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If vendor does not charge service tax on invoice

shibsankar (Asst. Manager - Accountants) (119 Points)

21 September 2016

Hi Everyone,

I need to know, who is accountable if vendor does not charge service tax?

Regards

Shibsankar Ghsoh

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4 Replies

Abhimanyu (CA) (316 Points)
Replied 21 September 2016

Thanks for the query,
Service tax is usually to be paid by service provider/vendor,
although few of the services are listed in a scheme called 100% RCM reverse charge mechanism, in which service receiver is required to pay the whole of service tax by himself, in such case vendor would not show any service tax liability in the bill he issues,
but also if in case he is a small service provider ie, annual service provided is 10lacs or below he is not covered in service tax law so he will not show any service tax in bill,
but lastly if in case he was required to pay service tax and still he did not mention service tax liability in bill separately, in service tax law it will be deemed that such total bill amount is inclusive of service tax and by grossing up technique service tax will be calculated,
eg bill amount 10000/- and no service tax is mentioned,
grossing up will apply,
10000/115*15= 1305 is service tax part
and balance is value of service,

thus, if in case there is no mention of service tax separately in invoice, service receiver will not be liable for service tax liability normally and generally and the vendor will be liable to pay service tax and govt. will be recover tax from vendor only. Service Receiver will not be liable.

Hope you have an idea about the issue,
if any query please revert,
Thanks,
Abhimanyu

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