Partial reverse charge
This query is : Resolved
25 July 2014
My friend is executing certain new work with public ltd company. He is paying service tax on 40% of gross amount. under partial reverse both S.P and S.R are liable for Service tax what is tax liability of S.P. and S.R please clarify. in this case is 50% service tax to be paid on Invoice pls let me know.
26 July 2014
Question is not clear
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26 July 2014
Civil work of erection is being executed under contract for six months.It is continuous work and the Service Provider will submit running Bills to Service Recipient for payment.Service tax to be paid to be paid both by Service Provider and Service Recipient as per Partial Reverse Charge 50% of Service Tax to be Service Provider and 50% by Service Recipient. Pls clarify
1. what is service tax liability of Service Provider.
2.There is no clause in the works contract for periodical raising of invoice he will raise running Bills as and when portion of work is completed. Service Provider is Individual and Service Recipient is Corporate Body.The turn over in this year is yet to begin. His first Bill raised is around 1.5 crores. what is point of Taxation.
a. 14 days from date of Invoice, irrespective of date of payment or 5th of next quarter or 14 days from date of payment.
should the service provider should opt for composition on works Bills at 4.994% tax on gross amount or pay paying tax at 12.35 % on 40 % of gross amount, which is beneficial. If he has to opt for composition should he apply before works execution or may apply before making tax payment.
As per the clause in works contract the amount paid is inclusive of service tax how to calculate the service tax.
Thanks
R.S.K.Singh
1. what is service tax liability of Service Provider.
2.There is no clause in the works contract for periodical raising of invoice he will raise running Bills as and when portion of work is completed. Service Provider is Individual and Service Recipient is Corporate Body.The turn over in this year is yet to begin. His first Bill raised is around 1.5 crores. what is point of Taxation.
a. 14 days from date of Invoice, irrespective of date of payment or 5th of next quarter or 14 days from date of payment.
should the service provider should opt for composition on works Bills at 4.994% tax on gross amount or pay paying tax at 12.35 % on 40 % of gross amount, which is beneficial. If he has to opt for composition should he apply before works execution or may apply before making tax payment.
As per the clause in works contract the amount paid is inclusive of service tax how to calculate the service tax.
Thanks
R.S.K.Singh
29 July 2014
Mr Sandeep Rajput,
Thank you for interest in answering my query.I have some doubts, I will be thank ful if you kindly reply in this forum.
1. My friend is executing certain works like check dams, de-silting tanks, afforestation works which are carried out to protect the environment of the mining area under Rehabilitation and Reconstruction works, in the interest controlling pollution to public ltd company wholly owned by State Government.
As per Notification/2012 ST dt. 20-6-12 any entrusted by Governmental company for carrying out Urban afforestation, environmental and ecological work is exempted from paying service tax,in this case work of environmental importance to give benefit to local people residing in the mining area is being entrusted by Govt. Company to contractor, whether tax exemption as er notification.
kindly provide relevant Rule and citation of Ruling of court if any.
thanks
yours
R.S.K.Singh
Thank you for interest in answering my query.I have some doubts, I will be thank ful if you kindly reply in this forum.
1. My friend is executing certain works like check dams, de-silting tanks, afforestation works which are carried out to protect the environment of the mining area under Rehabilitation and Reconstruction works, in the interest controlling pollution to public ltd company wholly owned by State Government.
As per Notification/2012 ST dt. 20-6-12 any entrusted by Governmental company for carrying out Urban afforestation, environmental and ecological work is exempted from paying service tax,in this case work of environmental importance to give benefit to local people residing in the mining area is being entrusted by Govt. Company to contractor, whether tax exemption as er notification.
kindly provide relevant Rule and citation of Ruling of court if any.
thanks
yours
R.S.K.Singh
09 August 2024
The situation you’ve described involves assessing the applicability of a service tax exemption under the Service Tax Notification and related legal provisions for environmental works. Here’s a detailed breakdown:
### **Service Tax Exemption for Environmental Works**
#### **Relevant Notification:**
1. **Notification No. 25/2012-ST**:
- This notification, issued on June 20, 2012, provides exemptions for certain services related to urban afforestation, environmental and ecological works.
- **Exemption Notification:**
- **Notification No. 25/2012-ST**: Exempts services provided to the Government, a local authority, or a governmental authority for environmental and ecological services.
**Text of Notification:**
```plaintext
"Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, or installation of plant and machinery or construction of a building or a civil structure or a pipeline or a conduit for water supply, drainage, or sewerage, or any other service in relation to infrastructure, that is intended to support, or is related to, public amenities."
```
**Reference Link:**
[Notification No. 25/2012-ST](https://www.cbic.gov.in/resources//htdocs-cbec/service-tax/st-notifications/st-notifications-2012/st25-2012.pdf)
#### **Application to Your Case:**
- **Works Description:** Your friend is engaged in works like check dams, de-silting tanks, and afforestation, which are aimed at environmental protection and public welfare.
- **Client:** The work is executed for a public limited company wholly owned by the State Government.
#### **Criteria for Exemption:**
1. **Nature of Service:**
- The service provided must fall under the category of services related to environmental and ecological work.
- The work should be specifically mentioned or related to the types of work listed in the exemption notification, such as urban afforestation, environmental works, etc.
2. **Recipient of Service:**
- The recipient must be a Government entity, a local authority, or a governmental authority. In your case, since the client is a public limited company wholly owned by the State Government, it generally qualifies as a governmental authority.
#### **Case Law and Rulings:**
- **Judicial Precedents:**
- Specific case laws can provide clarity on similar issues. For example, judicial rulings have interpreted exemptions and their applicability in various scenarios. It's beneficial to refer to relevant case laws such as those related to service tax exemptions for governmental entities and environmental services.
**Example Case:**
- **Supreme Court in the case of *Bharat Heavy Electricals Limited (BHEL) vs. Union of India*:** The court examined the nature of services exempt under various notifications. While not directly related, it provides insights into how exemptions are interpreted.
#### **Steps to Confirm Exemption:**
1. **Review Notification:**
- Ensure that the specific environmental works fall under the scope of the notification’s exemption clause.
2. **Consult with a Tax Advisor:**
- Consult with a tax advisor or legal expert who can provide detailed advice based on the exact nature of the services and the client’s status.
3. **Document Proof:**
- Maintain proper documentation proving that the services are for environmental protection and are provided to a government-owned entity.
4. **Filing for Exemption:**
- When filing your service tax returns, you should claim the exemption under the appropriate category as per the notification, supported by the necessary documentation.
By ensuring that your friend’s services meet the criteria specified in the notification and consulting with a professional, you can confirm the applicability of the exemption and comply with the relevant regulations.
### **Service Tax Exemption for Environmental Works**
#### **Relevant Notification:**
1. **Notification No. 25/2012-ST**:
- This notification, issued on June 20, 2012, provides exemptions for certain services related to urban afforestation, environmental and ecological works.
- **Exemption Notification:**
- **Notification No. 25/2012-ST**: Exempts services provided to the Government, a local authority, or a governmental authority for environmental and ecological services.
**Text of Notification:**
```plaintext
"Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, or installation of plant and machinery or construction of a building or a civil structure or a pipeline or a conduit for water supply, drainage, or sewerage, or any other service in relation to infrastructure, that is intended to support, or is related to, public amenities."
```
**Reference Link:**
[Notification No. 25/2012-ST](https://www.cbic.gov.in/resources//htdocs-cbec/service-tax/st-notifications/st-notifications-2012/st25-2012.pdf)
#### **Application to Your Case:**
- **Works Description:** Your friend is engaged in works like check dams, de-silting tanks, and afforestation, which are aimed at environmental protection and public welfare.
- **Client:** The work is executed for a public limited company wholly owned by the State Government.
#### **Criteria for Exemption:**
1. **Nature of Service:**
- The service provided must fall under the category of services related to environmental and ecological work.
- The work should be specifically mentioned or related to the types of work listed in the exemption notification, such as urban afforestation, environmental works, etc.
2. **Recipient of Service:**
- The recipient must be a Government entity, a local authority, or a governmental authority. In your case, since the client is a public limited company wholly owned by the State Government, it generally qualifies as a governmental authority.
#### **Case Law and Rulings:**
- **Judicial Precedents:**
- Specific case laws can provide clarity on similar issues. For example, judicial rulings have interpreted exemptions and their applicability in various scenarios. It's beneficial to refer to relevant case laws such as those related to service tax exemptions for governmental entities and environmental services.
**Example Case:**
- **Supreme Court in the case of *Bharat Heavy Electricals Limited (BHEL) vs. Union of India*:** The court examined the nature of services exempt under various notifications. While not directly related, it provides insights into how exemptions are interpreted.
#### **Steps to Confirm Exemption:**
1. **Review Notification:**
- Ensure that the specific environmental works fall under the scope of the notification’s exemption clause.
2. **Consult with a Tax Advisor:**
- Consult with a tax advisor or legal expert who can provide detailed advice based on the exact nature of the services and the client’s status.
3. **Document Proof:**
- Maintain proper documentation proving that the services are for environmental protection and are provided to a government-owned entity.
4. **Filing for Exemption:**
- When filing your service tax returns, you should claim the exemption under the appropriate category as per the notification, supported by the necessary documentation.
By ensuring that your friend’s services meet the criteria specified in the notification and consulting with a professional, you can confirm the applicability of the exemption and comply with the relevant regulations.
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