Liability of Legal Compliances

[Brijesh Verma]

Dear Sir

Is it a legal duty of the Main Contractor to ensure that the sub-contractor has complied with the legal formalities. The Main contractor must ensure that sub-contractor has paid the due tax to the Government even when the main contractor doesn't take any credit of the tax paid by sub-contractor. 

Kindly guide with case laws if possible. 

AI Summary

Main contractor not liable for sub-contractor's service tax compliance; responsibility lies with Cenvat Credit claimant. A query was raised regarding whether a main contractor is legally obligated to ensure that a sub-contractor complies with legal formalities, specifically the payment of service tax. The response clarified that there is no legal liability for the main contractor to ensure the sub-contractor's compliance. The responsibility lies with the party availing Cenvat Credit to ensure its correctness. Reasonable steps, such as verifying the sub-contractor's registration with the service tax department, are sufficient. A related case, Bhagwati Silk Mills versus Commissioner of Central Excise, Surat, was referenced for further guidance.