Respected Sir,
We are engaged in executing Water Pipe Line projects awarded by Government of Maharashtra and as per section 65 (25b) of the Finance Act, 1994 the work done by us is exempt from Service Tax. But the work done by Sub Contractors who working under us on such project are leviable for Service Tax and we are paying them the service tax charged by them in the bills. This means, we are indirectly paying service tax on the work done by the Sub Contractors on the Govt Projects awarded to us. In such situation, whether the Service Tax paid through the Sub Contractors can be claimed for refund ? If so, what shall be the procedure ?
For N.V.Kharote Constructions Pvt Ltd.
Shailendra G.Kumakale
919096562014
Construction Firm Challenges Subcontractor Service Tax Charges Despite Exemptions Under Finance Act, 1994; Refund Uncertain A construction company engaged in government water pipeline projects in Maharashtra seeks clarification on service tax exemptions. While their work is exempt under the Finance Act, 1994, subcontractors are charging service tax, which the company pays indirectly. They inquire if this tax can be refunded. Responses indicate that subcontractors are not exempt, as clarified by the Central Board of Excise and Customs (CBEC). CBEC states that subcontractors providing taxable services are liable for service tax, impacting project costs by 6-8%. The issue has been raised in court, but CBEC maintains its stance on subcontractor tax liability. (AI Summary)
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