Service Tax query

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Jayesh (Querist)
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14 October 2010 Please advise whether we need to pay service tax for the below mentioned purchase.

We have purchased computer components from US company amounting USD 42,536.60 which is Rs. 19,12,000 ( approx ). This purchase is basically Import of software licenses. The US company has not charged Service tax in Invoice to us as they are not registered with service tax ( Non Indian company )

1. Do we need to pay service tax on such import of software's on behalf of this company as we have used these components in the finished product on which we are charging service tax to our client , if yes on which amount do we need to pay this...here I mean upto Rest.10 Laces there is no service tax payable so do we need to pay the ST on the amount going above that ??

2) Can I take credit of service tax paid on Rent payment, Housekeeping charges, etc also against the service tax payable on this import ?

3 ) We have purchased this software in April 2010 & till date not paid service tax on this...can we pay it now ? what will be the penalty if any ??

4) We have applied for ST regn May 10 & got ST-2,however not got Registration Certificate...Do this will affect ? Can we still file the return on / before 25th Oct ?

Pls reply to this. Thanks in anticipation.
Regards,

Lalit

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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14 October 2010 Service tax is payable on import value, since the supplier is from outside india.

No deduction of Rs. 10 lakhs will be applicable.

You can take the input credit.

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Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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15 October 2010 The ITSS service includes providing of software electronically nas part of taxable service.[ this entry is under debate/ litgation as the same is also liable for VAT which is not legally valid.

However to avoid litgation you should as recepient pay the ST , avail the credit and pay the ST on your sale of the same. Thwere is no one to one corelation- one vbendors credit can be used to pay for anothers.

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Gagan Agarwal

Gagan Agarwal (Expert)
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15 October 2010 You will need to pay service tax on the entire value of consideration paid for the license (under reverse charge mechanism). Further, you will be eligible to claim credit of service tax liability when you invoice for the said license to your clients.

Also, you may need to pay VAT when you invoice for the said license to your clients

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Jayesh

Jayesh (Querist)
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15 October 2010 Thanks to all for the reply.

I have 2-3 questions more related to this--

1) Can I take credit of service tax paid on Rent payment, Housekeeping charges, etc also against the service tax payable on this import ?

2 ) We have purchased this software in April 2010 & till date not paid service tax on this...can we pay it now ? what will be the penalty if any ??

3) We have applied for ST regn May 10 & got ST-2,however not got Registration Certificate...Do this will affect ? Can we still file the return on / before 25th Oct ? if No pls provide solution

Pls reply to this. Thanks in anticipation.