

3. The sub-contractor purchases the material in the name of Main Contractor then who can avail input service tax on purchase of material i.e. excise portion?

Thanks in advance for your prompt response.

AI Summary

Service Tax Deductions in Construction Contracts: Legal Only If Clearly Stated in Agreement; Credit Eligibility Clarified A query was raised regarding the treatment of service tax by a sub-contractor in a construction project involving a principal contractor, main contractor, and sub-contractor. The questions included how the main and sub-contractors should file service tax returns, the impact of the principal contractor deducting service tax from bills, and which party can claim input service tax on materials purchased in the main contractor's name. The response highlighted the need for clarity on credit eligibility and noted that service tax deductions by the main contractor are not legal unless explicitly stated in the contract.