intercorporate transaction

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This query is : Resolved

DEBJIT MAJUMDER (Querist)

31 May 2010 ACB Co. Ltd and XYZ Co. Ltd have a common management. since ABC co is a huge profit making co,management decided to make a intercorporate transaction between such companies.and as a result XYZ Ltd raised an invoice on ABC Ltd for consultancy Charge and service tax added on consultancy fees. Since Service tax is payable on payment basis,management decided that ABC Ltd will not pay such amount and liability will arise in the book only,and accordingly no service tax have to pay.
Whether decision of the management is correct?
Whether any provision is there in this regard?

Rajesh Kumar

Rajesh Kumar (Expert)

02 June 2010 With respect to associated companies, the tax is payble not on receipt but on the date of booking. You are liable to pay ST along with interest.

DEBJIT MAJUMDER

DEBJIT MAJUMDER (Querist)

05 June 2010 But whether there is any specific circular in this regard?
In case of such transactions was made with a Trust or Society controlled by the same management,whether such answer will be same?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)

07 June 2010 The liability arise on making a provision/ raising debit note. ST to be paid in the subsequent month. The other enterprsie can avail the credit of ST if they are using such services fo rthe provding of taxable services or excisable goods are being manufactured.

DEBJIT MAJUMDER

DEBJIT MAJUMDER (Querist)

08 June 2010 Pl. do not answer on the basis of assumption......first answer was without having any specific notification/circular.....second one was far away from the main topic.....

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