03 July 2010
One of our client is a manufacturing entity and currently going through excise audit.
Excise people are saying that our client should have collected service tax from the transporters and paid to the department.
I would like to know the procedure of such service tax collection if what they are saying is correct. Procedure means whether to deduct Service tax while making payment & whether deduction shall be at the rate specified i.e. 10.30%. My client also undertake installation part thus registered under service tax.
03 July 2010
You are an Central Excise assessee. You are liable to pay Service Tax under the category of GTA under the reverse charge mechanism. The transport agency should have been paid the net amount and tax should have been paid to Government Exchequre.
There is an exemption of 75% in case of GTA service. Thus the effective rate currently is 2.575%.
However, if the Transport Agent has deposited the tax after collecting from you, there is noo need to demand the tax again from as held judicially.
CAclubindia
