Amount of commssion payable to be shown in return

[JOSHIL JAIN]

An exporter who pay commission to foregin agents for the business procoured by them. Commission is paid to them during the month of April for the whole financial year for the business procured by them during last financail year.He has to deposit service tax on the commission paid to them. But he can avial the benefit of Notification No. 18/2009-Service Tax which expempts the taxable services received by an exporter of goods in relation to GTA and Import of Business Auxilary Services- Now my question is if he takes the benefit of above said notification then how he has to file his half yearly return showing exemption amount of service tax when infact he has not paid any amount of commission during the first half year or even in second half year. Whether he has to show the amount of commission paybale and amount of service tax thereon or Whether he has to show the whole amount of commission in next financial year when in fact he paid the commission to service provider. Please adivse. Mob : 09896210875

[Rama Krishana]

There are two theories. The correct theory would be pronounced by the appropriate appellate authority as appropriate time. One theory is based on principle, accordingly, service tax is to be deposited at the time of making payment but has accrued and levied as per the provisions of section 66 as soon as it became payable. The exemption notification is prospective in nature and not retrospective. Therefore, If you have shown the amount as accrued and payable in the books of account or returns, you can not claim the benefit of exemption notification 18/2009. The other theory is from the practical prospective. In case of import of service, service tax is payable at time of making actual payment to the service provider. Since you are making payment to the service provider after notification 18/2009 date, you can avail the exemption under notification no. 18/2009. since you have not charged the service tax from the service provider, or no burden has been passed on, I prefer to follow the second option and not to pay service tax. But, department is not going to sit you with calm in such a situation be prepare for long battle of litigation.

AI Summary

Exporter Seeks Guidance on Service Tax Return Filing for Commission Payments Under Notification No. 18/2009 Exemption An exporter pays commission to foreign agents for business procured during the previous financial year and seeks advice on filing a service tax return under Notification No. 18/2009, which exempts certain taxable services. The query concerns whether to show the commission and service tax in the current or next financial year, given no commission was paid during the first half-year. The response outlines two theories: one requiring tax payment upon accrual, and another allowing exemption if payment occurs post-notification. The responder suggests following the latter, though warns of potential litigation challenges.