How to availing Notification no 14/2012 ST - RESEARCH & DEVELOPMENT CESS.

[Yatin Bhopi]

Dear experts

We are paying technical assistance fees to our parent company. Since it is our associate company we make monthly provisions in the books and we are liable to pay service tax on this provisions under head Intellectual property service other than copy rights on this technical assistance fees. We are paying Research and Development Cess under provisions of section 3 of the Research and development Cess Act, 1986 (32 of 1986) to Reserve Bank of India on quarterly basis.

We wish to avail benefit of Notification no 14/2012 ST dated 17.03.2012 to adjust Research and Development Cess paid against service tax liability under intellectual property service after fulfilling all conditions.

My query is:

How will we adjust the R & Cess in below cases. R & D cess is paid in April 15 ₹ 15000

Month Technical assistance fees Service tax

Jan-15 ₹ 100000 14000

Feb-15 ₹ 100000 14000

Mar-15 ₹ 100000 14000

April-15 ₹ 100000 0 (liability is 14000 and cess paid is ₹ 15000

Or

We have to just pay the service tax after deducting R & Cess Payable each month considering R & D cess will be paid in April 15

Month Technical assistance fees Service tax

Jan-15 ₹ 100000 9000 (14000-5000)

Feb-15 ₹ 100000 9000 (14000-5000)

Mar-15 ₹ 100000 9000 (14000-5000)

Can anyone guide? I hope have clarified my query correctly

AI Summary

Research and development cess adjustment against service tax allowed upon timely payment and linkage of payment records.
Exemption allows adjustment of service tax by the amount of Research and Development cess payable on import of technology, provided the cess is paid within the statutory time limit from invoice or credit entry and is paid at or before payment for the service; records linking the invoice or credit entry to the cess payment challan must be maintained. Cess amount alone is the basis for reduction, and where these conditions are met the cess can be allocated to respective months to reduce corresponding service tax liabilities.