Reverse charge methodology

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2013 DEAR ALL,

I HAVE A QUERY IN RESPECT OF REVERSE CHARGE MECHANISM THAT:

ONE OF MY CLIENT PROVIDING RENT A CAB SERVICE TO COMPANY ONLY AND HIS TOTAL RECEIPTS IS MORE THAN RS. 10 LAKH. NOW THE QUESTION IS WILL HE CHARGE SERVICE TAX IN INVOICE OR NOT? AND IS HE LIABLE TO FILE SERVICE TAX RETURN ON THE BASIS OF CHALLAN DEPOSITED BY RECEIVER?

THANKS
AMIT MITTAL

Vijay Thadani

Vijay Thadani (Expert)
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14 September 2013 Since his turnover is more than 10 lakhs he is liable towards service tax, so he required to charge service tax in invoice under reverse charge mechanism.
Yes he is required to file a return on the basis of challan received from the service receiver.

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Querist : Anonymous

Querist : Anonymous (Querist)

16 September 2013 Thanks for your quick reply

Mr. Vijay Can you also tell me the notification or section regarding filling of return by provider in reverse charge mechanism on the basis of challan submitted by service receiver?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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22 July 2025 Let's break down the Reverse Charge Mechanism (RCM) for Rent-a-Cab services and the related compliance regarding service tax invoicing and return filing:

1. Service Tax liability on Rent-a-Cab provider (Turnover > ₹10 Lakhs)
If the rent-a-cab service provider's aggregate turnover exceeds ₹10 lakhs, the provider is required to register for Service Tax.

However, for rent-a-cab services, the liability to pay Service Tax lies on the service receiver under RCM as per Notification No. 30/2012-ST.

This means:

The service provider does not charge service tax on invoice.

The service receiver pays the service tax directly to the government (Reverse Charge).

2. Invoicing by Rent-a-Cab Service Provider
Since the service tax liability is on the receiver under RCM, the provider should not charge service tax on the invoice.

The invoice should mention that the service tax is payable by the recipient under Reverse Charge.

3. Return Filing by Rent-a-Cab Service Provider
The service provider, being registered (due to turnover exceeding ₹10 lakh), is required to file service tax returns.

Although the provider does not pay service tax directly, the returns must reflect the outward supplies made.

Regarding the basis for return filing:

The service provider must file returns indicating the services provided under reverse charge.

The provider should report the supplies even if the tax is paid by the recipient (via challan).

There is no specific notification explicitly stating that the provider must file returns based on challan submitted by service receiver, but the general Service Tax return filing rules apply.

4. Summary
Point Explanation
Service Tax charged on invoice No, under RCM, receiver pays tax directly.
Who pays Service Tax Service receiver under Reverse Charge.
Return filing by provider Yes, required to file returns showing supplies.
Return filing basis Outward supply details; tax paid by receiver separately.

Relevant references:
Notification No. 30/2012-ST — specifies RCM on rent-a-cab services.

Section 70(3) of Finance Act, 1994 — service tax return filing rules.

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