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

Reverse charge on works contract services shifts tax liability based on provider and recipient legal status under notification.
The Reverse Charge Mechanism for works contract services is determined by the provider's and recipient's legal status under the notification: government recipients that are not business entities registered as body corporates generally do not attract recipient-side reverse charge, leaving the service provider liable under forward charge; where the recipient is a registered body corporate and the provider is an individual/partnership-type entity the notification contemplates a split or mixed forward/reverse charge; corporate service providers supplying any person are generally liable under forward charge.