APPLICABILITY OF REVERSE CHARGE MACHANISM

[MOHAMED RAFIQ]

IS THE REVERSE CHARGE MACHANISM APPLICABLE ON SERVICE PROVIDED BEFORE 01/07/2012 BUT BILL RAISED AND PAYMENT MADE AFTER 30/06/2012?

[JAMES PG]

Please refer to the clarification given in the Education Guide of Service Tax published by CBEC in this regard:

 

10.1.7 Is the reverse charge applicable on services provided and complete before 1.7.2012 though payments were made after 1.7.2012? For any service whose point of taxation has been determined and whole liability affixed before 1.7.2012 the new provisions will not apply. Merely because payments are being made after 1.7.2012 will not add any additional liability on the service receiver in respect of such services.

[YAGAY andSUN]

For any service whose point of taxation has been determined and whole liability affixed before 1.7.2012 the new provisions will not apply. Merely because payments are being made after 1.7.2012 will not add any additional liability on the service receiver in respect of such services.

AI Summary

Reverse charge mechanism not applicable where point of taxation and liability were fixed before rule change, despite later payments. Where the point of taxation for a service has been determined and the entire tax liability affixed before the new reverse charge provisions take effect, the new provisions do not apply; payments made after the effective date do not impose additional reverse charge liability on the service receiver.