Whether Srvice Tax applicable?

Queries 1506 views 9 replies

Dhara

204 Points Joined March 2007

firm has made an agreement naming "CONDUCTING AGREEMNT"

firm 1 has sold property to firm 2 for business purpose only,
in which firm 2 is paying to firm 1 fixed monthly amount [say more than 8.5 lac per month]
the condition is that either pay this fixed amount or fixed percentage of sale [say 5% of sale]
that means either fixed amount of rs. 8.5 lac or 5% of sales whichever is higher.
that fixed amount is called conducting fees.
My question is whether service tax is liable? payable?
if yes then under which category?

Replies (9)

Sandeep Rathi

Account

79 Points Joined April 2008

This is plainle Sale of Goods & No Service Tax is payble

BeyondConsultants

CA/CS/LLB(DU)

184 Points Joined December 2008

May be applicable. Mainly depends on scope and drafting of your agreement

Dilip Darji

392 Points Joined March 2007

Please let us know whether the ownership of the property has been passon to the buyer ? If not, when the buyer would be able tio use the right of ownership.

Dhara

204 Points Joined March 2007

ownership has already been transferred when agreement has been made.

i.e. on date of agreement only

Shakthi

433 Points Joined April 2008

The ownership has been passed to the Firm 2. And also looks like there is no service provided by the firm 1 to Firm 2.Hence service tax should not be applicable

ismailrazak

student

29 Points Joined May 2008

hi all,

while paying rental income after 1-6-2007 tds on rent will be applible inclusive of service tax or exclusive service tax

Sanjay Dwivedi

Advocate & Consultant

143 Points Joined March 2007

Dear Friend,

Although, one can give a definite opinion only after scrutinising the agreement, following is the general view.

If there is a periodical payment in consideration of transfer of 'right to enjoy the property', then the transaction is 'lease'. [see Section 105 of Transfer of Property Act]. It is immaterial that the agreement calls it by some other name.

Renting of immovable property for business purposes has become a taxable service w.e.f. 01.06.2007.

Thanks,

S. R. Dwivedi