13 July 2012
My Client is a Pvt. Ltd Company, it deals in supplying Iron-ore which it procures from other companies.
The company doesn't have a service tax registration.
My problem is that, the company is not deducting any amount of service tax from the payment made to the Transporter. For additional information, the transporter is providing the consignment note with all the details filled up and the freight amount is not shown separately, the consignment note only contains the quantity and the Invoice amount.
Further the transporters has not provided any Bill for the year FY 11-12, but a lump sum amount on an ad-hoc basis has been paid and final settlement along with the bill is pending.
I was auditing its account and this thing has came to my notice and the accountant says that this is their every year practice and no one has raised any objection till now.
If the above treatment is correct then can anybody please explain me why ?
And if its not correct what can be the possible solution to it.
Thanking you in advance, your concern will be highly appreciated.
13 July 2012
Mr Mayank Saroagi, As soon as the service provider,ie.the transporter,completes the service,he should raise an invoice on such services within 14 days and ST becomes payable at that time . If the service provider receives any advances,during and after the service,before an invoice has been submitted,such receipts become taxable immediately(see rule 3 and rule 6 ST rules) for reference.Here the procedure followed by the company in not making tds is wrong and it attracts penalty and interest also.See www.aces.gov.in for more details.
13 July 2012
Thank you sir for replying, indeed even my opinion too was that this procedure followed by the company is wrong, but before coming to any conclusion i wanted to get confirmed, thinking may be i am missing out on some points. And the company is not deducting TDS because the transporter has furnished its PAN, so is it okay ?
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