Associated Enterprises, Service Tax

[Pradeep Jain]

Dear Sir,

We have been provided design and Drawing by our Customer for manufacturing of Final product. Paying royalty thereon . At the time of year end we take provision of royalty payable . Service Tax is paid at the time of payment of Royalty .

Department view is that the said party is covered under Associated Enterprises as per section 92A of Income Tax . As associated Enterprises has the same meaning in ST as assigned in IT. Hence service tax is payable at the time of provision of service not at the time of payment.

Please give your kind advise.

Regards

Pradeep Jain

Posts / Replies

[DIPAK K]

Dear Sir please provide the following information for correct reply:-1. Description/name of service. 2. Location of service provider. 3. Date of payment of value of service. Thanks

[Pradeep Jain]

Dear Sir,

Thanks for quick response. As desired details are as under:-

Description of Service - Royalty

Location of Service Provider :- USA

Date of payment of Service :- 3-4 month from the date of provision. Going on Since 2010-11

Regards

Pradeep

[DIPAK K]

Dear sir associated enterprise has the same meaning as given in section 92A of IT Act. But as per rule 7 of POTR 2011, service tax is required to be paid at the time of payment of service value.

[DIPAK K]

Dear Sir. To avoid any dispute it is advisable that the payment of service value may be made within three months (6 months up to 30-9-2014).