Reverse charge mechanism

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aman (Querist)
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06 January 2014 sir, i am conducting an audit in which i noticed that our party is hiring labours from some suppliers. It apparently is the case of man power supply. Now the supplier who is an individual is chargng 100% service tax in his bill. As per reverse charge mechanism, on 75% portion of bill, service receiver is requird to pay service tax. Nw since service provider itself is charging 100% service tax, is our client required to charge service tax on 75% portion.??

Ganeshbabu K

Ganeshbabu K (Expert)
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06 January 2014 Legal liability is of service receiver. That liability does not disappear even assuming that the service provider has paid the service tax. The department can insist on payment of service tax from you [In respect of past, may be you can get away by claiming that it is only procedural mistake and no revenue loss. However, for future, please do not do it]
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Note that if service receiver is other than LLP OR COMPANY reversecharge not applicable.and then entire 100% service tax has to be paid to service provider only if he claimed in invoice,

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