PAYMENT OF SERVICE TAX

[S.C. WADHWA]

I am being an individual have given property on rent to an business entity in the year 2006 @Rs.20 lacs per month and entered an agreement that the rent was inclusive of all taxes at present and in future also. Service tax levied on renting services w.e.from 1.7.2007 and since then I am paying service tax by treating rent of 20 lacs inclusive of service tax as the said entity denied to pay service tax on rental amount as agreed.

Now my query is that when service receiver is liable to pay tax under reverse charge irrespective of the status of service provider whether eligible for service tax payment or not w.e.from 1.7.2012.  Whether I should stop for paying service tax for the quarter ending 30.9.12 onwards. Please give your expert opion on the matter immediately.

 

 

[YAGAY andSUN]

If the service receiver is liable to pay service tax under reverse charge mechanism then service provider has to charge only it's share of applicable service tax on the taxable services only.

AI Summary

Reverse charge: service recipient bears service tax liability, limiting provider to charging only its share on taxable services. Under the reverse charge mechanism the service recipient is liable to discharge the service tax on specified services; the service provider is limited to charging only its share of applicable service tax on the taxable services, which governs allocation of payment responsibility even where the lease states rent is inclusive of taxes.