I am a registered Excise and VAT dealer in Andhra Pradesh. I purchase goods from Gujarat. Recently my supplier has been charging me additional amount for service tax on transportation in the invoice. He told me the additional amount charged can be passed on to my customer just as we pass on the Cenvat Credit. Kindly throw some light on the procedure to pass on the service tax credit which is levied by my supplier to my customer. Also, please advise how to prepare the sale invoice in this case.
You can pass on the duty paid on goods to your customer because you pass on the goods physically. But, you cannot pass on the service that you have availed to your customer as the service gets consumed. The service of goods transport agency got consumed during transportation of goods from your supplier’s premises to your premises. So, there is no question of passing on that service or the service tax on that service to your customer.
We are a SEZ unit manufacturing ladies garments (Chapter 61 & 62). We believe we are not liable to pay CVD, under Section 3 of Customs Tariff Act, 1975, on clearances into DTA as per Notification No.30/2004-CE dated July 9, 2004, which exempts excise duty when ‘Cenvat Credit not availed’. However, Customs are insisting on payment of CVD because we have been allowed exemption of import duties on inputs and capital goods and we are not entitled to any benefit in the form of Cenvat Credit. Please advise.
For your clearances made before March 17, 2015, you can take a view that CVD must be ‘nil’ based on the Supreme Court judgment in the case of SRF Ltd. and ITC Ltd. [2015-TIOL-74-SC-CUS]. However, that notification no. 30/2004-CE has been amended through notifications 34/2015-CE dated March 17, 2015 and 37/2015-CE dated March 21, 2015 with a view to overcoming the effect of that judgment. You may refer to those amending notifications and CBEC Circular no. 1005/12/2015-CX dated July 21, 2015.
I have taken a cash loan on my credit card. The credit card agency has charged service tax on the interest amount along with a separate service tax on the processing fee. Should a customer be paying both the service taxes -- i.e. service tax on the processing fee and service tax on the interest amount? Please provide some clarification on the query.
CBEC has clarified that any charges or amounts collected over and above the interest or discount amounts would represent taxable consideration. So, processing fees will attract service tax. Secondly, the negative list entry covers any such service wherein moneys due are allowed to be used or retained on payment of interest or on a discount. So, if the credit card company recovers only interest on loan, it is not subject to service tax, but if penal interest is charged for delay or any other reason, that would be taxable as ‘tolerating an act or situation’ , which is a declared service.