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Applicability of service tax under reverse charge mechanism

Sagar Bhadra (Manager - Finance & Accounts) (501 Points)

19 February 2013

Dear All,

I need your help on the following issue:

Is the Service Tax under Reverse Charge applicable to a Pvt. Ltd. company belonging to Construction Industry, if the work received by it is exempted under any other notifications under service tax?

Thanks in Anticipation.

Regards,

Sagar Bhadra

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2 Replies

vittakaushik (articles) (71 Points)
Replied 20 February 2013

When the services received is exempted by way of notification then the service receiver can make use of such exemption notification and need not pay service tax under RC mechanism. Accordingly reverse charge will not apply however collect the copy of exemption notification to show to audit party.

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CA Saiyum khan (Practicing CA) (690 Points)
Replied 20 February 2013

If the service it self is exempt by virtue of any specific notification then reverse charge mechanism will not be applicable. However on the case to case basis indepth analysis should be done before taking any such stand as there are many technical ambiguities in the negative list regime of service tax.