An company having 20 branches with seperate service tax registration for all the branches. Some expense's which are commonly incurred for all branches say manpower supply, which is governed under RCM are paid by the head office which is not a Input Service Distributor. The invoice received is in the name of Head office finding reference of all branches. Head office pays the service tax liability on the total invoice under RCM . There after the head office transfers the expenses to all branches proportionately. It doesnt transfer the service tax amount paid by it.
Will the above transaction be deemed as shifting of liability of tax. Is this correct under service tax?
Company's Head Office Pays Service Tax Under RCM; Consider Centralized Registration or ISD Status for Compliance. A company with 20 branches, each having separate service tax registration, incurs common expenses like manpower supply, governed under Reverse Charge Mechanism (RCM), paid by the head office. The head office, not an Input Service Distributor (ISD), pays the service tax on the total invoice and proportionately transfers the expenses, excluding the service tax, to branches. Concerns were raised about shifting tax liability. Responses clarified that as long as the service tax is correctly paid, there is no issue. Suggestions included obtaining centralized registration or registering the head office as an ISD for compliance and convenience. (AI Summary)
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