I am working with a transport company we render service of transportation of material through Air Cargo, one of our client who is engaged in automobile parts manufacturing has given us the contract rates inclusive of service tax and wants us that we do not show service tax in our bills separately as they are saying that it creates some accounting problem with their system.
Actual
Freight 50,000 ST @ 10.3% 5,150 Total 55,150
Practice Followed (how we prepare bill)
Freight 55,150 ST 0 Total 55,150
Although we are depositing the service tax of Rs 5150 with the authorities but according to Rule 4A the bill should mention the details of Service tax charged.
So is it a default on our part? If yes what are the implications.
24 October 2009
General penalty u/s. 77 amounting to Rs. 5000.00 can be levied.
The manner of your billing is incorrect. It would appear from your invoice that, you have not charged ST at all. Department might ask you to calculate tax on the gross amount, although you can take shelter u/s 68(2).
I would suggest you to substitute the word "Freight" with the word "Freight including Service Tax @ 10.30%). It would help in avoiding dispute.
The problem cited by your client is unheard of. In place of correcting their system, they are asking you to circumvent the law.
CAclubindia
