works contract - service tax on sub contractor

[SANJAY MACHE]

One of my client (B) is working as sub-contractor (B) for providing services to main contractor (A) towards the service contract(C) of main contractor (A) with his client (C). Main contractor has paid the service tax on total value of services (C). As per agreements/work awards by main contrator (A) with my client (B)the service tax is to be borne by main contractor (A). Total turnover of my client (B) by subcontracts from main contrator (A) has exceeded Rs. 12 Lakhs. My Client (B) holds service tax registration and is paying service tax on direct orders (excluding sub-contract works).In this case whether my client (B) is liable to pay service on sub-contracts? Whether he shall show the sales towards services-by-sub-contract in service tax returns with tax liability as nil? please advice and provide references in service tax notifications/circulars/acts.

AI Summary

Sub-contractors must pay service tax on received value post-August 23, 2007, even if the main contractor pays. A client acting as a sub-contractor is questioning whether they need to pay service tax on sub-contracts when the main contractor has already paid it. The main contractor covers the service tax as per their agreement, and the sub-contractor's turnover exceeds Rs. 12 Lakhs. According to a 2007 circular, the sub-contractor must pay service tax on the received value and show it in their returns, while the main contractor can claim input service credit. This rule applies from August 23, 2007. Before this date, sub-contractors were not required to pay service tax if the main contractor did.