15 December 2012
Our company is into trading of goods. It availed the services of Maruti Courier Services for transportation of certain goods by air. Maruti Air Couriers charged service tax @ 12.36% and raised the invoice. Now we being a company debited the transport expenses (since we have transported the goods and not covers) and on reverse charge basis deducted service tax from their final payment and deposited the said service tax recovered from Maruti Air Courier to Service Tax Department. On receiving the less amount, they inquired for the reason and informed us that they are registered under Courier Agency Service.
So now are we liable to pay their service tax to department on reverse charge basis? And also let us know whether debiting the expense into transport is correct? If we do not debit the same into said account then it should be debited to which accounting expense? Also whether TDS is applicable on the above said expense?
1) Reverse Charge Mechanism is applicable to Goods Transport Agency and not to courier services. And since they have charged service tax in their invoice it is their liability to pay service tax to the Govt and not ours. We had no liability to deduct ST from the invoice amount. Actually there is no concept of ST deduction in Service Tax Law.
Under reverse charge mechanism service provider is not liable to discharge ST liability, so he should not include ST amount in the bill. The Bill should cover only service amount. And then Service Receiver should pay entire bill amt to Service provider and ST @12.36% of Bill amt to ST Department.
2) There is nothing wrong in debiting to Transport expenses.
3) It may be subject to TDS u/s 194C. (refer sec 194C)
17 December 2012
Sir, do we have the option of not deducting TDS since we are incurring transport expense and the courier company has provided us the PAN no, so no need to deduct TDS?
CAclubindia
