The co. where i work is having some subsidiaries and there are some expenses which are incurred in the holding co, and then subsequently allocated to its subsidiarie. for example there is a bill for traing of employees where employees of whole organisation had come, so the holding co. gave the subsy's the debit note. However, the debit note is net of service tax, i.e. the holding co. is itself claiming the entire service tax as they claim that the bill is in their name and they make direct payment to the veendor, Following, the service tax amendment where the method of taxation is changed from payment to accrual, is it correct in law to avail the whole credit by the holding co. only when it is not availig whole of the service.
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Service tax credit
Replies (4)
I think service tax credit can be taken by main co. only becuase it is making payment to vendor........ only ground of allocation by issuing debit note i think credit can not be transferred to subs. co....
lets see others view..
But As per Invoice and Makeing the Payment by Main Company. So no issue for Taking Credit by Main Company for Service Tax.
The basic condition for eligibility is whether the services are used for provding taxable services or in realtion to manufacture of goods or clearacne of goods upot the place of removal.
In this case it appears that the usage in in sepearte entities.
Alt 1- Main company avails the credit in gorss and charges the subsidiaries along with ST.
Alt- 2 - Main company does avails only what is ustilises and as there is no margin acts as a pure agent under Rule 5 (2) of the ST valuation rules.
thanks madhukar sir,....can u explain the referance of pure agent that u hav used here further. also, there is a solution that we can ask the vendor itself to issue separate bills
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