Hari (AGM) 15 February 2014

Treatment of service tax by a sub-contractor

Construction of a building work order received from Principal Contractor i.e. SBH, Hyderabad to Main Contractor (ABC Partnership firm) and the same work handed over to Sub-contractor (XYZ Partnership firm).

Now my question is -

1. How to file service tax return by Main Contractor & Sub-contractor? Explain briefly with examples.

2. If Principal Contractor deduct the Service tax liability from each running bill, what is the treatment of both the contractors i.e. Main Contractor & Sub-contractor?

3. The sub-contractor purchases the material in the name of Main Contractor then who can avail input service tax on purchase of material i.e. excise portion?

Thanks in advance for your prompt response.

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LPRajendraKumar (Advocate speciatised in Service Tax) 11 April 2014

Sub contractor is liable to pay service tax. If the main contractor paid service tax on behalf of the sub contractor then produce those challans along with your return. If you made purchase on the name of the main contractor they where is question of input credit to sub contractor. If the sub contractor is registered with the department then he should file the returns and pay tax ( if main contractor discharged the tax then show those challans against your turnover.)