Liability to pay service tax in reverse charge

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2013 Dear,

My question is when an service provider of recruitment/staffing agency has paid the full amount of (12.36%) service tax & mentioned this on his bill. Then what should a service receiver do in that case whether service receiver is free from the liability to pay service tax or not & what about input credit can receiver take input for 12.36% or he should only take input on his part that is 75% of 12.36%

Ganeshbabu K

Ganeshbabu K (Expert)
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13 September 2013 If you want to me to say as per provisions of reversecharge,,
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if reversecharge applicable to service receiver
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He Suppose to pay 25% only to you and 75% balance Service tax as to be paid by cash only i.e. GAR-7 challan.

Service tax is payable by service receiver when actual payment is made to service provider and not on receipt of Invoice from service provider. However, if payment is not made to service provider within 6 months, service tax is anyway payable. Interest is also payable.

Ganeshbabu K

Ganeshbabu K (Expert)
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13 September 2013 Service provider cannot pay total 12.36% to service provider
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Legal liability is of service receiver. That liability does not disappear even assuming that the service provider has paid the service tax. The department can insist on payment of service tax from service provider
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as per reversecharge in this case 25% of 12.36 input can take based on your bill,and balance 75% input can take as and when he paid service tax on reversecharge

Ganeshbabu K

Ganeshbabu K (Expert)
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13 September 2013 1)Cenvat credit cannot be used to pay tax by service receiver. Service tax as to be paid by cash only i.e. GAR-7 challan.

2)Once paid, Cenvat credit can be taken if otherwise it is his eligible ‘input service’.

3)Tax should be paid under service tax registration number of service receiver and included in his return as he is liable to pay service tax.

4)Service tax is payable by service receiver when actual payment is made to service provider and not on receipt of Invoice from service provider. However, if payment is not made to service provider within 6 months, service tax is anyway payable. Interest is also payable.