PAYMENT OF SERVICE TAX

[S.C. WADHWA]

A company is availing services of security guards from the security agencies which is furnishing us bills towards security guards services provided to us.

The bill furnished to us is inclusive of service tax @ 12.36%.

Please tell us whether we as a company are liable to pay service tax if we are making payment to agency after deducting tds on such bills.

Please advise.

Please also advise whether it matters whether the security agency is owned by an individual or company.

[YAGAY and SUN]

If the service provider is a company then it can charge the service tax 100% on its invoice/bills/challans otherwise partial reverse charge mechanism will be applicable.

[NEERAJ KUMAR, RANCHI]

I dont understand why you are deducting TDS, is there any provision such provision in service tax. Rest as Mr Khatri stated above is absolutely correct. 

AI Summary

Service tax reverse charge applies where security suppliers are non corporate; corporate suppliers may invoice full service tax.
When procuring security guard services, a corporate supplier may charge full service tax on its invoice; where the supplier is non corporate a partial reverse charge mechanism applies, shifting part of the service tax liability to the recipient. The correspondence questions the relevance of deducting tax at source to service tax liability and notes no clear provision linking TDS to service tax charging.