| Question And Answer | |
|---|---|
| Subject: | DOUBLE TAXATION IN SERVICE TAX |
| Category: | GST |
| Querist: | CA KARAN SHAH |
| Answered by: | Advocate C.B.Thakar |
| Tags: | Double taxation, GST- Service tax, manpower service |
| Date: | October 1, 2021 |
THE ASSESSEE WAS PROVIDING SUPPLY OF MANPOWER SERVICE TO BODY CORPORATE DURING THE FY 2015-16. THE BODY CORPORATE HAS ALREADY PAID SERVICE TAX ON RCM BASIS ON 100% INVOICE VALUE.
THE DEPARTMENT HAS PASSED ORDER DEMANDING SERVICE TAX ON FORWARD CHARGE FROM THE ASSESESEE BY NOT CONSIDERING THE SERVICE AS SUPPLY OF MANPOWER.
PLEASE ADVISE AND PROVIDE RELEVANT JUDGEMENT WHEREIN IT HAS BEEN HELD THAT IF SERVICE RECEIVER HAS ALREADY PAID TAX ON RCM BASIS THEN SERVICE PROVIDER SHALL NOT BE LIABLE TO AGAIN PAY TAX ON SAME TRANSACTION AS IT WILL LEAD TO DOUBLE TXAXATION.
Normally double taxation under taxation laws is required to be avoided. There are judgments under Maharashtra Value Added Tax Act,2002, like in case of Four Seasons Wines Ltd. vs. The State of Maharashtra (MVAT A.No.5 of 2017 dated. 4.7.2017)(Bom) by Hon. Bombay High Court.
In above case, the facts were that the contractee was liable to deduct TDS for payment to contractor. The contractee failed to do the same and hence the assessing authority raised liability on contractee on account of failure to deduct tax and pay to Government.
Contractee showed that the contractor has discharged VAT liability on the said contract payment. Though, there is no specific provision releasing contractee from TDS liability, when contractor has discharged liability, Hon. High Court, on principle that there should not be double taxation, removed liability of TDS on contractee. Similar principle will apply in facts of your case and since tax is paid under RCM by recipient, the liability should not arise once again on you as supplier.