Manpower recruitment agency service

This query is : Resolved

Rahul (Querist)
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24 April 2015 Dear Experts,

A small Service provider (i.e. Annual Value of Taxable Services Provided Less than 10 Lakhs) is providing Manpower Recruitment Agency Service.

Ideally, the service provider should not charge Service Tax on value of Taxable Services provided upto Rs. 10 Lakhs in view of Small service provider exemption.

Manpower Recruitment Agency Service is covered under Reverse Charge Mechanism in which Service provider is liable for 25% portion and Service Receiver is Liable for 75% portion.

Suppose, out of 4 Invoices issued by the Service Provider on 1 Invoice the Service Provider has not charged any Service Tax from Service Receiver. But, on 3 Invoices the Service provider has charged Service Tax erroneously @ 12.36%.

In such case, the Service Provider will have to pay the Service Tax so collected to the Credit of Central government in respect of 3 Invoices as mentioned above.

What would happen to the Service Tax Liability for the 1st Invoice in which no ST was charged from the Service Receiver.

Will the Service Provider be eligible for Small Service Provider Exemption ?

Please reply urgently

Thanks in advance