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Service tax payment query

Queries 725 views 2 replies

Santosh Gill

Consultant

37 Points Joined July 2010

Requesting help for the below query :

`A' an Indian IT Company receives legal services from `B' Firm in India. `B' raises Invoice to `C' in USA (holding Co. of `A') for such services amounting to Rs 2 lacs including service tax. For such exps., `C' debited `A' through its inter company transaction. `A' booked 2 lacs +additional service tax 20600 (considering 10.3%), totalling to Rs 220600.

The question is : Does `A' required to pay the service tax on book entry or to pay after it makes payment to its holding company `C' ?

Replies (2)

Satish

CA Final Student

479 Points Joined September 2008

In the given case, 'B', a legal firm in India has already raised an invoice to 'C' a foreign holding company of 'A' & paid / payable service tax to 'B'. In turn, 'B' will pay service tax to Govt. 'A' need not pay any service tax again for the same service.

Santosh Gill

Consultant

37 Points Joined July 2010

Thanks Satish but our Auditors E&Y have insisted that we book service tax on these inter company transactions. Is there any notification or circular to support our stand?

Thanks,