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Query on service tax - reverse charge

15 August 2012

I'am receving a Travel cab service from the individual. The service provoder not registered with service tax authorities and no service tax regn number stating that the turnover does'nt exceed 10 lakhs during preceding year. He is raising the bill without servicetax.

My question

Since the service tax is not levied in the bill, is it liable for the service receiver to pay his share of service tax under reverse charge mechanism?

2.FOr seurity and canteen service the notification was received on 07.08.2012. is reverse charge is applicable from Aug 2012 or from July 2012?

Thks in advance

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4 Replies

shivani (consultant) (122 Points)
Replied 15 August 2012

Pl note for first question -10 lakh ceiling is must

For second question it applicable servces received with immediate effect( Bifurcate the bill for the month)

Shivanand

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satya (Executive Excise) (1839 Points)
Replied 16 August 2012

Dear Sir,

when Reverse Charge Mechanism applicable to you, the question of turnover does'nt exceed 10 lakhs during preceding year, will not comes. If you are receiving such "RCM" services means ST liability is on you only.

2) Please refer notification issued on 07-Aug-2012, Security service only comes under RCM, no Canteen service specified in that notifications 44,45 & 46/2012.

Notification No. 46/2012 - Service Tax

New Delhi, the 7^th August, 2012

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:—

1. (1) These rules may be called the Service Tax (Third Amendment) Rules, 2012.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Service Tax Rules, 1994, in rule 2, in sub-rule (1),-

(A) in clause (d), in sub-clause (i),-

(i) after the item (E), the following item shall be inserted, namely;-

“(EE) in relation to service provided or agreed to be provided by a director of a company to the said company, the recipient of such service;”;

(ii) in the item (F), in the sub-item (b), after the words “manpower for any purpose”, the words “ or security services” shall be inserted.

(B) after clause (f), the following clause shall be inserted, namely:—

“(fa) “security services” means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity;”

Mallikharjun (Deputy Manager) (304 Points)
Replied 16 August 2012

I agree with sathya. When RCM is applicable, there is no question of ceiling/threshold limit. Pls refer the following point in "guidance note" released by CBEC.

10.1.3 If the service provider is exempted being a SSI (turnover less than Rs 10 lakhs),

how will the reverse charge mechanism work?

The liability of the service provider and service recipient are different and independent of

each other. Thus in case the service provider is availing exemption owing to turnover being

less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient

shall have to pay service tax which he is obliged to pay under the partial reverse charge

mechanism.

vivek tayal (accounts) (26 Points)
Replied 27 August 2012

dear all,

(1) I could not found any reverse chage on canteen service.Plese provide notification no if you have.

(2) how a persone can be exempted in Reverse charge being a SSI ( turnover less than Rs 10 lakhs) ?

Notification for reverse charge Notification No. 30/2012-Service Tax is issued In exercise of the powers conferred by sub-section (2) of section 68 of the Finance Act, 1994 (32 of 1994)

and as per Notification No. 33/2012

"Provided that nothing contained in this notification shall apply to,-

(i) taxable services provided by a person under a brand name or trade name, whether registered or not, of another person; or

(ii) such value of taxable services in respect of which service tax shall be paid by such person and in such manner as specified under sub-section (2) of section 68 of the said Finance Act read with Service Tax Rules,1994. "

as per my understanding Rs. 10 Lac Exemption is not applicable for those who are covered US 68(2)

which is as under

68(2) Notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified]8 by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 9[66B] and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service:
Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this Chaptershall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider.

please see the details & provide your viwes regarding this.Thanks in advance.