Input service tax

hi Hitesh,

Mr A is not charging the servcie tax on transportation component from the client. He is charging service tax only on agency charges. Regarding the transportation charges they are being billed on actual basis to client. In this case can the input service tax benefit be taken for service tax paid to Mr B.

e.g. Mr A gets invoice from Mr B regarding transportation as below

Transportation Charges : 1000

Service Tax                     : 123.60

So entry is  :

Transportation Charges Dr 1000

Input Service Tax          Dr 123.60

       Mr B                                        1123.60

Now Mr B send the full invoice of clearing the consignment as below :

Customer Dr  2123.60

    Transportation Charges  Cr             :  1000

    Agency Charges              Cr            :  1000

    Service Tax on Agency Charge Cr  :    123.60