Payment certificate and abatement

[Sudhir Kumar]

If a party submit only payment certificate showing VAT/Sale Tax deducted by the Service recipient and he imparted the construction work to them, is a valid ground to assume that he has given work contract service.?

[KASTURI SETHI]

    Payment of VAT/Sale Tax is a proof for sale (direct or deemed sale) and not for SERVICE.

   VAT and Service  Tax  are mutually exclusive-------Supreme Court.

[KASTURI SETHI]

Abatement under Rule 2 A of SERVICE TAX (DETERMINATION OF VALUE) RULES, 2006 as amended read with Notification No. 26/12-ST dated 20.06.12 can be claimed on the basis of VAT/Sale Tax returns (Proof of payment of VAT). 

Ratio of the judgment of Hon'ble in the case of Commissioner of ST Vs. Quick Heal - 2022 (8) TMI 283 - SUPREME COURT is applicable.  

[Ganeshan Kalyani]

Are you referring to Works Contract Tax (WCT)?

[Sudhir Kumar]

Not Work Contract Tax but deducted VAT.

AI Summary

VAT as proof of sale not service: abatement under Rule 2A can be claimed using VAT returns.
Payment of VAT or sales tax deducted by a recipient constitutes evidence of a sale, not of a service; VAT and service tax are mutually exclusive. Abatement under the service tax valuation rules may be claimed on the basis of VAT/sales tax returns or proof of VAT payment, consistent with the judicial ratio treating VAT payment records as a basis for abatement rather than conclusive proof of a work contract service.