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Input service credit taken on retained amount of service providers -reg

Service Tax - Started By: - vinay wakde - Dated:- 11-5-2016 Last Replied Date:- 17-5-2016 - We have retained 10% amount from some of our service providers as performance retention as per the contract. However, we have taken full credit as indicated in the invoices. We have received a show cause notice from the Department for not making full payments to the service providers on the date of taking credit of Service Tax. In our reply to show cause notice, we rely upon CBEC Circular No 122/03/2010-S .....

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he service Tax amount or 10% of the service amount or total Bill amount?Best RegardsSuryanarayana - Reply By vinay wakde - The Reply = In certain cases, a small portion of the basic amount payable to service provider is retained or held back with us in order to ensure that the service provider renders a quality service and also to ensure that he attends to complaints without any delay and makes good the deficiency in the service provided by him. Such retained amount is normally released to the s .....

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INAY - Reply By Ganeshan Kalyani - The Reply = Basically when payment is made by retaining some amount there is no such bifurcation that tax is paid and the basic is retained. How will you justify the working. Ideally when payment is not made within three months then cenvat credit taken should be reversed and can be taken again on payment to vendor. I think interest will be the hit to you. Thanks - Reply By KASTURI SETHI - The Reply = Sh.Vinay Wakde Ji, I agree with Sh.Ganeshan Kalyani, Sir. He .....

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ity service and to rectify the defective works etc., then absolutely the company can take credit of the full ST being paid to the service Provider.Otherwise, if the company is able to prove that the amount detained is only from the basic service amount then there should not be any problem in taking the service tax credit.Best RegardsSuryanarayana - Reply By KASTURI SETHI - The Reply = Sh.Vinay Wakde Ji,I agree with the views of Sh.Surya Narayana, Sir, especially with second para.This para is sub .....

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