Input of service tax

[Guest]

Our company has issued Composite as well as Divisible Civil contracts.While processng the bills of contractors for payment we insists for two things-the contractor should have claimed ST in the bill & contractor should have ST registration.If the contractor fails to satisfy any one of these two things, we hold the payment of ST.Is it the right way? If we hold the ST in above discussed circumstances, can we book the ST under Cenvatable ST & claim the credit in ST return ?

[Guest]

Wherever the Service tax is claimed, the same should be displayed in the bill along with Service tax Registratio No. Hence, you are right in not making the payment of service tax to the vendor if the bill is not in the format. As regards availing of CENVAT Credit by you, it depends on the purpose for which premises covered in the civil contract is used. If the premises is used for rendering output service, the CENVAT credit on input services can be availed. However,CBEC clarified if the premise is used for 'renting', then CENVAT on input service of construction/works contract service cannot be availed.

AI Summary

Service tax billing requirement: withhold payment if tax or registration missing; CENVAT credit only for premises used for output services. Service tax on civil contracts must be shown in the contractor's bill with the contractor's registration number, and the payer may withhold the tax portion if the bill lacks these details. CENVAT credit for input services relating to construction/works contracts is available only when the constructed premises are used to render taxable output services; if the premises are used for renting, CENVAT on those input services cannot be claimed.