TaxTMI 
TaxTMI 
TaxTMI 
The partial reverse charge mechanism was introduced by the CBEC vide Notification No. 30/2012-ST, dated 20.06.2012 and amended by Notification No.45/2012-ST, dated 07.08.2012. In this method the service recipient is liable to the percentage mentioned in the said Notification to the Department as a service receiver. The service receiver is under obligation to pay the service tax by cash to the credit of the Central Government on or before the stipulated date in the prescribed procedure. Failure to pay service will attract to pay interest and further action by the Department. The service recipient in this case is to register with the Central Excise Department and also liable to file returns with the Department periodically. Failure to do the same will attract penalty under the provisions of Chapter V of the Finance Act, 1994.
In respect of the services provided or agreed to be provided by way of supply of manpower for any purpose or security services, the service provider has to pay service tax on 25% of the taxable value and the service receiver has to pay service tax on 75% of the taxable value.
The Central Government Departments as well as State Governments now-a-days used to engage security services through some security agencies and also engage casual workers or contract employees through some man power supply agencies. The partial reverse charge mechanism is also applicable to the Central Government Departments and State Government Departments for receiving services from the man power agencies and security agencies. The Departments receiving such services are liable to pay service tax. Such departments are not service providers and therefore they are not eligible to avail CENVAT credit under this mechanism.
It seems that no exemption is provided to the Central Government Departments and State Government Departments from partial reverse charge mechanism. Further the Serial No. 1 of the negative list issued under Section 66D of the Finance Act, 1994 indicates about SERVICES BY GOVERNMENT OR A LOCAL AUTHORITY. The said negative list does not indicate about SERVICES TO THE GOVERNMENT. The mega exemption Notification No. 25/2012-ST, dated 20.06.2012 also does not cover the services mentioned above when they are provided to the Government Departments. taxtmi.com
In view of the above discussions it will be clear that all the State Government Departments and Central Government Departments, including Central Excise Department are to register under the Service tax provision if they receive the said services and they are liable to pay the tax by cash and to file periodical returns.