Service tax liability of service receiver

This query is : Resolved

ARBIND KUMAR CHOUBEY (Querist)
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03 July 2012 Sir

I am working in PSU where some vehicle has been taken on hire basis, maximum vehicle owner's have turnover is less than 10 lacs so service tax as not paybale by them . whether we are liable for payment of 40% of service tax as a service receiver's liability.

Thanks in Advance

CA Navin Jain

CA Navin Jain (Expert)
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03 July 2012 yes you are liable to pay service tax.

RENGARAJ R.K

RENGARAJ R.K (Expert)
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03 July 2012 Under reverse charge mechanism, it says 40% of the value will be taxable at the hands of the service receiver. After paying in separate challan, the same can be considered as cenvat document for availing cenvat credit w.e.f 01.07.2012.

Even if the service provider is below 10 lacs, the liability lies with the SR.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 July 2012 The exemption of Rs. 10 lakhs available to the service provider is NOT available (not passed on) to the service recipient where the service recipient is liable to pay service tax under reverse charge.

Accordingly, you will have to pay service tax.

CA CS Amit S. Kedia

CA CS Amit S. Kedia (Expert)
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03 July 2012 Note no 10.1.3 of Guidance Note issued by CBEC dated 20th june 2012-
The liability of the service provider and service recipient are different and independent of each other. Thus in case the service provider is availing exemption owing to turnover being less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient shall have to pay service tax which he is obliged to pay under the partial reverse charge mechanism.

Note:- if the Service Provider is individual, Hindu Undivided Family AOP,or partnership firm then only you are liable for 40% of service tax otherwise not.

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