Vinayak Parab (Internal Auditor) (45 Points)
23 September 2013Hello Friends, I am doing audit of a company having malls in Mumbai and nearby areas. The company provides shop to the retailers on the basis of leave & licence agreement.
Now, there is a dispute between this retailers & company on who is liable to pay Service Tax. The Company is saying that it should be bear by retailers & vice versa. Please guide me on the same.
Vijay Srivastava
(Senior Accountant)
(36 Points)
Replied 23 September 2013
Dear,
it should be bear by the company.
Rgds,
Vijay.S
Prashant Kini
(Article Assistant)
(154 Points)
Replied 23 September 2013
Ritzz
(CA Final - Article )
(365 Points)
Replied 23 September 2013
| Originally posted by : Prashant Kini | ||
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Service tax is paid on value of service rendered and in this case to be paid on amount of rent collected by the company. As such it is collected from the tenants and paid to Government. But in the above since the tenants dispute to pay anything over and above the rent, amount received by ur client will be considered as gross amount collected inclusive of service tax and paid by ur client |  |
Ravi Jorahosur
(Working)
(251 Points)
Replied 23 September 2013
Company has been made agreement with retailers, you should collected from them and you will pay to govt. here having dispute with them. than you will go to court they will decide, becuase its clearly law saying .after judement they will pay with interest don't worry you will go legal.
BR
ravi
sunil
(ca final student)
(41 Points)
Replied 24 September 2013
Sanjay
(CA Job)
(26 Points)
Replied 24 September 2013
| Originally posted by : Vinayak Parab | ||
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Hi, If the contract specifies ones liability that it is easy to arrive at who will pay Service Tax, so you need to check clauses on payment of taxes in the contract. In the similar case Supreme court has denied service receiver on the ground that Service Tax is liability which can be paid by either parties depends on the agreement between two, it is not that service receiver should not pay ST. The case has happened in 2012. So you can go ahead and check the contract about payment of taxes, if nothing is mentioned in contract than you can challenge retailers in court and decision has to turn in your favor. Better you can take advice from CS guy or Advocate to understand it clearly. Thanks, Sanjay Chauhan
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Vinayak Parab
(Internal Auditor)
(45 Points)
Replied 25 September 2013
| Originally posted by : Sanjay | ||
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The agreement states that any kind of taxes including service tax will be borne by licensor, but it also states that licensor will recover this money by including it in monthly license fees, so I guess if my client goes in court he has a good chance of getting judgement in his favour. |
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Sachin Jain CA, CS, CWA
(Job)
(240 Points)
Replied 26 September 2013
Sanjay
(CA Job)
(26 Points)
Replied 27 September 2013
Hi,
Well in this case, have your company has previously included service tax it in the rent composition?? If not ask them to do from now. For previous rent received you can fight legally.
If your company has issued rent invoice for the 1st month only and the said Service tax issue arise for the rent of 1st month only in that case changing invoice and adding service tax will stronger your case.
Regards,
Sanjay Chauhan
Anddy Thoper
(Finance Professional)
(43 Points)
Replied 30 October 2013
Don't assume that you can do your small business taxes. One of the biggest mistakes that small business owners make is doing their own taxes when they are not aware of all the small business deductions and tax laws. Consider at least consulting with a CPA, before you take on the task and invest valuable time doing taxes yourself or with an online tax program.
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