DEVELOPER FIRM (OWNER OF THE LAND) EXECUTING RESIDENTIAL COMPLEX PROJECT HAS SUB CONTRACTED STRUCTURAL WORK TO REPUTED BUILDER AND SERVICE TAX (INCLUDING S T ON MATERIAL SUPPLY) + VAT CHARGED IN RA BILLS ARE PAID. DEVELOER FIRM CONTENDS THAT AS PER BOARD'S circular no 108/02/2009 DATED 29.01.2009 (NOT RESCINDED BY THE BORAD TILL DATE) SUB CONTRACTOR SERVICE AVAILED BY IT IS TO DEDUCTED WHILE ARRIVING FIRM'S TAX LIABILITY. IS THE CONTENTION CORRECT ?
ON THE OTHER HAND IF 75% ABATEMENT IS AVAILED AND CENVAT CREDIT IS ALSO TAKEN ( AFTER 01.07.2012) DEVELOPER FIRM'S TAX LIABILITY IS NEGATIVE (THAT IS REFUND). IS IT CORRECT ?
Developer Firm Seeks Tax Refund Citing 2009 Board Circular and CENVAT Credit Abatement Rules A developer firm subcontracted structural work for a residential complex to a builder, paying service tax and VAT on RA bills. The firm argues that, according to a 2009 Board circular, the subcontractor's service should be deducted from the firm's tax liability. Additionally, if a 75% abatement is availed and CENVAT credit is taken post-July 2012, the firm's tax liability becomes negative, suggesting a refund is due. A respondent confirmed that service tax paid to the subcontractor can be considered as input, and after abatement, any excess amount can indeed result in a refund. (AI Summary)
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