Service tax liability under reverse charge mechanism

[Guest]

Dear Sir,

We are a Pvt Ltd Company one individual provide service to us with material which is falls under works contract service.

Service provider not charge the service tax on his invoice due to any reason but we as a company we paid the service tax under reverse charge mechanism our % i.e 50 % .

My question is if service provider not charge the service tax on his invoice in that case as a compnay we are lible to pay the service on total service tax that is 50% of service receiver as well as service provider also ?

Regards

Swapneswar Muduli

[Rajagopalan Ranganathan]

Sir,

You have to pay service tax on 50% of the gross amount charged by the service provider. Whether the service provider pay the tax or he is enjoying any exemption notification and such availment is correct or not is the look out of service tax department and you need not worry.

[Ganeshan Kalyani]

Sir, the liability of service provider lies under his registration number. and liability of service receiver lies under his registration number. Each has to bear his portion of liability independently. As a recipient of service you are liable to pay only your portion of service tax liability. Thanks.

[KASTURI SETHI]

I subscribe to the views of both experts. This issue has already been discussed in this forum.

[Suryanarayana Sathineni]

Dear Sirs,

The views expressed by the experts need no intervention.

Further, the concept of partial reverse charge was introduced to check out the evasion by the service providers since the records of the recipient revals ST payment under such partiaal reverse charge based on which the Department take the necessary action on the service provider if they have not taken registration or otherwise not paying ST on their portion.

Best Regards

Suryanarayana

AI Summary

Partial reverse charge: recipient must remit its half service tax liability; provider's obligation remains separate. Under the partial reverse charge mechanism for works contract services, the recipient must pay its allocated half of service tax on the gross amount charged by the service provider regardless of whether the provider charged or paid tax; the provider's obligation to remit its own share remains separate and enforceable by the tax authorities.