Notification 19/2008 vs. notifcation 18/2011 and 25/2011

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kartik_somu (Querist)
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29 October 2011 Can anyone explain which of the following notification is applicable.
a. Notification 19/2008 which states service tax liability arises when expense is booked (w.e.f 2008)
b. Notification 18/2011 superceeded by notification 25/2011 states that the liability arises only for expenses booked after 30th June 2011.

We have made a provision payable to our affiliated entity in the month of march 2011.
Will we have to pay service tax liability as per notification no. 19/2008 or at the time of payment as per notification no. 18,25 /2011.

pls advice.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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29 October 2011 Since the liability was booked before the point of taxation rules came into effect, the service tax shall be paid at the time of actual payment.

kartik_somu

kartik_somu (Querist)
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29 October 2011 Thanks. But Notification no. 19/2008 states the same.

Service tax officials are invoking notification no. 19/2008 while we are trying to shield using Notification no. 18/2011 and 25/2011.

does notification 18/2011 supercedes the notification no. 19/2008.

pls advice.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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29 October 2011 Notification 19/2008 is applicable to transactions entered into with an associated enterprise.

In such a case, the service tax liability arises at the time of booking the expenses.

Have you done a transaction with an associated enterprise? If yes, then N/N 19/2008 is applicable and service tax was to be paid at the time of booking the expense.

kartik_somu

kartik_somu (Querist)
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29 October 2011 The transaction is with associated enterprise.

But 18/2011 is also applicable for transaction with associated enterprises.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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29 October 2011 Yes but it is applicable to transactions entered into after 30.06.2011. It is not applicable retrospectively.

When you entered into the transaction, N/N 18/2011 was not applicable. At that time N/N 18/2008 was applicable. Accordingly, service tax was to be paid at the time of booking the expense.

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