service tax -sub contractor, Service Tax

[MUKUND THAKKAR]

one of my client have received order of metro rail project for supply and erection, said order is received on following manner.

1. Order issued by Govt, to party A.

2.Party is awarded order to different party Say. B & C

3.B & C is awarded to my client say D.

As per mega exemption serial no 14. of 25/2012. said services is taxable as per Budget change.service tax is applicable from 01.03.2016.

nowe my question is service tax applicable to my client -D who will act as sub contractor?

Posts / Replies

[KASTURI SETHI]

Sh.Mukund Thakkar Ji,

Sir, Service Tax is applicable to your client. D will provide service to A. De facto, D is sub-contractor. Pl. see serial no.29 (h) of Notification No.25/12-ST dated 20.6.12. Sub-contractor is exempt from ST only if the service of main contractor is exempt. If the service of main contractor is taxable, then service of sub-contractor is also taxable. In this case as mentioned by you, services are taxable. It may be revenue neutral exercise, Service Tax has to be paid by sub-contractor.

[MUKUND THAKKAR]

Thank you Very much Sh. Kasturi Sethiji