Originally posted by : Shivani
	Dear Vikas   1) Regarding your point (a) i disagree   Section 68(2) is all about fixing the service tax liability on such person specified by notification.   Section 68(2) doesnt say who this person will be but notifcation 30/2012 tells us that this person is service recipient.   So it is specifically mentiones in law but you are saying the opposite.   Proviso to section 68(2) talks about partial reverse charge.   When proviso to SSI notification says that this notification doesnt apply to reverse charge services as defined in section 68(2) then we have to read section 68(2) in totality including the proviso to section 68(2) which means both full and partial reverse charge is covered.   2) Regarding your point B i disagree. and all the debate on this thread thus far has been on this point for which my views are there for everyone to read.   3) Regarding your point C i agree. But disagreement is that you are including this from calculating the taxable value of services only when it fails to meet the reverse charge conditions specified in 30/2012 notification but my views are clear that while calculating the taxable value of services reverse charge services also has to be included since they are also taxable services provided by service provider. only in respect of GTA it is not to be included and notification specifically mentions it in point 3.     regards

Dear Shivani,

 

I think you didn’t get me there.

 

Regarding a) It is incorrect to say that Section 68(2) or the Notification 30/2012-ST dated 20 June 2012, prescribes for RCM liability to be paid by the service recipient. Your are incorrect here, as –

• Section 68 (2) only specifies for the nature of services and the person liable to pay service tax on their respective values as may be prescribed.
• Notification 30/2012-ST also prescribes for various services on which service provider and service recipient both are liable to pay ST, such as WCT.

 

Regarding b) & c) I humbly state that it is again difficult to understand your views. As the Law is clear, your views cannot prevail only based on your logic.

Dear Friends

 

I like to say to all members who disagree with me that i respect your view point, i just disagree.

 

I wish to ask all those who disagree with me that

 

I say that while calculating aggregate value of taxable services limit of Rs. 10 lakh during preceding FY, value of reverse charge services should also be included.

 

You say it shouldnt be included.

 

Its ok we have a difference of opinion.

 

But no one thus far replied on following:

 

Suppose i render normal service of Rs. 5 lakh and the services using brand name of others Rs. 2 crore in a financial year 2013-14 and 2014-15.

 

the purpose of the notification is to benefit small service provider. Now will u call me a small service provider in this case. My value of taxable services is 2 crore 5 lakh in this case.

 

Can i claim exemption of Rs. 5 lakh in FY 14-15?

 

You will say yes because 2 crore is not included.

 

I will say no because i am not a small service provider as value of my taxable services run in crores.

 

If i go by your logic and what you say is the standard practice then my value of taxable services for FY 13-14 is only 5 lakhs. and thus in FY 14-15 i can claim exemption in respect of Rs. 5 lakhs.

 

Do you really think i am a Small Service Provider entitled to this exemption ??

 

Regards

As the service provider in your case has to pay tax on brand name services he cannot claim small services exemption .small service exemptiin cannot be clsimrd selectively unless he is liable to pay tax a service reciever

Dear shivani please refer to poin no 10.1.3 of edu guide by cbec on 20.6.2012 which clearly states that liablity of service provider and service reciever is independent of each other while service provider can claime 10 lakh exemption the Same is not available to service reciever I think now it is proved that purpose of provison in 33/2012 is only to deny ssp exemption to service reciever

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.

 

 

Education guide says SP can avail SSP exemption IF its taxable value of services is less than Rs. 10 lakh in previous year.

My basic question is only this that while calculating limit of Rs. 10 lakh why are you excluding reverse charge services provided by SP during teh PY.

Notification only tells us to exclude exempted services while calculating Rs. 10 lakh.

And it tells us to exclude reverse charge services only if the SP is a GTA.

Nothing else it says.

 

Its only after once this limit of Rs. 10 lakh is calculated that Proviso to notification comes to picture.

 

Proviso only tells us the services in respect of which you cannot take the benefit of this notification.

 

In my example since value of taxable services (including reverse services - full or partial) of Mr. Sanjay is more than Rs. 10 lakh in PY, he cannot take benefit of this exemption notification.

 

Value of taxable services + Reverse charge services (full or partial) > Rs. 10 lakh ---- Not Eligible for exemption

 

Value of taxable services + Reverse charge services (full or partial) <= Rs. 10 lakh ---- Eligible for exemption

 

If Mr. Sanjay was a GTA, then

Value of taxable services + Reverse charge services (full or partial) - Reverse charge services (partial portion) > Rs. 10 lakh ---- Not Eligible for exemption

 

Value of taxable services + Reverse charge services (full or partial) - Reverse charge services (partial portion) <= Rs. 10 lakh ---- Eligible for exemption

 

 

ok I am out.

I was nit talking if you example but my example where in a manpower supplier providing tital service of rs 5 lakh can claim ssp exemption this must be vlear to you by edu guide

Now since proviso clearly says nothing in this would apply to such value of servuce in which suc petson is liable then how come ssp exemprion 8s available to service provider under partial reverse charge as clarified by edu guide

This is so as the intention is to exclude the portion on which service tax is to be paid fully by service reciever hence no question of including the same in aggregrate value as the concept of aggregrate value is only mentiibed 8n this notification and no where else

Dear respected members,

I have read all your views, opinions, logics, observations and intentions of your explanations along with the basic query of Ms. Shivani

 

I would say that shivani is absolutely correct in her views. She has interpreted the law carefully and exactly. And my answer also supports her answer.

 

My opinion

 

Notification no. 33/2012 is only for exemption of taxable services for the pupose of calculating the limit of 10 Lac . This notification is not meant for deifing the word aggregate value. This notification prescribe what to be included or not to be included in aggregate value of 10 lacs. This notification is only designed to exempt the taxable value upto 10 lacs sothat benefit can be granted to small scale service provider.

 

Now come to the provisio contained in this notification.

 

I will emphasis only second proviso which has been very debatable so far. Proviso should always be read with the line of main fact of the section or notification as the case may be. Here the main fact is to exempt the taxable services not to determine the aggregate value.

 

So if main part of the law says that what is exempt, then the proviso to that part says that this is not exempt. Just opposite. Very simple.

 

In 2nd proviso it has been mentioned that “such value of taxable services in respect of which service tax shall be paid by such person and in such manner as specified under subsection 2 of section 68 of the said Finance Act shall not be exempt.

 

Meaning of this proviso is simple which says that services covered under section 68 (2) are not exempt and still taxable and will be considered in the limit of 10 Lac.

 

It does not say if provider is providing services under section 68 (2) then he has to pay tax on the single penny on those services. If this is the case then so many service providers will not be able to take benefit of this notification which is not correct.

 

Under section 68 (2) both service provider and service receiver are covered under full reverse charge or partial reverse charge as the case may be.

 

But this notification is only for the service provider and specifically ordered the service provider that services covered under section 68 (2) are not exempted services therefore should be considered while determining the status of small scale service provider.

 

Who we are to decide the aggregate value under this notification. The notification mentions only taxable value has to be included in aggregate value. If aggregate value is to be checked then read the definition of aggregate value in the law but not in this notification.

 

Further point no 3 specially exempted the services of GTA. Had the intention of law been to exclude the RCM services then point no. 3 would have never been included in this notification. Therefore in 2nd proviso all the services which are covered under section 68 (2) are taxable except GTA which has been mentioned separately in point no 3.

 

Concluding my views, I would say that all the services whether normal or under reverse charge shall be included for determining the status of SSSP and will be considered in 10 lacs limit.

 

I know all above do not match with the views of all the experts. But I will request all of you to consider my views also.

 

Other views are always welcomed

 

Best Regards

CA Anubhav Vishnoi

8750089567

Agree with the above.