Liability to pay service tax

[VK Verma Indirect Tax Consultant]

What is the basis of liability to pay service tax under reverse charge mechanism?.Is it on due basis or payment basis keeping in view the fact that the service recipient is the person to make payment of charges and the tax too.

AI Summary

Reverse Charge Service Tax: Liability Arises Upon Payment Receipt, Not on a Due Basis, Under Current Provisions. A query was raised regarding the basis of liability for paying service tax under the reverse charge mechanism, questioning whether it is on a due basis or a payment basis. The response clarified that, according to the provisions of service tax, the liability arises only after the receipt of payment. Therefore, when a service recipient makes payments for services subject to reverse charge, the service tax should be paid once these payments are made, not on a due basis.