Sponsorship service
Querist : Anonymous
Who is liable to take registration certificate and who is liable to pay service tax to government.
Querist : Anonymous
As per sponsorship definition it will be B pvt Ltd who will be providing service to A pvt ltd.
Now what will be the scenario.
In accordance with rule 4 of service tax rules 1994 those person liable for paying service tax will have to obtain registration, in given case A Pvt Ltd will obtain the registration.
Querist : Anonymous
Querist : Anonymous
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### 1. **Who should take service tax registration?**
* According to **Rule 4 of the Service Tax Rules, 1994**, the person liable to pay service tax must obtain registration.
* Under sponsorship service, the **recipient of the service** is liable to pay service tax under **reverse charge mechanism** if the recipient is a body corporate.
* In your case:
* **B Pvt Ltd** is providing the sponsorship service (organizing event, placing A Pvt Ltd's name on the book).
* **A Pvt Ltd** is the recipient (body corporate).
* So, **A Pvt Ltd** must take **service tax registration** and pay service tax under reverse charge.
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### 2. **Under which category should registration be taken?**
* The service falls under **“Sponsorship services”** which is a taxable service.
* A Pvt Ltd should take registration as a **recipient of sponsorship services** under **reverse charge**.
* This means A Pvt Ltd is not providing the service but receiving it and liable to pay service tax on that.
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### 3. **What if B Pvt Ltd pays the service tax on behalf of A Pvt Ltd?**
* If **B Pvt Ltd pays the service tax on behalf of A Pvt Ltd**, it is considered a **payment made by a third party**.
* However, under service tax law, the **liability to pay and file returns remains with A Pvt Ltd**, as the recipient under reverse charge.
* **A Pvt Ltd can show that B Pvt Ltd made the payment** and can take credit accordingly.
* Proper documentation (like invoices and receipts) should be maintained to prove the payment was made by B Pvt Ltd.
* It is advisable for A Pvt Ltd to reimburse B Pvt Ltd officially and maintain records of this transaction.
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### Summary
| Query | Answer |
| ---------------------- | ---------------------------------------------------------------------------- |
| Who must register? | A Pvt Ltd (recipient, body corporate) |
| Which category? | Sponsorship services (reverse charge) |
| If B Pvt Ltd pays tax? | Liability stays with A Pvt Ltd; A Pvt Ltd can show payment made by B Pvt Ltd |
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If you want, I can help draft a simple note or agreement for the payment arrangement between A Pvt Ltd and B Pvt Ltd. Would that be useful?
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