Mentioning Service tax separately in Bills

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This query is : Resolved

mohit mehta (Querist)

24 October 2009 Hi

I am working with a transport company we render service of transportation of material through Air Cargo, one of our client who is engaged in automobile parts manufacturing has given us the contract rates inclusive of service tax and wants us that we do not show service tax in our bills separately as they are saying that it creates some accounting problem with their system.

Actual

Freight 50,000
ST @ 10.3% 5,150
Total 55,150

Practice Followed (how we prepare bill)

Freight 55,150
ST 0
Total 55,150

Although we are depositing the service tax of Rs 5150 with the authorities but according to Rule 4A the bill should mention the details of Service tax charged.

So is it a default on our part? If yes what are the implications.

Shyam Lal Naik

Shyam Lal Naik (Expert)

24 October 2009 General penalty u/s. 77 amounting to Rs. 5000.00 can be levied.

The manner of your billing is incorrect. It would appear from your invoice that, you have not charged ST at all. Department might ask you to calculate tax on the gross amount, although you can take shelter u/s 68(2).

I would suggest you to substitute the word "Freight" with the word "Freight including Service Tax @ 10.30%). It would help in avoiding dispute.

The problem cited by your client is unheard of. In place of correcting their system, they are asking you to circumvent the law.

mohit mehta

mohit mehta (Querist)

24 October 2009 thanks for your reply

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