Service Tax by Sub Contractor

[MAHENDRABHAI DESAI]

Dear All,

One contractor who is into construction of industrial sheds on works contract basis has paid service tax on construction work at full rate or under works contract category on 40 percent of taxable value.

Some of their labour contractors has not charged and paid service tax even if they crossed threshhold limit and department has started proceedings against them.

Will ration of DNS Contractor and others Vs Commissioner of Central Excise Delhi  = 2014 (5) TMI 764 CESTAT New Dehli, help them in any way ?

Regards.

AI Summary

Sub-contractor service tax liability persists unless the main contractor supplies an exempted service; forty percent option does not absolve sub-contractors.
A sub-contractor must pay service tax unless it provides services to a main contractor who supplies an exempted service; where a sub-contractor pays tax the main contractor may take that tax as CENVAT credit. The main contractor may opt for the Forty Percent valuation under Rule 2A(ii) and forgo CENVAT credit, but that option does not absolve sub-contractors of their separate service tax liability. The cited authority applies to the pre-01.07.2012 period and is not determinative for subsequent tax liability.