13 December 2010
Dear Experts, Could you explain how to address following query.
Company 'A' receives a job from company'B'. 1.Material purchased by company 'B' directly send to the company 'A' free of cost (incl.own material & material purchased from 3rd party) 2. company 'A' received the mat. with specification,then converted the material into particular specification. after that invoice made in follg.manner ------------------------------- Labour charges 100 Cost of material 50 Mat.given by Comp ‘B’) Gross margin(10%)on material 5 ----- 105 Ex. Duty 15 Cess 0.45 ------- 120.45 -------- --------------------------------- 3.Excise duty input credit taken by company‘A’ eventhough goods received free of cost and it adjusted against excise duty as per Invoice raised by company‘A’. My question is, Why service tax bill is not raised,whether is it correct method? Excise duty input credit taken by company ‘A’ is correct or not? If this procedure is not correct what is the correct procedure?
13 December 2010
In this case company A or B may pay the excise duty. Since, company a is paying the duty in this case a job work unit, they may calim input credit, no matter material is given for job work.
In this case , service tax bill could not be raised. Becasuse this is a manfacturing activity.
14 December 2010
thank you for your answer and i must differentiate mfg. and service activity. If you have any idea or experience in your job pls share with me sir..
CAclubindia
