Passing of cenvat credit to the lessee

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

03 February 2013 My client "Mr A" is a cargo agent who utilize Indian Railways for transport of cargo. The client has obtained a bogie on a lease contract from Indian Railways for transport of cargo for a fixed sum to be paid per day. The railways charge service tax at 3.71% i.e.....(12.36% * 30%). The lease contract is the result of his qualification in the sealed-bid.

Due to increased volume of business, the client has taken a sub-lease of bogies from another lessor "Mr B" who is also a legitimate bidder to the Indian Railways.

For utilizing the bogies on lease basis, Mr A pays premium to MR B.

Since MR B is the original bidder, the liability to pay tax is on MR B. Can MR B pass CENVAT CREDIT to MR A's for paying service tax ? In the above case, MR A is collecting tax on MR B's behalf, would this be legally wrong ??

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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23 July 2013 Yes it can be done as for rendering services the Railway is charging ST to both the lessee and for sublease you are being charged at a higher rate and with ST so the balance ST difference between your charges and railway is to be paid to the department after set off