Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Service tax query

515 views 2 replies

Asif Khan

Taxation executive

410 Points Posted on 24 January 2013

Dear Freinds,

We are a Dealer of Cars of Skoda.

We have incurred some Advertisement Expenses for the promotions of the cars. The Ad agency have issued us the bill for the services rendered with Service tax. We have paid the bills of Ad Agencies, After payment we claim 75% of the Ad expenses from Skoda and Skoda pays us the amount we claim.

My query is that what is the Service tax implication in this case and can claim Service Tax Input of expenses we incurred on Ads?????

Replies (2)

Mr Subrata Dasgupta

Finance Professional

171 Points Posted on 25 January 2013

Dear Mr Asif Khan

There is every possibility that your claim for Cenvat (Service Tax Credit) shall be rejected on the grounds of "unjust enrichment".

A better way of doing it is to pay 100% of the bills of the Ad Agency and bill the same to Skoda charging applicable service tax. In this way Service Tax paid by you (Input Service) can be claimed against your liability to pay Service Tax (Output Service) on the billing to Skoda. Even Skoda will be able to claim the amount of Service Tax paid to you, thereby the amount of Service Tax shall not be a "cost".

preeti22

manager

35 Points Posted on 29 January 2013

Asif sir, you can contact V Palkar ,chartered accountant in navi mumbai , i have got many good reviews about this firm. so you can take help from them if you have queries in taxation area.