Foreign commission
This query is : Resolved
27 January 2016
Dear Sir,
We have a special case of service tax liability raised in audit of central excise during Dec 2015.
There was a Tender from Indian Army for Supply of Imported Dental Equipments to be supplied directly by foreign manufacturer
The Indian Agent Commission of 5% was allowed as per Tender Terms
Tender was awarded to M/s Planmeca Finland
Tendered items were supplied directly during 2012 when foreign commission was not chargeable to tax
The foreign Party was insisting on adjustment against supplies to us and we refused to accept due to customs difficulties.
After prolonged arguments and discussions finally the actual receipt of commission was effected on 12.10.2014 by which time the service tax was chargeable even on foreign commission
Provision was not made in accounts during 2012-13 due to ambiguity for how to receive the commission
The Value of Commission is nearly 92000/- Euro (Value on the Date of Receipt was nearly 67.5 Lakhs)
Now excise auditors are asking to pay service tax on receipt basis @14% along with interest and penalty.
We need your opinion in applicable ST for the examination of all issues and legal opinion.
Please provide the same.
With Regards,
We have a special case of service tax liability raised in audit of central excise during Dec 2015.
There was a Tender from Indian Army for Supply of Imported Dental Equipments to be supplied directly by foreign manufacturer
The Indian Agent Commission of 5% was allowed as per Tender Terms
Tender was awarded to M/s Planmeca Finland
Tendered items were supplied directly during 2012 when foreign commission was not chargeable to tax
The foreign Party was insisting on adjustment against supplies to us and we refused to accept due to customs difficulties.
After prolonged arguments and discussions finally the actual receipt of commission was effected on 12.10.2014 by which time the service tax was chargeable even on foreign commission
Provision was not made in accounts during 2012-13 due to ambiguity for how to receive the commission
The Value of Commission is nearly 92000/- Euro (Value on the Date of Receipt was nearly 67.5 Lakhs)
Now excise auditors are asking to pay service tax on receipt basis @14% along with interest and penalty.
We need your opinion in applicable ST for the examination of all issues and legal opinion.
Please provide the same.
With Regards,
27 January 2016
As per point of taxation Rules under reverse charge mechanisam, the point of taxation is the date of completion of service if invoice is not issued within 30 days from the date of completion of service.
At the time of completion of service service tax not applicable, hence demanding service tax on receipt basis is not justified.
At the time of completion of service service tax not applicable, hence demanding service tax on receipt basis is not justified.
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27 January 2016
central excise auditor have made a point since the same is shown in balance sheet you have to pay service tax with interest and penalty , is that correct.
27 January 2016
We have to see only service tax Rules not the balance sheet. Ask him to quote the Rules.
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