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This query is : Resolved
22 November 2012
Company 'X' in SEZ.dey apointed Comapny 'A' for some labour work. Company 'A' is give to another company 'B' is a Subcontractor, a work in SEZ compny 'X'. my qun. is Compny 'A' is not charges service tax to Company 'X' bcz Company 'X' in SEZ. but Company 'B' is charged service tax to Coampny 'A'. now Company 'A' is taken a input r wt..? plz advise me
22 November 2012
hi
Co. A can take input since it is taxable to them & can pay st on taxable srtvice.
No input can be taken if they are providing 100% exempt services
Thanks//Vaibhav
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Co. A can take input since it is taxable to them & can pay st on taxable srtvice.
No input can be taken if they are providing 100% exempt services
Thanks//Vaibhav
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22 November 2012
Company A is providing pure 100% ST Exemption bcz Company 'X' in SEZ. but company 'B' is charged on ST his bill to Company 'A'. So Comapny 'A' if not taken the input.comapny 'A' how to account that ST amount in tally.
22 November 2012
Hi
Is co. A is only providing services to co. X, if yes then there is no ST liability payable by co. A, so that they can not utilise CENVAT of ST paid to co. B.
However if it is not so then co. A can take cenvat of ST paid to co. B unless all input sefrvices of co. B is utlised for providing services to. Co. X.
So if Co. A is not taking cenvat then that would be purchase cost for company.
Thanks//Vaibhav
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Is co. A is only providing services to co. X, if yes then there is no ST liability payable by co. A, so that they can not utilise CENVAT of ST paid to co. B.
However if it is not so then co. A can take cenvat of ST paid to co. B unless all input sefrvices of co. B is utlised for providing services to. Co. X.
So if Co. A is not taking cenvat then that would be purchase cost for company.
Thanks//Vaibhav
Revert for more clarity.
Use thank button to convey your appreciation.
22 November 2012
Thanks
Comapny 'A' also providing Taxable service but Comapny 'A' is providing Srivece 50% SEZ claint another 50% others. this time company A can take a input on service providing on SEZ
Comapny 'A' also providing Taxable service but Comapny 'A' is providing Srivece 50% SEZ claint another 50% others. this time company A can take a input on service providing on SEZ
14 July 2014
Vijay Company have a two branchs in India one is bangalore and another one is chennai. Vijay Company got supply order from Sujay Company its located in Chennai. Sujay Company Released order to Vijay Company Bangalore Branch. Now My Question is Vijay Company Billing & Material delivery should be Bangalore Branch or if its possible to delivered & billing from chennai (Vijay) branch.
Kindly please any one suggest me.
Note : PO Received barnch is Bangalore.
Thanks & Regards
Lohith H P
Kindly please any one suggest me.
Note : PO Received barnch is Bangalore.
Thanks & Regards
Lohith H P
26 July 2025
Let's break down your queries one by one:
---
### 1. **Service Tax & Input Credit (CENVAT) for Company A, B, and SEZ Company X**
* **Scenario:**
* Company X (SEZ unit) appoints Company A for labor work.
* Company A subcontracted the work to Company B.
* Company B charges service tax to Company A.
* Company A does **not** charge service tax to Company X because services to SEZ are exempt.
---
### Can Company A take input credit (CENVAT) of the service tax paid to Company B?
* **If Company A provides 100% exempt services (to SEZ only):**
* Company A **cannot take CENVAT/input credit** on the service tax paid to Company B because CENVAT credit is available only when the recipient is liable to pay service tax on output services.
* In this case, service to SEZ is exempt → no service tax on output → no input credit allowed.
* **How to treat ST paid to Company B in accounting?**
* The service tax paid to Company B becomes a **cost to Company A**.
* So, in Tally or your accounting system, treat the service tax paid as part of **purchase/service cost** (i.e., increase expense or capitalized cost as applicable).
* **If Company A provides mixed services (partly exempt, partly taxable):**
* Suppose 50% services are to SEZ (exempt), 50% to non-SEZ clients (taxable),
* Then Company A can **take proportionate CENVAT credit** for the input services used for taxable output services.
* The proportionate credit needs to be calculated on the basis of output services split.
---
### Summary:
| Situation | Can Company A take CENVAT credit? | Treatment of Service Tax paid to Company B |
| --------------------------------- | --------------------------------- | ------------------------------------------ |
| 100% Services to SEZ (exempt) | No | Expense/cost to Company A |
| Mixed Services (taxable + exempt) | Proportionate credit allowed | Input credit on taxable portion only |
---
### 2. **Billing & Material Delivery: Branches of Vijay Company**
* Vijay Company has two branches: Bangalore and Chennai.
* Sujay Company (Chennai-based) places an order to Vijay’s Bangalore branch.
---
**Question:** Can billing and delivery be done from Chennai branch although order is received by Bangalore branch?
---
### Key points:
* Legally, the **branch that receives the purchase order is responsible for billing and delivery** unless internal arrangements allow otherwise.
* For **VAT/sales tax purposes**, the place of supply and billing location may impact tax liability.
* You **can deliver and bill from Chennai branch**, but ensure:
* Proper **inter-branch transfer entries** are maintained in accounts.
* Comply with **local VAT/GST laws** regarding place of supply.
* Both branches should maintain their respective books accordingly.
---
### Practical suggestion:
* If the PO is received by Bangalore branch, ideally billing should be done by Bangalore branch.
* If Chennai branch wants to bill/deliver, Bangalore branch should issue an inter-branch transfer (stock transfer) invoice to Chennai branch.
* Then Chennai branch raises the final invoice to Sujay Company.
---
If you want, I can provide sample journal entries or inter-branch invoicing formats.
---
Feel free to ask for any clarifications!
---
### 1. **Service Tax & Input Credit (CENVAT) for Company A, B, and SEZ Company X**
* **Scenario:**
* Company X (SEZ unit) appoints Company A for labor work.
* Company A subcontracted the work to Company B.
* Company B charges service tax to Company A.
* Company A does **not** charge service tax to Company X because services to SEZ are exempt.
---
### Can Company A take input credit (CENVAT) of the service tax paid to Company B?
* **If Company A provides 100% exempt services (to SEZ only):**
* Company A **cannot take CENVAT/input credit** on the service tax paid to Company B because CENVAT credit is available only when the recipient is liable to pay service tax on output services.
* In this case, service to SEZ is exempt → no service tax on output → no input credit allowed.
* **How to treat ST paid to Company B in accounting?**
* The service tax paid to Company B becomes a **cost to Company A**.
* So, in Tally or your accounting system, treat the service tax paid as part of **purchase/service cost** (i.e., increase expense or capitalized cost as applicable).
* **If Company A provides mixed services (partly exempt, partly taxable):**
* Suppose 50% services are to SEZ (exempt), 50% to non-SEZ clients (taxable),
* Then Company A can **take proportionate CENVAT credit** for the input services used for taxable output services.
* The proportionate credit needs to be calculated on the basis of output services split.
---
### Summary:
| Situation | Can Company A take CENVAT credit? | Treatment of Service Tax paid to Company B |
| --------------------------------- | --------------------------------- | ------------------------------------------ |
| 100% Services to SEZ (exempt) | No | Expense/cost to Company A |
| Mixed Services (taxable + exempt) | Proportionate credit allowed | Input credit on taxable portion only |
---
### 2. **Billing & Material Delivery: Branches of Vijay Company**
* Vijay Company has two branches: Bangalore and Chennai.
* Sujay Company (Chennai-based) places an order to Vijay’s Bangalore branch.
---
**Question:** Can billing and delivery be done from Chennai branch although order is received by Bangalore branch?
---
### Key points:
* Legally, the **branch that receives the purchase order is responsible for billing and delivery** unless internal arrangements allow otherwise.
* For **VAT/sales tax purposes**, the place of supply and billing location may impact tax liability.
* You **can deliver and bill from Chennai branch**, but ensure:
* Proper **inter-branch transfer entries** are maintained in accounts.
* Comply with **local VAT/GST laws** regarding place of supply.
* Both branches should maintain their respective books accordingly.
---
### Practical suggestion:
* If the PO is received by Bangalore branch, ideally billing should be done by Bangalore branch.
* If Chennai branch wants to bill/deliver, Bangalore branch should issue an inter-branch transfer (stock transfer) invoice to Chennai branch.
* Then Chennai branch raises the final invoice to Sujay Company.
---
If you want, I can provide sample journal entries or inter-branch invoicing formats.
---
Feel free to ask for any clarifications!
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