Service Tax on Associated Enterprises

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Biju P (Querist)
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12 December 2009 Dear Sir,

Regarding the applicablity of service tax on services done by an Indian Company to its subsidiary company(Both are operating in India).First Company doing selling/marking services to the second company and charges/raises bill for services rendered.Is it coming under the purview of amended provision of service tax u/s 67?

SANJAY JAIN

SANJAY JAIN (Expert)
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12 December 2009 First of all it is crucial to decide whether service provided by one to another company is falling under the ambit of tax liability. As it is basic of service tax, the service provided to any other person is only liable to service tax because no body can be held liable to pay service tax for providing service himself. So for taxability, there must be two separate entities and here the parent company and subsidiary company are two independent legal entities to attract service tax liability. So it may be inferred that selling/marketing service provided to another company is very much under the service tax net.

As far as concern of the applicability of Section 67 for Associated Enterprises. The Section 65(7B) refers the definition of Associated Enterprises as defined under Section 92A of the Income Tax Act,1961. Prima facie, the both entities are Associated Enterprises, hence accordingly the relevant provisions of book adjustment prescribed under Section 67 are applicable.

For further query, feel free to write sanjayinfbd@yahoo.com (M-09350048731)