Adjustment of R & D Cess / Notificaitton No 14/2012 ST

[Yatin Bhopi]

Dear all

Dear Sir, We are paying R & D cess on import of technology. We want to avail benefit of Notification no 14/2012-ST to adjust ST payment of Int. Prop. Ser. after fulfil all conditions therein.  we have paid the R&D Cess Rs. 50000/- my liability for the month is 150000+3000+1500=154500/-  my query is my liability will be 1) 100000+3000+1500=104500/- or 2) 101455+2030+1015=104500/-(by back calculating 50000 to calculate Cess and SHED Cess) or 3) 100000+2000+1000=103000/- please guide

[YAGAY andSUN]

Option number one is applicable in you case.

[Yatin Bhopi]

Dear Sir

In Notification no 14/2012 ST the wording is "is necessary in the public interest so to do, hereby exempts the taxable service involving import of technology, from so much of the service tax leviable thereon under section 66B of the said Act, as is equivalent to the amount of cess payable on the said import of technology under the provisions of section 3 of the Research and Development Cess Act, 1986 (32 of 1986)" it is confusing, when Service Tax is exempt how 2% cess and 10% SHE cess  is payble on exempted portion of service tax?. can you please check the  possibility of option no 3 i.e. 100000+2000+1000=103000

[YAGAY andSUN]

If you had paid R&D Cess then the amount of R&D Cess will be deducted from the total liability of service tax.

Service Tax (Say) Rs. 12.36

R&D Cess (Say) Rs.    5.00

You would have to pay Balance amount of Rs. 7.36 only

AI Summary

R&D cess adjustment: exemption offsets service tax liability, allowing deduction of cess from net service tax payable. An exemption permits deduction of the R&D cess paid on imported technology from the total service tax liability on the taxable service involving import of technology, so that the taxpayer pays only the balance service tax after subtracting the R&D cess; the advisory exchange raises but does not resolve questions about whether education cess and SHE cess apply to the exempted portion.