Sub contractor- exemption from service tax

[AJAY AGRAWAL]

One of the contractor has been awarded the trunkey work of renovation of STATIDUM . The award letter clealy state for reimbusement of service tax. The Contract was awarded prior to 01.03.2008 and contactor was paying 2 % under composition scheme. From 01.03.2008, the contractor is paying 4 % as service tax besides the work contract tax i.e VAT . The subcontractor are also claiming the service tax from the contractor. My QUERY IS : 1. Whether, such sub contractor can avail the expemption from service tax , being sub contract. 2. If the contractor has to pay the service tax on subcontract, Will he claim the CENVAT Credit under composition scheme

AI Summary

Contractor and Subcontractor Must Pay Service Tax; No CENVAT Credit Available Under Composition Scheme A contractor engaged in a turnkey renovation project for a stadium is dealing with service tax issues. The contract, awarded before March 1, 2008, initially involved a 2% service tax under a composition scheme, which increased to 4% after that date. The subcontractor is also claiming service tax reimbursement. The queries raised are whether the subcontractor can be exempt from service tax and if the contractor can claim CENVAT credit under the composition scheme. The response clarifies that both the contractor and subcontractor must pay service tax, and no CENVAT credit is available under the composition scheme.