Please go thru the attached and give me your valuable suggestion
Satish
(CA Final Student)
(479 Points)
Replied 18 June 2009
Dear Vikram, I have gone thru ur file. The situation is inconsistent with the service tax law. When seller is not liable to service tax, he cannot get registered and cannot pay service tax. Where buyer is liable to pay service tax, he should get registered on his own and pay service tax. He will charge service tax in his sale invoice to his customers and the seller from whom he purchases services can in no case pay service tax on his behalf. The situation given in ur excel file is contrary to the service tax mechanism.
Vikram
(CA)
(75 Points)
Replied 18 June 2009
Dear Satish,
Thanks for your reply. To Clarify the situation, the issue is not about registration. Assume both are Service Tax Assessees having the registration numbers. it is more to do with contractual terms...In my example , seller (though registered ) is not liable to undertake ST liability as per the contract. He is paying on Buyer's behalf as like any other expenditure.
Regds,
Vikram.R
CA. Rashi Goyal
(Chartered Accountant)
(512 Points)
Replied 19 June 2009
In the given case the payment of service atx is given name of reimbursement. Service tax is always charged from the buyer of services. It's payment cannot be termed as reimbursement. TDS is required to be deducted on both the amounts services amount & service tax amount.
Satish
(CA Final Student)
(479 Points)
Replied 19 June 2009
Dear Vikram, Why I have insisted on registration matter is because service tax should be paid only under the registration no. of the person who is liable to pay service tax. If the seller in your example pays service tax on behalf of buyer under the buyer's registration number, he can get it reimbursed from the buyer on the basis of submission of challan. But since this is an indirect levey, buyer will not be able to pass on the incidence of duty on his customers and the same will be borne by him. In any case Seller will not be able to pay service tax on behalf of buyer under his own registration number.
Regards,
Satish
Satish
(CA Final Student)
(479 Points)
Replied 19 June 2009
Such reimbursement is not liable to TDS as is charged in a separate reimbursement debit note.
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