02 May 2016
Dear sir, we are running initially as a proprietor concern which has been convert on 01/04/2015 into Private limited with the same business of providing manpower recruitment in NCR-Gurgaon.
In the month of march-15, we have raised invoice of Rs. 3,00,000/- charging service tax of Rs. 9,270/- (3,00,000*12.36%*25%) thus Gross amount of bill is Rs. 3,09,270/- out of which we have deposited service tax of Rs. 9,270/- on the basis of POT.
Subsequently i received payments of Rs. 3,00,000 (Less TDS) instead of Rs. 3,09,270/-(Less TDS) after 30th April-15 as they deducted the amount of ST of Rs. 9,270/- with the shelter of reverse Charge mechanism Rule 7 of POTR.
so my question is what should i do as i have already paid the amount of ST. to Gvt. and service recipient again deducted the amount of S.Tax while payment to us. we have N number of case likewise mentioned above amount to Rs. 6,00,000/- Aprox. Is it legal or is there misunderstanding of law. kindly guide.
02 May 2016
if service recipient is company and you are non company then they not pay ST to you, they deposit the ST with govt. and when you are company then you have to charge the St and deposit the same with Govt. service recipient company or non company there will be no diff.
02 May 2016
See Mr. Kakkar, during the month of March'15, your status was Individual. As per the RCM, if the service receiver is a company and a service provider is a individual,huf,firm, then it is liability of the service receiver to pay service tax to the government.
All you can do is to file a refund or you can show the payment made by you to the government as an advance payment of tax in your service tax return and can adjust the same with the payment of service tax in the upcoming months.
03 May 2016
But this rules was applicable 1/04/2015 onward before that if Service provider is HUF/Individual/ AOI/Partnership Firm and service Recipient is business entity incorporate as corporate entity then in case:- Service recipient is liable to pay 75% and service provider is liable to pay 25%.
And i also paid 9,270/- (3,00,000*12.36%*25%) to Govt. in the month of March-16 and client while paying me the deduct Rs.9,270/- as per the proviso. So My question is that why do i suffer this amount as i discharge my liability within stipulated time and party had paid me after 24 April-15.
So how can i demand my money back from party as they would be penalised.
03 May 2016
I understand your point. And many service providers had faced this problem.
Point of taxation for Reverse Charge situation (full/ partial) is governed by Rule 7 of the POT Rules which stipulates the date of making payment as the Point of taxation. Further, in case the payment of the aforesaid invoice has not been made within a period of 3 months from date of invoice, then the provisions of Rule 3 of the POT Rules will supersede Rule 7 thereof.
So in your case, Since you have raised the invoice with March month date, you are liable to pay the 25% of service tax. The same has been paid by you. But from the view of Service receiver, point of taxation will be considered as Date of payment. Since payment is made on or after 01-04-2015, the Department may invoke Rule 7 of the POT Rules and allege that the service receiver is liable to pay 100% in view of the amended provisions as the date of payment is the Point of taxation. So to secure himself from the department the service receiver has paid 100% to the department.
I personally feels you are raising this issue very late, nearly after completion of one year. Had you have contacted any CA or other professional at that time itself then probably you could have saved your money. You can request your party to make some adjustment on this point because here the Government has got his full revenue, so the government is not at loss. Even if department is issuing any notice on service receiver, he can give a proper reply by submitting all the proofs.
Mutually you both have to sort out this problem, else just contact your service tax circle Supreintendent.
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