October 18, 2013


Dear Expert,
Please give your valuable expert comments on this matter. A contractor (Pvt. Ltd. Co.) working with us since September’2011, but they Registered for Service Tax vide ST-1 on December’2012 & Date of ST-2 is January’2013, now they are demanding Service Tax to us since September’2011 (from 1st Bill) my queries.
1. Are we liable to pay service tax with date of work starting or 1st Bill ? (although ST-1 & ST-2 date is latter)
2. From the date of ST-1 or ST-2, or Bill generated after ST-1 or ST-2
3. How could we know & how can they prove that they are deposited Service Tax against our Project, because they are working with various Builders. Thanks.

The meaning of your problem which I derived from your question is that:
The contractor is registered from December 2012 and is asking you to pay Service Tax from September 2011. Since the contractor has registered after December than it may be concluded that he has been under SSI scheme and therefore he is not liable to collect Service Tax before crossing Rs. 10 lakhs.

My answers will be based as per the above understanding and it may differ on case to case basis,

1. You are not liable to pay service Tax, as the contractor was not liable to pay service tax from September 2011 to December 2012.

2. You are liable to pay service tax from the date the contractor would issue first bill for work undertaken by them.

3. The contractor will give you a Invoice in which they will quote your Firm name and will quote there service tax registration number. You are not required to see whether they are paying this service tax, as it is their duty and if they don't fulfill it, Service Tax Department may put penalty on them.

Hope this will solve your problem.


  1. Sir good reply,

    But if Contractor raised first Bill in September'2011 (without Service Tax) because of non availability of Service Tax & after Registration of Service Tax whole amount of Service Tax mention in that Bill which raised after Service Tax Registration, than will have to pay service tax to contractor by Builder ?

  2. Sir I'm still waiting for your reply.

  3. Vimal Ji,
    If your contractor was not liable to collect service tax until December 2012, then he cannot collect service tax before that day. Thus he can only collect service tax from bill issued after registration i.e. December 2012 and not from back dates.

    Hope this will help you.

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