Service tax - accounting issue

This query is : Resolved

Rider ride (Querist)
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05 May 2010 Hello

During audit of an exciseable unit i have faced a problem-

1) a building given on rent to another company and service tax is charged on rent . Whether Company can charge service tax since it does not have a service tax number but has only excise reg no.

2) The service tax charged on rent is credited to an expense a/c - "Service Tax paid a/c". That means service tax collected ( to be deposited with govt.) is set off against service tax paid on other services availed.Whether this is correct principally ?

3) The company can claim input on service paid on some services. Such tax is dr. to Service tax input receivable. My ques. is whether service tax collected 1) can be set off with it ?

thanks

Shyam Lal Naik

Shyam Lal Naik (Expert)
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06 May 2010 Q1. No (Service tax registration essential)

Q2. It would be better, if, service tax charged on output service is accounted under a separate ledger under current liability group and service tax charged on input services under current asset group. The cenvat utilisation should be accounted by way of a journal entry.

Tax paid on services used for providing output service or for manufacture etc. is available for set off.

Q3. Q3 appears to be para materia to Q2.