Service tax: Applicability of RCM on Work contract services to Govt

[ROHIT GOEL]

Dear Experts,

One of our client is under appeal in service tax matter and they are liable to discharge tax on certain taxable works contract services which was not done by them. However, IO has computed 100% tax liability liability in hands of contractor under forward charge but as per ST Notification no. 30/2012, there was 50% reverse charge on work contract services.

The recipient in our case is government and therefore my question is whether there was any exemption under service tax as per which Govt was not liable to pay RCM on works contract and 100% was payable under forward charge by contractor?

AI Summary

Appeal on Service Tax for Works Contract: Debating 100% Forward Charge vs. 50% Reverse Charge under Notification No. 30/2012. A client is appealing a service tax issue related to works contract services provided to the government. The issue involves whether the client should pay 100% of the service tax under forward charge, as computed by the investigating officer, or if there is a 50% reverse charge mechanism (RCM) applicable under Notification No. 30/2012. The discussion highlights the need to consider various factors, including the specific exemptions under Notification No. 25/2012, the constitution of the service provider, and the applicability of forward charge versus reverse charge mechanisms. The responses emphasize careful legal strategy and scrutiny of notices.