Service tax issues..input service tax credit

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RAHUL R. JAIN

CmA Practice

52 Points Joined May 2013

A Company is an authored dealer of MARUTI SUZUKIN INDIA LIMITED and engaged in trading of cars and also providing various services like financing loans and taking insurance and also of servicing of motor vehicles..Company also engaged in the business of selling and purchasing old cars…I have two specific queries in this regard which are as follows..

1. In the purchase invoice received from MARUTI SUZUKI INDIA LIMITED (MSIL)it charges transportation charges which are inclusive of service tax. Now the question is that whether the company ( the DEALER COMPANY ) is eligible to claim the input service tax credit of the service tax so charge by MARUTI SUZUKI INDIA LIMITED in the purchase invoice sent to the dealer..?The company is also providing various other services as stated earlier and also having the service tax registration number..MSIL is also charging service charge in the purchase invoice issued to the dealer and again service tax is charged there on by the MSIL now again my question is same whether the dealer company is eligible to claim the input service tax credit of such service tax which is charged by MSIL on service charge.

2.My other question :_

company is also engaged In selling and purchasing the old cars..without having such vehicles registered in its name..now question is whether dealer company is required to collect VAT (company is situated in gujarat so Gujarat vat is applicable)..?? whether it should be considered as service and the company is required to collect service tax..?

please guide me on the above questions….

Thanks in advance to all

Replies (2)

Arun Kumar

Deputy Manager Assurance

230 Points Joined October 2008

Question 1: Input on Transportation charges

Credit cannot be taken, the transportation cannot be inclusive of service tax.

Question 2: Input Credit on other services

Input credit on any of the services received within the Showroom. i.e rent, telephone, mobile, maintanence bills etc can be availed

Question 3 : Since you make sales without getting it registered in your name it will be regareded as commission agency and service tax is chargeable on the profit.

Guest

1. As the delaer engaged in only trading, specific credits credits relating to trading can not be availed.

2. Here the propertyin vehicles is transferred to the dealer or not to be examined. In case if transfer of property in vehicles are transferred it is liable to VAT. If the dealer is acting only as commission agent, then service tax applicable.