Service tax on reimbursement of exps

This query is : Resolved

Guest

Guest (Querist)

24 September 2011 My Client (A ltd)has newly entered into cable business......since he is new to this business he has asked B Ltd ( B Ltd is in cable business since many years) to provide him TV signal from C Ltd(Signal Supplier)....
C Ltd had raised the Bill for supplying signal in name of B Ltd & B Ltd had also paid service tax on the same on behalf of my Client....but when my client is reimbursing him signal charges..B Ltd is not charging service tax....
my question is my client liable to service tax in the above case.

CA Parth Shah

CA Parth Shah (Expert)
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24 September 2011 Practically, B Ltd has taken service from C Ltd and all formalities have been completed regarding Service Tax. hence now when B Ltd is passing services to A Ltd, B's role is just middleman charging commission hence to the best of my knowledge, Service Tax should not be charged upon this transaction.

Guest

Guest (Querist)

24 September 2011 A ltd is not paying any commission to B Ltd..... in this case.... B Ltd had not only provided signals to A Ltd but to other cable operators also....y will b ltd claim cenvat credit of the service tax paid to c ltd....on behalf of A Ltd

CA Parth Shah

CA Parth Shah (Expert)
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25 September 2011 When B Ltd is passing services to other cable operators, it may attract service tax. But as is transaction with A Ltd, it will not create Service Tax liability as it results in Double Taxation. And as far as commission's question, if B Ltd has paid Rs.110 to C Ltd, B will charge Rs.120 from A Ltd. Hence dont go by mere name, but it is in NATURE of commission only.

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