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Service Tax

Krishna Prasad (Service) (42 Points)

13 March 2008

Hi friends

I need ur suggestion for the following; Our company having various subsidiary , we are having a common office, security service & Pantry. All the expenses paid by Parent co. The same is shared by the all co. s per agreement entered into. For this , parent co. issuing a Dr note to other co. I want to know is it subject to Service Tax or Note.? If yes, Does co. require to issue a bill instead of Dr. Note.

Also I would like to know the applicability of TDS & what rate. Is different rate will be applicable such as 1) Rent, 2) Security services, 3) Common facility as DG Set Running & Maintenance, Pantry service etc. Under what sec. tds will be deducted. Pls advised

Thanks in advance

CA Krishna

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7 Replies

Dayal (Gen. Manager - Indirect Taxation) (3434 Points)
Replied 15 March 2008

Charging proportionate amount to associate companies /subsidiary, having separate legal entity on account of sharing of services would attract service tax liability.

For instance premise taken on rental by principal company and shared by associate or subsidiary for which debit note is raised on associate / subsidiary for rent attributable to them will be termed as rendering of service to the subsidiary / associate company by the principal

It would be ideal to avail proportionate credit on the amount attributable to the service consumed by principal. (if associate /subsidiary does not have any output service)

To avail full credit and charge the same to associate (If associate/ Subsidiary provides output taxable service) and adjust the credit of service tax against such payments.

The second option will require the principal to follow all the procedures under the act right from seeking registration.

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Ravi Jagetiya(CA Final) (Articled assistant) (191 Points)
Replied 17 March 2008

hello dayal sir,

can u let me clear about the difference between Business auxiliary services & business support services.

It will really help ful to me.

thanks in advance

Ravi Jagetiya(CA Final) (Articled assistant) (191 Points)
Replied 19 March 2008

give some reply please

Sriram (Accounts) (24 Points)
Replied 19 March 2008

For Rent SEC 194I is applicable (First Case) & For rest of cases is come under TDS Contractors under Sec 194c Is applicable ( S. No. 2 & 3)

sanjay singhal (CA) (987 Points)
Replied 25 March 2008

Hello frnds

My client is providing Service of Authorised service station and paying service tax on free service also. Recently i came to know that there is any case or notification on the matter to provide relaxation to exclude the free services from the net of service tax liability.

If any one posses any infformation in this matter please advise.

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sanjay singhal (CA) (987 Points)
Replied 26 March 2008

I need full text of the following judgment SERVICE TAX FEB 2008

"Where a dealer of motor vehicles offered 3 free services on the sales made by him to his customers, the services provided by him are not liable for service tax in absence of any consideration. [Indus Motor Company vs. CCE (2008) 9 STR 18 (Tri. - Bang.)]."

CA.Mkhandelwal (Practice) (156 Points)
Replied 13 February 2009

Originally posted by :sanjay singhal
"	Hello frnds My client is providing Service of Authorised service station and paying service tax on free service also. Recently i came to know that there is any case or notification on the matter to provide relaxation to exclude the free services from the net of service tax liability. If any one posses any infformation in this matter please advise. CESTAT, BANGALORE BENCH Indus Motor Co. v. Commissioner of Central Excise dr. S.L. Peeran, Judicial Member And T.K. Jayaraman, Technical Member Final Order Nos. 928 and 929 of 2007 Appeal Nos. ST/93 and 94 of 2007 August 9, 2007 Authorised Service Station Section 65, read with section 68, of the Finance Act, 1994 - Authorised service station - Period from 16-7-2001 to 31-3-2005 - Assessee, an authorized service station, provided free services for vehicles sold by manufacturer ‘M’ - Service tax was demanded from assessee for said free services rendered by it - Whether when a service was free, unless revenue showed some evidence that assessee got reimbursement in some other guise, it would not be possible to confirm demand - Held, yes - Whether since demand of service tax was based upon assumptions and presumptions, impugned order demanding service tax was to be set aside - Held, yes [Para 6] >> Facts The assessee was the authorized service station of ‘M’. It rendered free services for the vehicles sold by ‘M’. The revenue proceeded to demand service tax and education cess from the assessee for said services for the period from 16-7-2001 to 31-3-2005. The demand was confirmed by the adjudicating authority on the ground that cost for the services rendered was actually hidden in the cost of vehicles itself. The Commissioner (Appeals) also upheld the order of the adjudicating authority. On appeal : >> Held The department was not in a position to show any evidence for reimbursement to the assessee for the services rendered. Thus, it was found that the demand of service tax in instant case was based upon assumptions and presumptions. When a service was free, unless the revenue showed some evidence that the assessee got reimbursement in some other guise, it would not be possible to confirm the demand. Therefore, no merit was found in the impugned orders. Hence, the appeal was to be allowed. [Para 6]	"