Taxability of Services

[CA AJAY KUMAR AGRAWAL]

Kindly share your views:-

1. A Service Provider located in J&K & provides Taxable to persons located in Taxable territory. In such case who has to deposit Service Tax & how ?

2. A Service Provider located in Taxable territory (other than J&K) & provides Taxable services in J&K. In such case who has to deposit service tax & how?

[DR.MARIAPPAN GOVINDARAJAN]

In the first case the service receiver is payable under RCM.

In the second case in my view the service provider is liable to pay service tax.

[CA AJAY KUMAR AGRAWAL]

Sir, Thank you very much. Consider in case (1) value of service provided is ₹ 100 then SR has to deposit ₹ 15 as Service Tax & in (2) If service provider receives ₹ 100 then he has to deposit Service Tax ₹ 13/- (back calculation). I think this would be the position.

[Ganeshan Kalyani]

Service tax law is not applicable in the State of J&K. It is very much applicable in the State other than J&K. So, if a person is providing service from taxable territoy then he is authorised to charge service tax on invoice. Hence in second point, service tax @15% shall be payable.

AI Summary

Reverse charge mechanism applies where provider is in J&K; provider collects service tax when located in taxable territory supplying into J&K. When a service provider is located in J&K and the recipient is in the taxable territory, the recipient is said to be liable under the reverse charge mechanism; when the provider is located in the taxable territory and supplies services into J&K, practitioners advise the provider is liable to collect and remit service tax and may charge tax on invoices, with differing views on calculation of the payable amount.