Passing of cenvat credit to the lessee
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 February 2013
My client "Mr A" is a cargo agent who utilize Indian Railways for transport of cargo. The client has obtained a bogie on a lease contract from Indian Railways for transport of cargo for a fixed sum to be paid per day. The railways charge service tax at 3.71% i.e.....(12.36% * 30%). The lease contract is the result of his qualification in the sealed-bid.
Due to increased volume of business, the client has taken a sub-lease of bogies from another lessor "Mr B" who is also a legitimate bidder to the Indian Railways.
For utilizing the bogies on lease basis, Mr A pays premium to MR B.
Since MR B is the original bidder, the liability to pay tax is on MR B. Can MR B pass CENVAT CREDIT to MR A's for paying service tax ? In the above case, MR A is collecting tax on MR B's behalf, would this be legally wrong ??
Due to increased volume of business, the client has taken a sub-lease of bogies from another lessor "Mr B" who is also a legitimate bidder to the Indian Railways.
For utilizing the bogies on lease basis, Mr A pays premium to MR B.
Since MR B is the original bidder, the liability to pay tax is on MR B. Can MR B pass CENVAT CREDIT to MR A's for paying service tax ? In the above case, MR A is collecting tax on MR B's behalf, would this be legally wrong ??
23 July 2013
Yes it can be done as for rendering services the Railway is charging ST to both the lessee and for sublease you are being charged at a higher rate and with ST so the balance ST difference between your charges and railway is to be paid to the department after set off
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