Dear Experts,
The issue is related to services rendered to Coal India by contractors.
It is the practice in the subsidiaries of Coal India to make payment for the service Tax on production of challan as proof of payment of taxes. In some cases, they retain the original challan as well. The Coal India authorities has explained that the modality has been arrived at with active consideration of the Ministry of Finance. This sort of practice is in vouge in other PSUs, both Central and State, as well.
Due to the above practice, the contractors are compelled to pay the taxes in cash. Further, the are not in a position to pay service tax charged by the sub contractors. More over it would be double taxation.
In the above matrix, please advise, whether the department can ask for payment of taxes from the sub contractors, more so, when the above modality has been arrived with the active consideration of Ministry of Finance.
Thank You.
Best Regards,
SL Naik