tax applicable-reg

[Ramakrishnan Seshadri]

Dear Sir,

During the service tax audit the auditors has demanded service tax for services provided  for amc for repair,modification work etc .The service providers are individual/firm.The audit team has calculated 70 percent of the value and claimed 12.36 percent with interest.

Could any one confirm that how we have pay service tax. whether reverse charge mechanism is applicable. If applicable means then  we have to calculate  35 percent of the value.

The service provider has  not registered with the department. whether we have to pay the service provider tax also .

Please clarify. very urgent.

Thanks

S.Ramakrishnan

AI Summary

Dispute Over Service Tax on Annual Maintenance Contracts: Reverse Charge Mechanism and CENVAT Credit Explained. An individual inquired about the service tax obligations for services provided under an annual maintenance contract (AMC) for repair and modification work. The audit team demanded service tax on 70% of the service value at a rate of 12.36%, raising questions about the applicability of the reverse charge mechanism. A respondent clarified that under the reverse charge mechanism, the service receiver is responsible for 50% of the service tax, calculated on 70% of the service value. The service receiver can claim CENVAT credit for 50% of the tax paid under this mechanism.