Reverse mechanism

[ashok Bohra]

Dear sir,

in case of reverse mechanism, how to protect from double tax, as per new system, we are liable to pay service tax on several services, but consultant,Advocate, transporter,men power supplier,security service provider, courier, charge service tax on his invoice, and we have to pay, and under reverse mechanism  department too demand, how to protect from double taxation. 

 

 

 

[Mohit Jain]

In my view, If the service provider is charging service tax in his Invoice and you have to pay that on reverse charge mechanism then, in that case you do not need to reimburse the amount to your service provider upto the amount you have to deposit with Service tax department. However, you have to clarify these things to your service provider in detail. That since it is your liabiliy, not his that is the only reason you are paying less to him.

[Brijesh Verma]

Statutory Liability under notification 30/2012 cannot be shifted by mere arrangement between the provider and receiver of services. SO if all conditions mentioned under the notification 30/2012 are satisfied and RCM is found applicable, then you must have a word with your Service Provider and ask them not to to force for payment of service tax amount from you which you are statutorily required to deposit. 

[ashok Bohra]

Dear Sir,

Thanks for your reply and opinion , how do service provider like transporter or consultant,know  to whom charge service tax and on what document  to rely and satisfied department for not charging service tax. For example in case of TDS get certificate from source ,and satisfy IT. Simply verbal confirmation will not save service provider.

[Brijesh Verma]

The service provider whose services are such that they fall under reverse charge and they are in the category on whom reverse charge is applicable under the provisions of the notification 30/2012, are not statutorily bound to maintain any compliance are regards payment etc, nor are they required to keep any proof in order to satisfy the CEO. Its not about verbal or written communication, its about the law and the law simply states that whenever RCM is applicable then the liability (Fully or partially) shift to the service receiver and in such a case the service provider gets absolved from his liability to the extent the liability is statutorily shifted to the receiver.

AI Summary

Reverse Charge Mechanism in Service Tax: Avoid Double Taxation by Clarifying Responsibilities Under Notification 30/2012. A discussion on the reverse charge mechanism in service tax highlights concerns about double taxation. The initiator queries how to avoid paying service tax twice when service providers charge it on invoices, and the tax department also demands payment. Respondents suggest that if service tax is charged by the provider, the receiver should not reimburse the provider beyond their statutory liability. They emphasize the importance of communication with service providers to clarify responsibilities under notification 30/2012. The discussion underscores that statutory obligations cannot be shifted through private arrangements, and service providers are not required to maintain compliance proof when the reverse charge is applicable.