Service tax under rcm
This query is : Resolved
07 September 2016
I have a Manpower supplier(House Keeping and Security) who is registered under Service Tax
He raises his bill with service tax and I make him payment with service tax and I claim Cenvat credit for that ST.
Now since manpower supple is under RCM so do I have to pay Service Tax myself and not him or it is also correct if Service Provider pays service tax himself after receiving it in his bills.
Kindly note that my Firm is a Partnership firm.
He raises his bill with service tax and I make him payment with service tax and I claim Cenvat credit for that ST.
Now since manpower supple is under RCM so do I have to pay Service Tax myself and not him or it is also correct if Service Provider pays service tax himself after receiving it in his bills.
Kindly note that my Firm is a Partnership firm.
08 September 2016
If service provider is Individual, HUF, proprietary firm, partnership firm or AOP located in taxable territory and service receiver is a business entity incorporate as body corporate located in taxable territory; Reverse charge mechanism will apply.
In cases where the service provider himself charges S.T and remits the same to the Government, then service receiver is not liable to pay service tax again due to double taxation. So by mistake, your service provider paid service tax himself which you need to pay under RCM, you are not required to pay service tax again under RCM.
Supporting case laws :
M/S Lilason Breweries VS CCE bhopal
CCE vs om tea company
But in the best interests of compliance and to avoid unnecessary arguments with Service tax departmental staff, kindly advise your service provider not to charge the same as this will lead you into giving explanations to the S.T dept which is a real pain .
In cases where the service provider himself charges S.T and remits the same to the Government, then service receiver is not liable to pay service tax again due to double taxation. So by mistake, your service provider paid service tax himself which you need to pay under RCM, you are not required to pay service tax again under RCM.
Supporting case laws :
M/S Lilason Breweries VS CCE bhopal
CCE vs om tea company
But in the best interests of compliance and to avoid unnecessary arguments with Service tax departmental staff, kindly advise your service provider not to charge the same as this will lead you into giving explanations to the S.T dept which is a real pain .
08 September 2016
Thanks for reply but in case of Service Receiver being a non corporate as in my case, RCM doesn't apply for Manpower supply, Security service and Work Contracts. Please confirm.
08 September 2016
Thanks again but one more clarification required, if Service provider is not registered under Service Tax then is it liability of a Service Receiver(Partnership Firm) to pay under RCM or it is not required.
08 September 2016
No as you are a partnership firm and you are out of the ambit of RCM, you need not pay. It is not your obligation anyways.
08 September 2016
Please check, you have written, "you need to pay".
08 September 2016
Need not Pay. As your out of the scope of RCM, you need not worry.
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