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Registration and payment of part service tax?

Atul Kesarkodi (IPCC+Service) (71 Points)

10 March 2014

Respected members and experts,

Kindly suggest,

M/s P and co , a proprietor ship concern, is providing painting and refurbishing job/service to flat and commercial office owners. During the last and current financial year, it has provided service to a pvt limited company. The total value of service provided to all the clients has not exceeded 9 lacs during this or last year.

I have learnt that reverse charge mechanism is applicable in this case, as P and co is providing service to a pvt ltd. company. My query is, Will "P and Co"(Service Provider) have to get itself registered under service tax and pay the part of the service tax to govt ,even if the turnover during this or earlier financial years does not exceed 9 lacs?

the pvt ltd, company has paid their portion of the service tax to govt.

thanks!

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8 Replies

Manoj Mehta (Head Of Department (Accounts & Finance)) (1479 Points)
Replied 10 March 2014

Dear atul if your case is covered under reverse charge than you have to get registered in 30 days from date of providing service or payment received. So now get your company registered also you have to pay peanalty and interest on such defalt. regards

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Atul Kesarkodi (IPCC+Service) (71 Points)
Replied 10 March 2014

thnx Manoj for reply.

but is there any way i can confirm whether reverse charge is actually applicable or not. may be, some note or a link?

Rashmi (CA Final Student) (137 Points)
Replied 10 March 2014

Dear Atul

Since the taxable turnover of the concern does not exceed Rs. 9 Lakh in previous FY, you need not obtain registration under service tax.

Under reverse charge mechanism, the liability of service provider and service receiver, to pay service tax, are independent of each other. Therefore, even if service receiver is discharging his liability, service provider need not pay service tax by availing benefit of threshold exemption of Rs. 10 L. Further since your turnover is within Rs. 9 L, you need not even obtain registration.

Rashmi (CA Final Student) (137 Points)
Replied 10 March 2014

The activity of painting shall be subjected to reverse charge mechanism as works contract provided that the material (paints) is provided by the service provider or where charges of his work include charges for the material used.

If the material (paints) is supplied by the service receiver and your company is invoicing the client only for labour charges for the work done, then it is not a works contract and normal provisions of taxability shall be followed, i.e. service provider shall be liable to pay service tax.

Further, refurbishment activity shall construe to be works contract. Hence reverse charge mechanism shall apply.

Atul Kesarkodi (IPCC+Service) (71 Points)
Replied 10 March 2014

thnx Rashmi for your valuable reply.

What to do , if accountant accidently shows service providers share of service tax( say , 4.94%) on invoice? OR adds 12.36% as service tax on invoice and bills them the same, payment of which is already received? Billling was for last year. FY12-13. In short, what to do ,if accountant accidentlly added up the service tax component to the bill and the payment of this bill has already been collected.

What to do with such service tax shown or billed in the invoice?

Total turnover or receipts have not exceeded 9 lacs during FY12-13 or FY13-14.