We are a company providing IT (hardware?related) consultancy services to a wide range of clients. Our services pertain to advising clients on their appropriate IT requirements. Our normal practice has been to recover the consultancy fees with service tax. Costs incurred towards boarding, lodging and travel are billed on actuals and the same is recovered from clients without charging service tax. We have been advised that service tax should be charged on such charges. Please let us know the correct position.
The above matter has been dealt in the Finance Act 1994 read with the Service tax Valuation Rules 2006. It has been clarified that all expenditure or costs incurred by the service provider in the course of providing taxable service needs to be included in the value of services rendered for the purpose of charging service tax. Since the boarding, lodging and travel costs are incidental expenses incurred by you and charged to your clients for rendering the aforesaid services such costs should be recovered with service tax from your clients.
We are an authorised dealer of a Japanese car manufacturer providing services free of charge to customers during the first year after purchase of the car, as per our agreement with the concerned car manufacturer. Such facility is being provided as a marketing policy primarily to attract more customers. However, the car manufacturer reimburses us the charges for such service that we provide to the customers during the first year. Are we are liable to paying service tax for these services provided to our customers even though the value of such services is not received directly from them.
The liability to discharge service tax arises once the payment is received by the service provider from the recipient of services. There is no stipulation in service tax law that the value of services should be received directly from the service recipient or indirectly from any other source. In this case, you are providing the services to the customers free of cost. You receive the consideration for the services provided from the manufacturer indirectly, even though you do not receive any amount from your customers. Therefore, you will be liable to pay service tax as ?authorised service station? on the amount received from the car manufacturer for servicing of vehicles belonging to customers.
We are a Mumbai-based agency having agreements with various newspaper and magazine publishing houses for the procurement of advertisements from advertising companies. We receive commission on a monthly basis for such services provided to the newspapers and magazines. We would like to know if we are liable to pay service tax under the category of ?advertising agency? for the aforesaid services rendered by us.
It seems from the above facts that you are not involved in making, preparation or display of advertisement, but merely perform the job of procuring an order for advertisement. Hence, the services that you render do not fall under ?advertising agency service?.
Further, the services provided by you will also not fall under the category ?sale of space or time for advertisement service? because sale of space in the print media is excluded from the above category of service. However, the above service might qualify as ?business auxiliary services? if it constitutes services rendered in relation to procurement of input services.
We are a company having three plants in India and are engaged in manufacture of water-tankers of different dimensions and supply the same to industrial houses. Our business also includes setting up, installation and commissioning of the tankers at sites in and outside Hyderabad. Kindly advise on whether we can deposit the service tax in Hyderabad for the jobs executed at sites outside Hyderabad or would we require separate registrations for each of the sites.
According to service tax laws, if a person provides taxable service from more than one premises, and has a centralised billing system or centralised accounting system he may at his discretion obtain a centralised registration. However, if there is no centralised billing/accounting system in place, separate registrations have to be taken for each separate premise from where taxable services are provided. In your case, you executed the erection, commissioning and installation work in and outside Hyderabad and it appears that you have a centralised billing system. Hence, you could obtain a centralised registration for ?erection, commissioning or installation service?. Therefore, it is advised to make an application for centralised registration and deposit the service tax accordingly.
?Respondents are senior professionals at Ernst & Young. The replies do not constitute professional advice, but are based on interpretation of facts available in readers? queries to the professionals. Neither Ernst & Young nor this publication are liable for any action taken on the basis of this information