1st August 2011
ABC Private Limited is a manufacturer of tranformers. ABC supplied transformers to their customer and the product was sent through a local lorry transport. Transporter raised a bill for Rs.4000/- on ABC. The transporter (lorrywala) did not charge any service tax. However ABC Pvt Ltd paid service tax on its own for the said transport service and also availed input credit for the same. Kindly advise whether the procedure followed by ABC is correct or not.
Further, ABC raised a debit note on its customer for reimbursement of above transport charges of Rs.4000/-. ABC also charged service tax on this debit note sent to its custmer. The customer is now asking ABC, that why they had charged service tax on the debit note. The customer is also asking for the necessary notification from the department.
Kindly advise whether the procedure followed by ABC by charging service tax on its debit note (claimed towards reimbursement of transport charges incurred for sending the transformers) is correct or not.
with regards
Murali
CAclubindia
