Payment of Service Tax by Branch

[Asked by Guest]

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?

AI Summary

Reverse charge mechanism: central payment by head office does not shift service tax liability when branches have separate registrations.
Where a head office receives a consolidated invoice for services governed by the reverse charge mechanism and pays the service tax centrally, subsequent accounting allocations of the expense to separately registered branches do not change legal liability; correct payment by the invoiced registrant addresses the tax obligation. Advisers recommend centralised registration or registering the head office as an Input Service Distributor to regularise allocation and ease compliance.