Reverse charge liability

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This query is : Resolved

Pankaj Vashistha (Querist)

06 August 2012 I wanted to know exact point of liability for service tax receiver.
Suppose a service provider raised invoice on 01/07/2012 for the services provided in the month of June 2012 and service provider charged service tax on its invoice and service receiver has made payment of invoice in July itself alongwith service tax. In such case whether service receiver will still have to deposit its part of service tax or not.
Please clarify.

RENGARAJ R.K

RENGARAJ R.K (Expert)

06 August 2012 You are right. In general, when service tax is already paid there is no need to pay the service tax again for the same transaction. But when such services are brought under reverse charge mechanism fixing liability to (part or full)service receiver, there is no need to pay service tax by the service provider. There are two options.

1) SP can issue fresh invoice cancelling the one he charged service tax and ask the SR to pay the tax under RCM.

2) SP need not deposit the tax so collected and pass credit note only the service tax portion and ask the SR to pay the Tax.

Any how, SR has to decide on this. Legal decisions are not available now.

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