Reverse charge liability arise on cash transaction or not

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sagar jain (Querist)
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06 July 2014 Suppose Xyz Ltd. co. received a renting or hiring motor vehicle service from Mr. A who is an individual. In the books of Co. if company recorded this transaction as: Conveyance Exp a/c Dr. To Cash. a/c So in the hands of company service tax reverse charge liability arise or not on this cash transaction. (Party name does not arised anywhere in the books ) Please reply me for proper guidlines.

Ganeshbabu K

Ganeshbabu K (Expert)
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06 July 2014 is service tax applicable on service rendered and payment collected in cash?
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Yes,definetely Service tax applicable. But if you have not shown cash received in your books and not raised invoice no need to pay service tax
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in the same way
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Let me tell you levy of service tax will not depend on cash or bank payment/collection
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1)No doubt you are liable to discharge liability under reverse charge if individual given bill infavour of your company
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whether u paid cash for it or cheque for it ,no difference,,
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2)No doubt you are not liable to discharge service tax liability if cab provider gives bill infavour of indivual(employees)no need to pay service tax
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So i can advise u like this
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If you don't want to pay reverse charge service tax Better take Bills in the name of your employees and account it as re-imbursement expence paid to them
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No reversecharge levy here
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Because service receiver is not company but individual,
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So it is the responsibility of service provider to charge service tax on bill
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So it is legal way to avoid reversecharge obligations

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