04 December 2016
Please advice on the applicability of Service Tax on Sinking Funds Invoices raised by RWA on it's Members once in a Year to collect amount for future replacement of Housing Complex's Assets, e.g. Chillers, Lifts, Diesel Generating Sets etc. ? There are various views. 1. One view is amount of Sinking Fund is taxable at the time of raising Invoices as amount per Member Exceeds Rs.5000/-. Invoices are raised Once in a Year.
2. Another view is, it is NOT Taxable as it is in the Assets Replacement Fund, i.e. for Purchase of Capital Assets and not for providing maintenance Services. There is also argument that when the Assets will be purchased, there will be significant portion of VAT and very little portion of Service Tax for Installation of the Asset/s. So, practically no significant portion of cenvat credit benefit will be available to RWA. There is also argument that when Assets will be purchased in future, RWA do not claim Cenvat Credit. So Department has received the Service Tax in that way included in the Invoice of the Vendor to RWA !!
3. The 3rd argument is that Assets will be purchased by RWA as Pure Agent for it's Members and NO QUESTION of Service Tax applicability !!
Please advice if Service Tax is to be CHARGED by RWA on Sinking Fund Invoices raised by it on it's Memebrs or NOT. N J S
CAclubindia
