Dear all,
we have 2 division of same company.(lets say as X and Y) Both have separate RC for Excise. X is providing some taxable Services to Y. my query is whether (1) S. Tax shall be charged or not coz we have common bank a/c for X and Y. (2) if it is charged then how to take S. Tax credit since it is available on payment only.
Hi,
I am correcting previous comment, since in your case service is not provided to different person/entity Service Tax is not taxable
Sir
i m nt clear with ur query....
If services is provided without any consideration than it will nt be considered as taxable service
The term service has been defined under section 65B(44) of the Finance Act, 1994 vide amendment effected by the Finance Act 2012 to mean any activity carried by one person for other person for a consideration. The activity should be carried between two different persons. If one division of the company bills on the other division, it would be considered as service provided to self and such transaction would not be under the purview of the service tax.
Dear all,
Thanx for ur participation. i would like to clear two things as
(1). Thought it is same company but we have taken two separate RC for both dovision hence both division comes under the definition of "Artificial judicial person".
(2). Management wish to treat both division as profit centere hence S. Tax shall be treated as income of X division. Hence "Consideration" factor is also there.
hope i m clear now for ur further inputs..
Thanx in advance.
Under Central Excise , each premises where manufacturing activity is carried on shall bear separate registration . But this does not make it a separate legal entity as it is only a requirement of CE Act. In your case each division is not independent person for service tax and hence the service providede by one division to another is not liable to service tax.
| Originally posted by : CA Unnikrishnan Nair N | ||
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Under Central Excise , each premises where manufacturing activity is carried on shall bear separate registration . But this does not make it a separate legal entity as it is only a requirement of CE Act. In your case each division is not independent person for service tax and hence the service providede by one division to another is not liable to service tax. |
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Agreed ..
| Originally posted by : Ashutosh | ||
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Dear all, Thanx for ur participation. i would like to clear two things as (1). Thought it is same company but we have taken two separate RC for both dovision hence both division comes under the definition of "Artificial judicial person". (2). Management wish to treat both division as profit centere hence S. Tax shall be treated as income of X division. Hence "Consideration" factor is also there. hope i m clear now for ur further inputs.. Thanx in advance. |
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Dear Ashutosh,
Thanks for asking such a basic question ...
Though you have been issed diffrent RC but both must be bearing same Registartion number.
So one entity can not in turn provide services to it self, even though assume it is taxable then also you can claim cenvat Credit immediately & no ST would be payable.
Thanks..
Dear Mr. Nair/Vaibhav,
Thanx.
But we have two separate RC with two different registration no...! we are filling two separate ER-1 return also for both division.
further, in my opinion both division are two person which comes in the definition of Artificial Judicial person which can be read as "Artificial judicial person means an Entity other than a natural person (human being) created by law and recognized as a legal entity having distinct identity, legal personality, and duties and rights. "
pl. consider that since both are different assesee for Excise dept. hence they cannot take CENVAT credit of each other division..!
Hi
Kindly cnfirm Service Tax no .is same or different.
Thanks..
yes, i reconfirm it is different...!
According to me S. Tx has to be paid coz it is Taxable service, Consideration is also there, both are different person ( as i explained earlier) than how Y division can take credit of S. Tx paid to X coz in actual there will be no cash payment..?
Hope now query became bit tricky..
SIR ACTUAL CASH PAYMENT IS NOT NECESSARY, EVEN ADJUSTMENT WITH UR LIABILITES IS CONSIDERED TO BE AS PAYMENT MADE...
BT I M NT CLEAR WHY SERVICE TAX IS CHARGED WHEN BOTH DEPT ARE FROM SAME ORGANISATION....
Even under Central Excise law , a diviion is not a separate legal entity although each factry needs separate registration and cenvat credit account which is meant for tax administration.
HI
Refer this link for clarity..
https://www.taxmanagementindia.com/wnew/print_Article.asp?ID=263
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