19 February 2016
Sir We are the Man power service receiver. For the month of April 2015 to September 2015 we have done the previous RCM (75% Receiver and 25% Provider) calculations and return also done. Now we came to know that from 1-4-2015 RCM is 100% has to pay by Service Receiver. Q1. A few bills belong to previous year i.e 2014-15 (as per invoice date) but we paid in April 2015 do we have to pay 100% ST ? Q2. Service Provider has paid 25% ST for those bills can we get Credit of these 25% payment?
20 February 2016
Reverse Charge Mechanism automatically falls on the service receiver. Even if by some mistake or oversight the service recipient has paid RCM.
With effect from 01st April 2015, RCM on Manpower Recruitment & Supply Service was raised to 100% from 75%. In the case of RCM, it is the date of payment on which the liability to pay service tax arises and not the date of invoice. Therefore you are liable to pay the balance 25% of service tax under RCM.
For the service provider, the Point of Taxation is the earliest of the following: (a) Completion of service, (b) Issue of invoice after 30 days from the completion of service (if the invoice is issued within 30 days, the date of invoice will the point of taxation) (c) Receipt of payment. Therefore for invoices issued in 2014 - 15 the Manpower Supplier Service provider was liable to pay 25 % of Service Tax, which he has discharged. There is no provision by which you can claim credit for taxes paid by the Service Provider, nor can the service provider claim refund of the taxes paid by him on the plea that the service recipient has in the next year paid 100% tax under RCM. This is a lacuna that exists in the statute.
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