Penal consequences for an unregistered subcontractor

[paresh zatakia]

Dear All, a person ia subcontractor of a contracot (contractor is registered under service tax).He has not taken the regi.because he thought he is not liable to pay tax,since the main contractor is paying.now enquiry from dept has come,what are the penal consequences? paresh zatakia

AI Summary

Service tax registration obligation: subcontractor may be liable to register and pay tax despite main contractor's payments.
A subcontractor must register and pay service tax when his taxable turnover exceeds the statutory threshold; failure to do so can lead to assessment and penalties, though defences such as bona fide belief, limitation and reliance on Board circulars may mitigate consequences. Use of specified notifications determines the taxable portion of receipts and affects whether registration is required, while the main contractor's payment of tax does not automatically relieve the subcontractor though an earlier circular suggested otherwise and may be disputed by the department.