Service tax under reverse charge on Vehicle Repair

[Vinay Sharma]

Dear Sir,

When Vehicles are sent for repair and servicing it is a works contract. The service provider charges service tax on service portion and VAT on material portion in the same bill.

Now as a recipient of service, are we liable to pay service tax under reverse charge as it is a works contract. If yes, then will it not be excess service tax as the provider of service has already charged service tax @ 12.36% on the value of service portion in the bill. Please Clarify.

With best regards

AI Summary

Reverse charge liability: recipient not liable where service provider charged and revenue accepted service tax on works contract.
Where the service provider has charged, collected and the revenue has accepted service tax on a works contract for vehicle repair, the recipient is not required to pay the same tax under the reverse charge mechanism. The practice recommendation is that recipients who have not paid may deduct the service tax from the provider's bill and notify the provider of this legal position or obtain clarification from the tax commissioner, relying on tribunal authority that precludes re-demanding tax already accepted from the provider.