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Reverse charge

Atul Bajaj (CA) (63 Points)

07 March 2013

My Client A Govt Co. is receiving Legal Services from Advocate & Firm Of Advocates Both.The service provider is charging service tax on the Bill& service receiver is paying him in full including service tax amount after TDS deduction.
My query is if the Advocate is still charging the servie tax and Service provider is paying the liability to govt. and service receiver is paying to service provider,then where does the reverse charge come into play,is role of service tax receiver wrong here.?

PS. what would be treatment if Service provider does not charge service tax in bill?

Please answer both the queries.

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9 Replies

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 07 March 2013

Dear Atual ..

Reverse Charge mechnism is not applicable in all casses. For details just go to this link it will help u more.

/articles/reverse-charge-mechanism-in-service-tax-an-overview-15865.asp

Atul Bajaj (CA) (63 Points)
Replied 07 March 2013

Mr. Saroj,
Thanks For Asnwering,

I have read that article.But as per this article service tax liability is still on Service receiver.
I am still not clear on your view which is reverse charge is not applicable in this case.

My client is a PSU i.e. business entity and service provider is firm of advocate,so it very well

comes into service tax ambit?

plz answer accordingly

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 07 March 2013

Atul in ur case u are responsible to pay the service tax liablity not the Advocate

In ur case u have to deduct the whole amount of service tax and deposit by ur separtment.

Ponit no - 5

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 07 March 2013

but one more thing that is there must be the turn over(T/O) exceeding 10 lakh in the financial year.

T/O in respect of Serevice receiver.

MANISH AGRAWAL (CA) (60 Points)
Replied 07 March 2013

Mr Saroj

Is there any provision of 10 lacs limit for services reciver also in cse of reverse charge?

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 07 March 2013

Yes there is limit of 10 lakh turnover in the previous/preceding financial year. if u will the read the article which i have provided in LINK u may get ur answers at the last TOPIC- "Some Instances" Para- 2.

Rup Kumar (finance manager) (288 Points)
Replied 07 March 2013

Is a municipality is liable to registration under server tax act?

For which services a municipality have to pay service tax?

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 09 March 2013

Dear Atul, As per Notification No. 30/2012, the person liable to pay service tax in case of legal services provided by individual Advocate or firm of advocates is the service receiver, who should be a business entity with turnover exceeding Rs. 10 Lakh. The liability of service receiver is a mandatory and statutory liability under section 68(2) of the Finance Act, 1994 and it cannot be shifted by mutual agreement. So, in my opinion, even if the Advocate is charging service tax and paying the same to the central government, your client's liability remains, and must be discharged. However, your client need not pay the service tax amount wrongly charged in the bill. Cenvat Credit can also be availed after payment of service tax on legal fees.

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Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 09 March 2013

Originally posted by : MANISH AGRAWAL
	Mr Saroj Is there any provision of 10 lacs limit for services reciver also in cse of reverse charge?

Dear Manish,

I regret to inform you that there is no basic exmeption limit available to a service receiver in case of reverse charge mechanish under section 68(2) notification no. 30/2012. Though it is quite ill-logical, but even if a service receiver pay Rs. 100 to an Advocate for Legal services, then he must get himself regestered for service tax and pay the tax and file returns.

The exemption of Rs. 10 Lakh available to service providers under notification no. 33/2012 is not applicable for persons covered under section 68(2)

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