Service Tax query

This query is : Resolved

Jayesh (Querist)
Follow

14 October 2010 Please advise whether we need to pay service tax for the below mentioned purchase.

We have purchased computer components from US company amounting USD 42,536.60 which is Rs. 19,12,000 ( approx ). This purchase is basically Import of software licenses. The US company has not charged Service tax in Invoice to us as they are not registered with service tax ( Non Indian company )

1. Do we need to pay service tax on such import of software's on behalf of this company as we have used these components in the finished product on which we are charging service tax to our client , if yes on which amount do we need to pay this...here I mean upto Rest.10 Laces there is no service tax payable so do we need to pay the ST on the amount going above that ??

2) Can I take credit of service tax paid on Rent payment, Housekeeping charges, etc also against the service tax payable on this import ?

3 ) We have purchased this software in April 2010 & till date not paid service tax on this...can we pay it now ? what will be the penalty if any ??

4) We have applied for ST regn May 10 & got ST-2,however not got Registration Certificate...Do this will affect ? Can we still file the return on / before 25th Oct ?

Pls reply to this. Thanks in anticipation.
Regards,

Lalit

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
Follow

14 October 2010 Service tax is payable on import value, since the supplier is from outside india.

No deduction of Rs. 10 lakhs will be applicable.

You can take the input credit.

Message likes : 1 times

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
Follow

15 October 2010 The ITSS service includes providing of software electronically nas part of taxable service.[ this entry is under debate/ litgation as the same is also liable for VAT which is not legally valid.

However to avoid litgation you should as recepient pay the ST , avail the credit and pay the ST on your sale of the same. Thwere is no one to one corelation- one vbendors credit can be used to pay for anothers.

Message likes : 1 times

Gagan Agarwal

Gagan Agarwal (Expert)
Follow

15 October 2010 You will need to pay service tax on the entire value of consideration paid for the license (under reverse charge mechanism). Further, you will be eligible to claim credit of service tax liability when you invoice for the said license to your clients.

Also, you may need to pay VAT when you invoice for the said license to your clients

Message likes : 1 times

Jayesh

Jayesh (Querist)
Follow

15 October 2010 Thanks to all for the reply.

I have 2-3 questions more related to this--

1) Can I take credit of service tax paid on Rent payment, Housekeeping charges, etc also against the service tax payable on this import ?

2 ) We have purchased this software in April 2010 & till date not paid service tax on this...can we pay it now ? what will be the penalty if any ??

3) We have applied for ST regn May 10 & got ST-2,however not got Registration Certificate...Do this will affect ? Can we still file the return on / before 25th Oct ? if No pls provide solution

Pls reply to this. Thanks in anticipation.

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
Follow

24 July 2025 Happy to help! Let's address your three service tax-related questions one by one, clearly and accurately:

1) Can I take credit of service tax paid on rent, housekeeping, etc. against service tax payable on import of services?

✅ Yes, CENVAT credit can be taken, provided:
The input services (e.g., rent, housekeeping) are used in providing your output services (or for business purposes).
The services are not specifically excluded under the CENVAT Credit Rules, 2004 (e.g., personal services, employee welfare, etc.).
The input services are used for taxable services, including import of services where you're paying service tax under reverse charge.
Rule 3 of CENVAT Credit Rules, 2004 allows credit of service tax paid on input services used for providing taxable output services.
✅ So yes, you can set off service tax paid on rent, housekeeping, etc. against your liability on imported services, as long as:

You're using the premises for business,
The services are not for personal use or excluded, and
Proper invoices are available.
2) We purchased software in April 2010 and haven't paid service tax yet. Can we pay now? What penalty applies?

✅ Yes, you can and should pay it now.
If the software purchase involved import of software services or license fees, and service tax was applicable, you're liable to pay it under reverse charge.
Since the tax is delayed, you must pay interest and may face a penalty.
🔸 Interest (Section 75):
Interest will apply from the due date till the actual date of payment.
Interest rate as per Rule 6 of Service Tax Rules (varied over time, e.g., 13%–18%).
🔸 Penalty (Section 76 & 78):
If you pay before any notice is issued, the department may waive or reduce penalty.
Under old rules, if you voluntarily pay tax + interest, penalty may be nil or minimal.
✅ Action you should take:

Calculate and pay the service tax along with interest.
File a letter of voluntary compliance with the department to minimize penalty.
Retain proper documentation in case of audit.
3) We applied for ST registration in May 2010, got ST-2 but not received Registration Certificate. Can we file the return before 25th Oct?

✅ Yes, you can still file the return.
The ST-2 certificate (acknowledgment of registration) is your formal proof.
The registration certificate (in physical form) is procedural and non-receipt does not bar return filing.
You can file ST-3 return online using your registration number.
🔹 If you face portal issues:
Visit the jurisdictional Service Tax office with your ST-2 copy.
Request help to activate your account/login if not yet done.
✅ Final Summary:

Question Answer
CENVAT on rent/housekeeping? ✅ Yes, if for business and not ineligible under CCR
Software purchased in Apr 2010 – tax unpaid? ✅ Pay now with interest; penalty can be avoided if voluntary
No registration certificate received yet? ✅ No problem, use ST-2 to file return before 25 Oct

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now