03 October 2012
FACTS: “B” is Associate Co. of “A” and is registered under Service tax.
A is exempt from paying service tax as it is into export and so is not registered.
Both the Companies are availing services for different matters from the SAME Advocate firm “X” and as per the notification No. 25/2012 dated 20.6.2012, are now liable to pay service tax under Reverse Charge mechanism on advocates services.
QUERY :
A does not want to get itself registered only because of the reverse charge mechanism on advocate service, though he is the ultimate receiver of the service and liable to pay. And hence can it make some internal arrangement with its Associate B by way of requesting Advocate firm "X" to raise entire bill in the name of B for total Advocates services availed by both ?since the bill is in name of B,it will pay entire Service Tax and later on by way of inter company debt, this transaction can be settled in books of both the Companies.
Or
is it mandatory for A to get itself registered under Service tax for the purpose of reverse charge mechanism and pay itself, because ultimately A is the receiver of service of Advocate?
05 October 2012
under departmental audit the case will get clear, and both the companies will get penalized, indirect taxes, when caught under evasion, are not so simple to handle.
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