Assumed that the service provider comes under SSI Exemption limit and hence he is not raising service tax in his invoice. But as a service receipient, after 01.07.2012, the assessee is liable to pay 60% of the service tax on the invoice value. Say Rs. 10,000/- is the invoice value, then the assessee is liable to pay Rs. 742/- (10000*12.36%*60%).. Also refer notification no. 30/2012 ST.
Also refer to the Service tax guidance note issued by the CBEC in this regard. Relevant question and answer is pasted below.
10.1.3 If the service provider is exempted being a SSI (turnover less than Rs 10 lakhs),
how will the reverse charge mechanism work?
The liability of the service provider and service recipient are different and independent of
each other. Thus in case the service provider is availing exemption owing to turnover being
less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient
shall have to pay service tax which he is obliged to pay under the partial reverse charge