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Reverse charges

Deepak Chavan (Manager) (24 Points)

13 November 2013

our company is providing repair maintenance services in field of electronics. we charge service charge as per govt direction 12.36% from whom we provide service and pay to govt. one of our customer (corporate) who has deposited half of the service tax to govt.but in our case we have paid 12.36% service tax to govt. now govt is paid total of 18.4% of tax, Now can somebody tell me the way to get refund of my 6.18% service tax back and how? attaching transaction details for clarity...

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6 Replies

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 13 November 2013

There is no revere charge in your case. You collected service tax correctly @ 12.36% and the receiver should not deduct tax from your bill. The refund can be claimed only by the service receiver.

CA. Narottam Kumar Rawat (Indirect Tax Consultant) (394 Points)
Replied 13 November 2013

Dear Sir, Transaction may fall under Works Contract in case repair & maintenance along with some material component and same may fall under Reverse Charge Mechnism. In case you fall under RCM, excess amount paid by you can be adjusted against future liability in accordance with Rule 6 (4A).

CA PRASAD KSHIRSAGAR (CA Practice ) (148 Points)
Replied 13 November 2013

Sir, Plz refer notification no 30/2012 dated 20th June, 2012. If it is works contract service, then you should bill as per half the rate i.e. 6.18% in your bills. So I agree with the opinion of CA Narottam in this case. Regards.. CA Prasad Kshirsagr

CA. Narottam Kumar Rawat (Indirect Tax Consultant) (394 Points)
Replied 14 November 2013

Dear Mr. Prasad & Deepak, Please note that rate of tax under Works contract will not be 6.18%. Refer Valuation Rules and in accordance with that Value of Service under Works contract where actual amount of material can not be bifurcated will be as : Original Works- 40% (Original Works is defined) repair of Immovable Prop- 60% Repair of Movable Prop- 70% Incase it fall under Reverse Charge service provider and service recipient both will pay in equal proportion.

Manoj Agarwal (Service Tax Consultant Rourkela ServiceTaxExpert@yahoo.com) (3456 Points)
Replied 14 November 2013

Sir, since the service is provided by a company to another company, reverse charge is not applicable. Further, the service shall be classified as 'Works Contract' only when as per the contract, there is 'transfer of property in goods' to the service receiver. It seems that the 'Repair & Maintenance of Electronic goods' is a pure service whereby some consumables are consumed in providing the service and there is no transfer of property in goods. But, If the service can be classified as 'works contract' and is provided by any individual/proprietorship / partnership firm/HUF to a body corporate, then I fully agree with the views of Shri Rawat Ji.

CA Vichitra Trivedi (CA in Practice Studying LL.B. (Hons)) (171 Points)
Replied 14 November 2013

Reverse Charge Mechanism in case of Works Contract is applicable when service provider is Individual, HUF, Partnership Firm or AOP and service receiver is a registered Body Corporate.

As you have mentioned that you are a Company providing services to a Company, hence, reverse charge mechanism is not applicable in your case.

In your case service receiver company was not required to deposit half of the service tax to government.

Mr. Manoj Agrawal explained correctly that refund can be claimed by service receiver company only.