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service tax on debit note

Kirti Sanghavi (202 Points)

20 December 2007

We had a service tax audit in our company and they had the following comments to make

any debit note for advertisement sharing shall attract service tax of 12.36 %
Any commission or incentive given by sleek either by credit note or raised by dynamic on debit note will

Attract service tax

Any installation, sitevisit charges etc collected will attract service tax..

pl can you help me with any references

thanks in advance

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2 Replies

MANISH PANCHAL (service) (174 Points)
Replied 20 December 2007

Yes it is definately service ,Service tax apply on debit note for advertisement expenses sharing under category of BSS.

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Pritam (CA) (95 Points)
Replied 20 December 2007

If the cost sharing is amongst the group companies -

Sharing of expenses among group companies/entities are general practices. Such sharing of expenses is done by issuing debit note on other group company. In this transaction there is no service rendered by one group company to another group company, it is merely an allocation of expenses out of common pool. As the service tax paid on such service is already paid by the corporate office, now again on sharing of such expenses cannot attract service tax again.

Kindly note that cost incurred on staff and shared by group companies’ fall under the Business Auxiliary Services. In the case of Glaxo Smithline Pharmaceuticals Ltd V Commissioner of Central Excise (2005–TOIL-688-CESTATE), it was held that cost incurred on staff and shared by staff fall under Business Auxiliary Services.

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