27 May 2013
My company has taken a consultancy service on 1.07.2010 from a associated enterprise of australia. But the company has made a provision for expense in March 2010. Company reverses provision for expense in March 2011
company has made the payment to associated enterprise on the basis of actual booking of bill which is booked in july 2011 and company has paid the service tax in the month of ju;y 2011.
Now the service tax department is demanding intrest for 1 year for the period from march 2010 to march 2011 on the creation of provision of expense.
On the other hand I am arguing with department that in the present case I have made a reversal of provision next year therefore ultimately no service tax is payable by the company and thus no intrest will be payable.
Plz tell me whether Intrest will be payable or not. Plz give reply with appropriate reason...........