Penalty if reverse charge liability is not paid

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niranjan (Querist)
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14 April 2016 For cases in which RCM is applicable, if 100% Service Tax is reimbursed to Service Provider,i.e. Service Receiver pays 100% Service Tax as per Invoice to The Service Provider only and does not deposit the 50% (or applicable) part directly to Govt, what will be consequences regarding Interest and Penalty?
Usually Small Service Providers raise bill with 100% Service Tax and if we pay half of Service Tax to Govt,they sometimes create problem saying that they have already deposited the full amount of Service Tax as per Invoice to Govt. What could be the solution in this case?

Please guide in his regard

Regards
Niranjan

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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15 April 2016 The liability to pay tax under RCM cannot be avoided. Even if 100% Service Tax is paid to the service provider, the service recipient is liable to pay the service tax under RCM alongwith Interest. If the Department has issued a Show Cause Notice for payment of RCM then the penalty sought is mentioned in the SCN. If the demand is raised by a Spot Memo during the audit conducted by Departmental Officers, then penalty to the extent of 25% will be leviable.

As far as the service provider is concerned, he can carry forward the ST paid for future adjustment or apply for refund of the same.

niranjan

niranjan (Querist)
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16 April 2016 Thanks for reply Suresh Ramaswamy Sir

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