Service Tax refund paid under rev. chg. mechanism - If main service is exempted from ST

[YASHAVANTH RM]

Dear Sir,

Service Tax is exempted U/ Notification No. 27/2012  Dt. 20th June 2012, for service provided for the Diplomatic mission in India. The Foreign Embassy offices are exempted from service tax, provided the certificate issued by the their higher authorities. We have obtained the certificate for construction work at their Embassy premises. We are paying ST under reverse charge mechanism on Legal & other services, Since our main services are exempted under above notification, can we apply for refund of service tax paid under reverse charge mechanism.

[Madhukar N Hiregange]

The works contract/ construction services provided by  sub contractors would be exempt as per s.no29 h) of mega exemption 25/12. All other services used are a cost. Even GOI pays ST on telephone, consultancy ...

AI Summary

Service tax exemption for main contract may limit refund of reverse-charge tax on ancillary taxable services.
Whether service tax paid under the reverse charge mechanism is refundable when the main construction service to a diplomatic mission is exempt; the reply distinguishes that works contract/construction services supplied by subcontractors are treated as exempt under the referenced mega exemption, whereas other procured services (telephone, consultancy, etc.) remain taxable and are treated as costs attracting service tax under reverse charge rather than being automatically refundable.