Applicability of Service Tax between closely held companies

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2011 HI,

Please let me know if service tax is applicable between closely held companies, wherein one company is giving an order to its sister concern with 0% margin.

The company getting the order is inturn paying the amount to a sub-contractor.

CS Bijoy

CS Bijoy (Expert)
Follow

27 June 2011 According to me the service tax is levy only when any taxable service is provided.

Dear Friend please mention the kind of order.

Querist : Anonymous

Querist : Anonymous (Querist)

27 June 2011 Thank you.

It is a work order for construction of a building.

Say there are two closely held companies, say A & B. 'C' is an outside company. 'A' through company 'B' allots a contract to 'C'. Therefore, when the billing takes place, 'C' would bill 'B' and later 'B' bills 'A' with the same amount.

Company 'B' does not have a mark-up.

Therefore, would service tax be applicable between 'A' and 'B'. If yes, can any exemption be claimed on the same?

Upgrade to CAclubindia Pro. Subscribe Now!