TaxTMI 
TaxTMI 
Whether a manufacturer who is manufacturing the excisable products and is paying duty is also laible to pay service tax incase it appoints the maintenance and handling contractor for selling its goods on its retail outlets.
Service Tax
26 Mar 2015 
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Service tax liability on handling and maintenance services: provider liable and reimbursements affect taxable consideration and input credit.
Issue whether service tax applies to handling and maintenance services at a manufacturer-run retail outlet when a contractor incurs expenses and is reimbursed by the principal. The provider of the taxable service is primarily liable to pay service tax; reimbursements can form part of consideration depending on contractual treatment. If the recipient pays service tax, it may claim input service credit subject to statutory conditions. The departmental demand against the contractor for tax on full payments including reimbursements highlights assessment, interest and penalty risks and the need for clear invoicing and credit compliance. (AI Summary)
Issue whether service tax applies to handling and maintenance services at a manufacturer-run retail outlet when a contractor incurs expenses and is reimbursed by the principal. The provider of the taxable service is primarily liable to pay service tax; reimbursements can form part of consideration depending on contractual treatment. If the recipient pays service tax, it may claim input service credit subject to statutory conditions. The departmental demand against the contractor for tax on full payments including reimbursements highlights assessment, interest and penalty risks and the need for clear invoicing and credit compliance. (AI Summary)