Service tax - reverse charge mechanism
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
16 January 2014
Dear Sir,
In case of Security Services reverse charge is applicable. what should be done if the service provider sends the invoice with 100% service tax. What should the Service receiver should do?
If the Service receiver pays 100% of service tax leived on the bill. then does it releases the liability of the service receiver under reverse charge mechanism.
Please kindly send me the details
In case of Security Services reverse charge is applicable. what should be done if the service provider sends the invoice with 100% service tax. What should the Service receiver should do?
If the Service receiver pays 100% of service tax leived on the bill. then does it releases the liability of the service receiver under reverse charge mechanism.
Please kindly send me the details
16 January 2014
No. Under the Reverse Charge Mechanism, the service tax has to be deposited by the Service Receiver.
Message likes :
1 times
16 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].
Message likes :
1 times
16 January 2014
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..
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..
Querist : Anonymous
Querist :
Anonymous
(Querist)
05 February 2014
I came to know that there have some amendments regarding that & if the provider pays the whole sum then the receiver doesn,t need to pay any part of his own.
25 July 2025
Here's the clear picture on **Service Tax Reverse Charge Mechanism (RCM) for Security Services**:
---
### Who pays what?
1. **Service Provider’s share:** Usually, under RCM for security services, the service provider is liable to pay **50%** of the service tax.
2. **Service Receiver’s share:** The remaining **50%** is payable by the **service receiver** under reverse charge.
---
### What if the service provider charges 100% service tax on invoice?
* **Legally, the service receiver is still liable to pay their 50% portion.**
The liability under RCM is independent of what the provider charges or pays.
* Even if the service provider pays **100% service tax**, **the service receiver does NOT get relieved of their statutory liability** to pay their part (50%).
* The department can hold the service receiver responsible for the RCM portion regardless of the invoice.
---
### Can the service receiver avoid paying if the provider pays the full amount?
* As per the law and CBEC circulars, **NO.** The statutory liability cannot be shifted by mutual agreement or the provider's action.
* The **service receiver must pay their portion (50%) via GAR-7 challan** and show it in their service tax returns.
---
### Any amendments or changes?
* No amendment says that if the provider pays 100%, receiver’s liability goes away.
* The confusion might come from administrative practices, but legally **receiver's liability remains**.
---
### Summary:
| Party | Portion of Service Tax to Pay | Payment Mode | Liability |
| ---------------- | ----------------------------- | ------------------- | --------------------------------- |
| Service Provider | 50% (their share) | Normal payment | Responsible for their 50% |
| Service Receiver | 50% (under RCM) | GAR-7 Challan (RCM) | Responsible for their 50% portion |
---
If the provider is charging and paying 100%, the receiver should **still pay their 50% share separately** and not assume their liability is cleared.
---
**Would you like me to help you draft a letter/email to your service provider for proper invoicing under RCM?**
---
### Who pays what?
1. **Service Provider’s share:** Usually, under RCM for security services, the service provider is liable to pay **50%** of the service tax.
2. **Service Receiver’s share:** The remaining **50%** is payable by the **service receiver** under reverse charge.
---
### What if the service provider charges 100% service tax on invoice?
* **Legally, the service receiver is still liable to pay their 50% portion.**
The liability under RCM is independent of what the provider charges or pays.
* Even if the service provider pays **100% service tax**, **the service receiver does NOT get relieved of their statutory liability** to pay their part (50%).
* The department can hold the service receiver responsible for the RCM portion regardless of the invoice.
---
### Can the service receiver avoid paying if the provider pays the full amount?
* As per the law and CBEC circulars, **NO.** The statutory liability cannot be shifted by mutual agreement or the provider's action.
* The **service receiver must pay their portion (50%) via GAR-7 challan** and show it in their service tax returns.
---
### Any amendments or changes?
* No amendment says that if the provider pays 100%, receiver’s liability goes away.
* The confusion might come from administrative practices, but legally **receiver's liability remains**.
---
### Summary:
| Party | Portion of Service Tax to Pay | Payment Mode | Liability |
| ---------------- | ----------------------------- | ------------------- | --------------------------------- |
| Service Provider | 50% (their share) | Normal payment | Responsible for their 50% |
| Service Receiver | 50% (under RCM) | GAR-7 Challan (RCM) | Responsible for their 50% portion |
---
If the provider is charging and paying 100%, the receiver should **still pay their 50% share separately** and not assume their liability is cleared.
---
**Would you like me to help you draft a letter/email to your service provider for proper invoicing under RCM?**
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