Reverse charge mechanism

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 June 2013 Hi,

My client is recieving service of menpower.
Though the service provider is an individual he recovers service tax on full amount.
My Client says, since entire liability is discharged by reciever his liability is nil.

Please reply wether my client is liable or not. Please provide notifications, sections or case laws for this.

Ganeshbabu K

Ganeshbabu K (Expert)

05 June 2013 Billing by service provider:-

1)Service provider should charge only his part of service tax

2)Service receiver to pay service tax of his part by GAR-7 challan

3)Service receiver liable for only his part and not entire amount, even if service provider does not charge his portion of service tax.

4)A statutory liability cannot be shifted by mutual agreement. If statutory liability is of service receiver, he alone is liable..

Ganeshbabu K

Ganeshbabu K (Expert)

05 June 2013 But your client already paid total amount to individual so ask him to obtain copy of service tax paid challans of service provider,

so that we can convince to dept that there is no revenue loss to dept. ,
if any issue come for this in future.

But please not from now onwards , that it is the primary responsibility of service receiver to discharge his service tax liability of 75% of service tax because as and when service tax on reverse charge comes to the picture service receiver liability is limited to 25% of service rendered by him

Querist : Anonymous

Querist : Anonymous (Querist)

06 June 2013 Thanks a lot

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