We are a manufacturing company and our holding company at Germany appointed their employee at India to look after the work to strengthen the business over India. He stayed in India for 6 months and our parent company had charged us 50% of his share and provided us the debit note for the same since they had paid the same. Now we dont have any agreement or board resolution for the same and given the approval for the same in verbal communication.
Now Audit Officers had carried out the point and they are saying us to pay service tax under reverse charge mechanism along with interest and penalty. Also debit notes provided by our company indicates Consultation Fee but the fact is it's and salary and bonus re-imbursement done by Indian company to the overseas.
Whether ST will be applicable under RCM since we have to look after the facts of services done and it comes under Manpower Classification of service and we have also shown them the act under Advance Ruling No. AAR/ST/13/2015 but they are denying the facts. Require your immediate assistance on the same and awaiting for your reply at the earliest.
Thanks & Best Regards Chetan Senior Executive - Finance and Accounts.
20 June 2018
Dear Sir, Thanks for your immediate reply in this regards and really appreciate the information shared.
We have shared some of this information to our Auditors but they have pointed out the fact that on the invoice it is mentioned Consultancy Charges and we have wrongly booked the charges in the same account in our books of accounts. They are not yet convinced that this is salary re-imbursement.
They are not seeing the facts behind the services rendered. Now how we can convinced them please help us out with some circulars or rules behind the same.
CAclubindia
