Tender Document Clause on Service Tax Reimbursement
One of the clauses in the Tender Document regarding the hiring of two personnel for Housekeeping Services states that Service Tax will be reimbursed. All tenderers quoted ST at 10.3% with an ST Registration Certificate. However, one firm did not quote ST and also did not submit any proof of ST registration, thus becoming the lowest bidder. Can such a quotation be accepted as the firm failed to quote ST, which is a statutory liability? Can the Principal Employer escape from the liability of ST?
Urgent clarification is solicited from the members.
With warm regards and Diwali Greetings,
Kadalirao
From India, Jaipur
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4One of the clauses in the Tender Document regarding the hiring of two personnel for Housekeeping Services states that Service Tax will be reimbursed. All tenderers quoted ST at 10.3% with an ST Registration Certificate. However, one firm did not quote ST and also did not submit any proof of ST registration, thus becoming the lowest bidder. Can such a quotation be accepted as the firm failed to quote ST, which is a statutory liability? Can the Principal Employer escape from the liability of ST?
Urgent clarification is solicited from the members.
With warm regards and Diwali Greetings,
Kadalirao
From India, Jaipur
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Dear Kadali, How were the tenders evaluated? Do you have a member from Finance on the committee to evaluate tenders? (I hope the tenders were not processed by a single person). Do you not think that there is a fundamental error in evaluating, which could have been prevented if the Comparative Statement was made properly?
Level Playing Field
There is a well-known phrase and concept of "level playing field" which was not taken care of. If tenders are evaluated in this shoddy manner, any bidder can be made the highest or lowest, thus rendering the process of comparison meaningless. Hope you find the answer during the process of self-examination.
Warm regards.
From India, Delhi
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Level Playing Field
There is a well-known phrase and concept of "level playing field" which was not taken care of. If tenders are evaluated in this shoddy manner, any bidder can be made the highest or lowest, thus rendering the process of comparison meaningless. Hope you find the answer during the process of self-examination.
Warm regards.
From India, Delhi
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Thank you, Mr. Hansdah, In every stage of the tendering process, Finance personnel are involved, and the committee will always consist of 3 or more persons. As per the tender clause, Service Tax (ST) will be reimbursed. The element of ST that I proposed to add in the Central Sales Tax (CST) is against the firm defaulting in quoting the same since it is the statutory liability on the Principal Employer in case of default by the Service Provider to pay ST and also not having ST Registration. One of the Committee members is of the opinion that ST should not be included in CST as it is not quoted by the firm, which becomes the lowest, and thus the financial implication for the organization becomes less. Please suggest.
Further, I would like to know, for my knowledge, the concept of "level playing field."
With warm regards,
kadalirao
From India, Jaipur
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Further, I would like to know, for my knowledge, the concept of "level playing field."
With warm regards,
kadalirao
From India, Jaipur
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Kindly ask the person who has not quoted Service Tax for their registration details. There is a possibility that the concerned person is ignorant of the law, or maybe they do not fall within the purview of Service Tax on account of their turnover being less than the threshold limit. In any case, the tenders should be evaluated based on the bid for fees/charges and not the taxes that are a statutory liability. Non-compliance with the law or avoidance of taxes entails great liability in terms of cost, time, as well as goodwill for the person.
I hope this information proves helpful.
Thanks,
Regards,
Avika Kapoor
Assistant General Manager - Business Development
From India, New Delhi
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I hope this information proves helpful.
Thanks,
Regards,
Avika Kapoor
Assistant General Manager - Business Development
From India, New Delhi
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Thank you for the suggestion. What happens if the Principal Employer comes under the purview of Service Tax (ST) and hires services from a Service Provider without an ST registration, perhaps because they do not fall within the turnover limit for ST?
With warm regards,
Kadali Rao
From India, Jaipur
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With warm regards,
Kadali Rao
From India, Jaipur
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Dear Kadali Rao,
Up to Rs. 10 Lakhs, income Service Tax is exempted. It might be that the person/organization's income is below Rs. 10 Lakhs. If so, then there will be no problem. If a person is charging Service Tax and not remitting it to the government, then it is an offense on their part. I don't think the employer is responsible for the same. If anyone is charging service tax from your company, you should ask for their service tax number.
Regarding Your Second Query Evaluation
In any case, service tax can be credited, so it is not considered an extra cost to the company. Check which quotations/bids are lower without service charges and also consider their services.
Regards,
Praveen
Career Growth Consultants
(Providing Manpower Solutions)
Bangalore
[Email Removed For Privacy Reasons]
From India, Bengaluru
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Up to Rs. 10 Lakhs, income Service Tax is exempted. It might be that the person/organization's income is below Rs. 10 Lakhs. If so, then there will be no problem. If a person is charging Service Tax and not remitting it to the government, then it is an offense on their part. I don't think the employer is responsible for the same. If anyone is charging service tax from your company, you should ask for their service tax number.
Regarding Your Second Query Evaluation
In any case, service tax can be credited, so it is not considered an extra cost to the company. Check which quotations/bids are lower without service charges and also consider their services.
Regards,
Praveen
Career Growth Consultants
(Providing Manpower Solutions)
Bangalore
[Email Removed For Privacy Reasons]
From India, Bengaluru
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Thank you for the information. The acceptable solution appears to be appropriate. In the case of CST prepared without the element of Service Tax, the firm which has not quoted ST is not considered the lowest (L-1).
With warm regards and Diwali greetings.
Regards,
Kadalirao
From India, Jaipur
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With warm regards and Diwali greetings.
Regards,
Kadalirao
From India, Jaipur
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Tax Liability.doc
Service Tax.pdf