chargeability of Service tax
This query is : Resolved
20 February 2009
1.commission received by a bank (Both own commission & commission of other Bank)on Bills/cheques for collection are credited to Profit & loss account
2. The bank pays a part of the commission to other banks which is involved in the collection of such instrument and such commission paid(Commission ceeded) are debited to Profit & loss account.
3. The Bank for the purpose of payment of service tax had netted the commission received & paid and the net amount only offered for service tax.
4.Now the audit party of the Central Excise Dept. has asked the Bank to pay tax on the entire commission credited to Profit & loss account with out considering the commission ceeded to other Banks.
5. is the contention of the Department correct.
5. Can any body give any citation on the netting of commission for service tax payment.
6.The commission received credited to P&L account also includes reimbursement of commission to other Banks and therefor the entire credit is not the income of the Bank
2. The bank pays a part of the commission to other banks which is involved in the collection of such instrument and such commission paid(Commission ceeded) are debited to Profit & loss account.
3. The Bank for the purpose of payment of service tax had netted the commission received & paid and the net amount only offered for service tax.
4.Now the audit party of the Central Excise Dept. has asked the Bank to pay tax on the entire commission credited to Profit & loss account with out considering the commission ceeded to other Banks.
5. is the contention of the Department correct.
5. Can any body give any citation on the netting of commission for service tax payment.
6.The commission received credited to P&L account also includes reimbursement of commission to other Banks and therefor the entire credit is not the income of the Bank
19 April 2009
The process adopted by the bank is incorrect.
All receipts are subject to payment of service tax
Therefore the objection raised by the audit party is absolutely in line with the provisions of the act.
The notional amount which the bank adjusted against the payment will be subject to levy of service tax.
Please refer determination of value rules which are amply clear on the payment of service tax and the taxable amount for the purpose of arriving at the service tax liability
All receipts are subject to payment of service tax
Therefore the objection raised by the audit party is absolutely in line with the provisions of the act.
The notional amount which the bank adjusted against the payment will be subject to levy of service tax.
Please refer determination of value rules which are amply clear on the payment of service tax and the taxable amount for the purpose of arriving at the service tax liability
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