Where the main contractor and sub-contractor both are invoved in same contract. In this case whether main contractor is liable to pay service tax.
Posts / Replies
In this regard, pl.see service Tax Circular dated 06.5.2011.Both are liable to pay service tax. However, main contractor may avail cenvat credit of service tax paid by sub-contractor on services rendered by him
But Nofn.1/2006 does not permit cenvat credit?
As per CBEC Circular dt. 23.8.2007, if part of the work is entrusted to sub-contractor, the service tax paid by the sub-contractor can be taken as credit by the main contractor since it is an input service for him. However, if the entire work is entrusted to the sub-contractor, the entire service stands rendered by the sub-contractor and he shall be liable to pay the tax and the main contractor cannot take the credit since he doesn't provide any output service. As regards Nofn.1/2006-ST, if it is a case of part work done by the sub-contractor, credit can be taken by the main contractor but the service tax has to be discharged without availing the benefit of abatement under the said notification.