Reverse Charge

[sunil jain]

We are a cooperative society registered in Delhi, please clarify whether society is liable to pay service tax on reverse charge basis on services like advocate, man power, security service, work contract etc.  These services are taxable on reverse chargeable basis if provided to 'Business entity'. Society provides T/C services-viz depsit from members and lending to members and depositing surplus with banks.

Further in case of man power, securtiy service, business  entity should be 'Body Corporate', Whether Coop society registered under Delhi Coop Society Act would be construed as 'Body Corporate'.

 

Thanks,

CA. R.K. Aggarwal

[YAGAY andSUN]

Kindly check the Notification No. 30/2012-ST in this regard wherein certain conditions have been mentioned for the purpose of making payment under Partial Revese Charge Mechanism.

[sunil jain]

We have seen notification no 30/2012, now clarfication is being sought whether Cooperative Society carring on Thrift & Credit activities for its members, can be termed as "Carrying on business activities".

Thanks,

R.K. Aggarwal

[sanjeev bajaj]

Dear Aggarwal,

Co-op. society is not a body corporate. Kindly refer clause (bc) of Rule (1) of Service Tax  Rules, 1994 read with clause (7) of Section 2 of the Companies Act.

Hence no Service Tax on reverse charge basis in respect of man power, security service and works contract.

However, according toclause (17) of Section 65B of the Finance Act, 1994, the co-op. society is doing activity of commerce, hence liable to pay tax on payment to advocates being individual/firm.

 

Sanjeev Bajaj

 

[sunil jain]

Thanks Mr. Sanjeev Bajaj for updating on definition of Body corporate and business entity.

Please also clarify the applicability of reverse charge on section 25 company being whether it is a business entity.

 

CA. R.K. Aggarwal

[sanjeev bajaj]

In my opinion, Section 25 company is not a business entity as they are not carrying out any activity relating to industry, commerce or ant other business or profession.     But the company is fromed for promoting commerce,art, science,religion, charity etc. but not carrying any ativity relating to industry, commerce or any other business or profession.     If so, please let me know.

 

(Sanjeev Bajaj)

AI Summary

Cooperative Society Exempt from Reverse Charge Tax for Manpower and Security Services; Liable for Advocate Fees A cooperative society in Delhi inquired about its liability to pay service tax on a reverse charge basis for services like legal, manpower, security, and work contracts. The discussion clarified that a cooperative society is not considered a 'body corporate' under the Service Tax Rules or the Companies Act, thus exempt from reverse charge tax for manpower and security services. However, it is liable for tax on payments to advocates. A Section 25 company, not engaging in business activities, is also not considered a business entity for reverse charge purposes.