Service tax on raw materials

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Magesh R (Querist)
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10 March 2008 Raw Materials are purchased by a company. The goods are transported through Goods Transportation Agency. The company pays service tax at an abated rate on behalf of the goods transport agency and no credit for service tax paid has been taken by the company.Can this service tax amount be added towards the cost of inventory in the books. If it can be done how will be treatment at the end of the year when closing stocks are physically verified and valued, as per AS-2

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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10 March 2008 If this is done as a practice the ST can be built into the cost, subject to the cost or market value whichever is lower principle.

CA Saurabh Maheshwari

CA Saurabh Maheshwari (Expert)
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10 March 2008 IT CAN BE ADDED TO COST AS PER AS-2

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