05 February 2008
Sir, I am from Pharmaceutical company. We are transfering the goods to consignment agent. Consignment agent are paying service tax through GAR-7. We are paying service tax amount to CA. After paying Service tax by CA through GAR 7 (TR-6), can we avail the service tax credit? Can we take credit of ser.tax(paid by consignment agent)without GAR-7 as a proof? is any alternate document allowed? like details on latterpad from CA?
06 February 2008
THE TAXA BLE SERVICES IF PROVIDED BY THE CONSIGNMENT AGENT , THEN HE IS SERVICE PROVIDER AND LIABLE TO SERVICE TAX LIABILITY. REGISTRATION UNDER SERVICE TAX ACT IS DONE BY WHOM , YOUR COMPANY OR THE CONSIGNMENT AGENT?IT IS THE REGISTERED SERVICE PROVIDER (SUBJECT TO EXEMPTION LIMIT)WHO IS LIABLE FOR SERVICE TAX. IS YOUR CA A COMMISSION AGENT?IN THAT CASE HE IS LIABLE TO PAY SERVICE TAX AS C&F AGENT. In the case of commission agents also, if the consideration is not linked to the amount of sale or purchase, he may not qualify to be a commission agent and therefore would not be entitled for ANY exemption. If a person is acting as a consignment agents as well as commission agent, the entire consideration received by him would be liable to tax under the existing category of Clearing & Forwarding Agents. THEREFORE THE COMPANY CLAIMING SERVICE TAX CREDIT DOES NOT ARISE. R.V.RAO
06 February 2008
What I understand that you are availing services from CA
The consignment agent as a provider is charging your service tax and the same is paid to him with his service charges
It is an input service for you
You can very well take the credit if the above interpretation is correct
You are a receiver and you can take the credit once you have paid the bill of CA in full along with service tax
You need not wait for the CA to deposit the amount by GAR 7, as per the provision of the act once you have paid to the CA you can take the credit of service tax
However to safeguard your interest you can seek a copy of GAR 7 for your record.
Please be advised that if your company is into trading business and not providing any taxable output service then you cannot availe the credit of service tax.
But if you are a manufacturer and you final product is subject to excise duty and or you are rendering taxable output service then yes you can take the credit
Request Mr. Rao for his views on the clarification
CAclubindia
