19 June 2007
Sir, Our issue is this :- We are basically a Software company owing a commercial building. We have let it for rent and the total rent receivable exceeds Rs. 8 lacs per annum . When we raised the invoice along with ST component, the lessee refused to pay the same stating that it is not part of the original agreement. How do we convince them to pay the Service Tax ? Kindly give me some case laws/judgements etc which says that ST is to be borne by the receipient of service . Thanks Subbu
20 June 2007
The recepient of service has been made liable to pay service tax only in the case of GTA service and where a foreigner is giving service from outside and the service is received in India. In the "Renting of immovable property Service" there is no provision which states that the service receipient has to make the service tax payment. I presume that At the time of agreement made, service tax was not applicable on the above, since the above service has been brought into the tax net only in this budget, you shall charge it to the service receiver and can explain them that although the agreement do not specify charging of service tax but its a new levy and we will have to follow the rules and amendment in the rules framed by the Government time to time. The service tax amount is a government due and as per the law it has to be collected from the service receipient by the service giver and deposited in to the Government account.
CAclubindia
