Service tax on services provided with in the company
This query is : Resolved
29 December 2011
Our company have two unit. Both are registered in service tax with diff reg no 001 & 002. If one unit provides service to another unit then wheather service tax is payable on it or not.
please solve my problem, Thanks in advance.
please solve my problem, Thanks in advance.
29 December 2011
if it comes under taxable services, then st payable, receipent unit may avail input credit,
however if its under job work sent under annexure II, then no ST or excise payable.
however if its under job work sent under annexure II, then no ST or excise payable.
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31 December 2011
sir,when there is no any relationship of service receiver & service provider then why service tax is payable on providing the service from one unit of a company to another unit of same company?
Please reconfirm me.
Thanks
Please reconfirm me.
Thanks
24 July 2025
Great question! Here’s the clarity on **service tax on services provided between two units of the same company** but having **different Service Tax registrations**:
---
### Key points:
1. **Are the two units distinct taxable entities?**
* If both units have **separate Service Tax registrations with different Service Tax Registration Numbers (ST RNs)**, then legally they are treated as **distinct taxable persons** under Service Tax law.
2. **Is service tax applicable on inter-unit services?**
* Since they are distinct taxable persons, any **taxable service provided by one unit to another unit is subject to Service Tax**.
* So, yes, **service tax is payable on services provided by one unit to another**.
3. **Why this treatment even if units belong to same company?**
* Service tax law is based on the **taxable person**, not ownership.
* Having different registrations means different entities from tax perspective.
4. **Input credit**
* The receiving unit can **avail Input Service Credit** of the service tax paid on services received from the other unit.
---
### Exception: Job Work
* If the service provided is a **‘job work’** (i.e., processing or manufacturing service as per notification like Annexure II), then **no service tax** is payable on such service provided by one unit to another.
---
### Summary
| Situation | Service Tax Applicability |
| ---------------------------------------------------------------------------------- | ------------------------------------------------- |
| Two units with different ST registrations, providing taxable service to each other | Service tax is applicable, payer can claim credit |
| Service provided is ‘job work’ as per specified notifications | No service tax applicable |
| Same unit or branch (single ST registration) | No service tax on internal transfer |
---
**So, if your two units have different Service Tax registrations and the service is taxable, service tax will apply.**
---
Would you like help in determining whether your inter-unit services are taxable or fall under job work? Or how to do accounting entries for this?
---
### Key points:
1. **Are the two units distinct taxable entities?**
* If both units have **separate Service Tax registrations with different Service Tax Registration Numbers (ST RNs)**, then legally they are treated as **distinct taxable persons** under Service Tax law.
2. **Is service tax applicable on inter-unit services?**
* Since they are distinct taxable persons, any **taxable service provided by one unit to another unit is subject to Service Tax**.
* So, yes, **service tax is payable on services provided by one unit to another**.
3. **Why this treatment even if units belong to same company?**
* Service tax law is based on the **taxable person**, not ownership.
* Having different registrations means different entities from tax perspective.
4. **Input credit**
* The receiving unit can **avail Input Service Credit** of the service tax paid on services received from the other unit.
---
### Exception: Job Work
* If the service provided is a **‘job work’** (i.e., processing or manufacturing service as per notification like Annexure II), then **no service tax** is payable on such service provided by one unit to another.
---
### Summary
| Situation | Service Tax Applicability |
| ---------------------------------------------------------------------------------- | ------------------------------------------------- |
| Two units with different ST registrations, providing taxable service to each other | Service tax is applicable, payer can claim credit |
| Service provided is ‘job work’ as per specified notifications | No service tax applicable |
| Same unit or branch (single ST registration) | No service tax on internal transfer |
---
**So, if your two units have different Service Tax registrations and the service is taxable, service tax will apply.**
---
Would you like help in determining whether your inter-unit services are taxable or fall under job work? Or how to do accounting entries for this?
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