Applicability of Service Tax and TDS on display of movies

This query is : Resolved

CA Ravi Shankar K (Querist)
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14 April 2009 Pallavan Transport Consultancy Services ltd., (PTCS) the nodal agency, on behalf of the State Transport Undertakings (STUs) fixed an operating agency for display of movies in buses through Build, Own, Operate and Maintain (BOOM) method through open tender. The rate for display of movies is fixed as Rs.262/- per bus per day. This is inclusive of all taxes and levies. An agreement with the operating agency is signed by the individual STU.

PTCS is deducting 5% service charges and the service tax on the service charges from the amount payable to the STUs.

Under the above circumstances the following queries may be answered?

1. Who is the service provider and the service receiver?
2. Who is liable for the recovery and remittance of service tax?
3. Whether service tax is to be recovered from the total amount payable by the operating agency?
4. Whether recovery of service tax by PTCS on the service charges @5% deducted from the amount payable by the operating agency is correct?
5. Whether TDS has to be recovered on the amount payable by the operating agency?
6. Whether TDS has to be recovered on the amount of service charges payable to PTCS?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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15 April 2009 Only service provider is liable for taxable services. Can this service be called a business support. It appears to be one of provding entertainment. May not be a defined service.

There is no provision for the service receiver to deduct the ST ( unlike VAT/ TDS)

Dayal

Dayal (Expert)
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18 April 2009 following queries answered

1. PTCS is the commission agent and operating agency is service provider and STU is the service receiver as agreement is between Operating Agency and STU
2. The operating agency in this case is liable for the recovery and remittance of service tax to the government for services rendered to STU.
3. Service tax is to be recovered only on the service charges as PTCS is commission agent for other case Rs. 262/- is inclusive which probably includes both vat and service tax
4. Yes since they are the mediators and 5% is the commission drawn which is subject to service tax and covered under BAS
5. Yes TDS needs to be recovered on the amount payable by the operating agency
6. Yes TDS has to be recovered on the amount of service charges payable to PTCS

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