22 July 2013
Is reverse charge on supply of manpower services and hiring of motor vehicles designed to carry passenger services applicable if only exempted services are provided by the company?
22 July 2013
Exempted service which is provided by the company is public roadwork. Input services used to provide such output service are works contract service, supply of manpower service and hiring of vehicle for carrying passenger services. All the three input services are covered under reverse charge mechanism. Clause 29 (h) of the mega exemption notification says: “Sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt.” Is any exemption available to the company regarding works contract service from reverse charge or company is liable to pay reverse charge for all three input services?
22 July 2013
@ Neha Gupta. Your query should be very specific as there are two parties involved in Reverse charge mechanism, i.e service provider and service receiver. The service tax is to be paid in some cases jointly. So, Please ask like this:
I am a service provider, or i am service receiver. What is the liability of SP or SR for specific services (10 services are there in reverse charge mechanism) like insuranc, gta, sponsorship, arbitral tribunal, legal services, govt services, renting of motor vehicle to carry passengers, manpower supply/security, wc, Director fees. It will be easy for the experts to analyse and give fitting reply..Thanks
22 July 2013
I am a service provider providing works contract services which are exempt[Notification No. 25/2012-ST, dated 20.06.2012] For the purpose of providing such works contract services some part of the works contract is sub-contracted. The services received from sub contractor are in the nature of works contract, supply of manpower services, hiring of passenger carrying vehicles which are covered under reverse charge mechanism. Now my query is, since company is providing exempted services (Notification No. 25/2012-ST, dated 20.06.2012, is there any liability of the company on account of reverse charge on the receipt of above said services.?
06 August 2013
Please note that N/N 25/2012 is applicable to SERVICES and NOT SERVICE PROVIDERS.
In simple words it means that SERVICES are exempt and NOT SERVICE PROVIDERS.
Specific services have been exempt. If a person is providing more than one service and one of them is exempt, that does not mean that the service provider is exempt from service tax on all services.
Similarly, reverse charge is a different concept from exemption. A person may be exempt from service tax on services provided by him. But he will still be liable to pay service tax under reverse charge because liability under reverse charge is fixed by Section 68 read with N/N 30/2012.
So, in the above case you are liable to pay service tax on manpower supply services and renting of motor vehicles under reverse charge.
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