Service tax Implication on Storage charges

[Balamurugan R]

Dear Sir,

We have paid Monthly cold storage charges to party, he was not charge any service tax, he is not Service tax

registered party,

Is it we need to pay the service tax to the Government for those storage charges,

Pls clarify,

[DR.MARIAPPAN GOVINDARAJAN]

He may be within the threshold limit to register with the service tax department. If service tax is not levied by the service provider it is his botheration to meet the consequences.

[Ganeshan Kalyani]

Prima facie the responsibility of service tax to charge, collect, and pay it to the Govt lies with the service provider.

Only those services which falls under reverse charge, The service receiver is liable to pay the tax.

Service receiver for other than reverse charge applicable service can not be held responsible.

[YAGAY andSUN]

Storage and warehousing of agricultural produce covered by Negative List 66D (d) (v). All storage covered whether cold storage or otherwise. Non agricultural produce storage liable to service tax @ 14%.

2. Storage of rice and cotton covered by entry no. 40 of Mega Exemption Notification. Exempted.

3. Jaggery, cereals and copra could be considered agricultural produce if no processing undertaken to make them marketable other than for primary market.

4. If providing both taxable and exempted services, follow rule 6 of cenvat credit rules for reversal of credit attributable to exempted service.

[Ganeshan Kalyani]

The rule does not say that if service provider does Not pay service tax then the recipient become liable to pay the tax due. So the receiver is not responsible to track whether the provider has discharged his liability or not.

[Ganeshan Kalyani]

The scenario in GST regime will change a lot. The recipient of service will not be granted credit unless the provider of service pay his tax dues.

[Ganeshan Kalyani]

Then the recipient task would increase to track whether the service providers has done his compliance correctly.

[Ganeshan Kalyani]

With respect to the responsibility that has been cast upon the purchaser / service receiver to ensure that the supplier / service provider has paid the tax collected, I am of the view that the authority should check these compliances. The dealers would like to concentrate on development of his business rather than ensuring the complaince of the counter part.

I have expericend that the department officials do check with the dealers whether those dealers have paid their taxes or not. I have seen Assistant Commissioner/ Deputy Commissioner do call the dealers under their jurisdiction and enquires whether the tax dues were paid or not. They also ask for future payments to quantify approx.

In line with this i am of the view that departmental officials should ensure whether the supplier/ service provider has complied or not.

[Ganeshan Kalyani]

I have elaborated the discussion to put in more views and thereby to share knowledge. Thanks.

AI Summary

Service tax liability: service providers generally liable; storage of agricultural produce exempt, recipients not normally liable. Service tax on storage charges is generally payable by the service provider; the recipient is liable only under a statutory reverse charge. Storage of agricultural produce is not taxable, while non-agricultural storage is taxable. Exemptions for certain commodities apply. Where both taxable and exempt services are provided, Rule 6 of the Cenvat Credit Rules mandates reversal of credit for exempted services. Non-payment by the provider does not automatically make the receiver liable under the described service tax regime, though GST will tie recipient credit to supplier compliance.