Service Tax on Stamp Papers for Employee Declarations: Do We Need to Charge It?

Service Tax Applicability on Stamp Papers

We are an HR service provider organization. We purchased some stamp papers for our employees to make affidavits/declarations while they are based at the client's office. We are planning to claim the amount from the client.

Please advise on whether Service Tax will be applicable to this transaction, or if the invoice will be raised without Service Tax.

Regards,
Shishir

It is paid as per the Indian Stamp Act, 1899. This is a type of duty only. It will not attract any service tax. The sale and purchase of stamps do not fall under any services.

Regards,
Ramakant

The stamp vendor is not allowed to charge anything to the purchaser as they receive a commission from the Government. One concern for stamp vendors is that this commission is eligible for TDS deduction. Additionally, vendors are required to pay professional tax in accordance with the rules.

Thank you,

Ramakant

I hope I am reading your case correctly. You have bought stamp paper for a legal document to be signed by employees at a client location. Further, you are going to charge that amount to the client. You need to raise an invoice on the client for the stamp paper and costs of filing the legal document. In that case, you will need to add service tax to your invoice.

However, if you are raising a debit note, and the circumstances fall under the conditions laid down in the Continental Case, then you do not have to charge service tax. The amount will not be large, so why take a risk? The client will probably get a set-off anyway.

Mr. Shishir, what Ramakant said is right. The amount collected by the licensed stamp vendor is a commission. It is not related to the service tax. In fact, the stamp vendor has to collect the same amount as the stamp value. Any excess amount collected by him is his commission.