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Is service tax payable by patnership firm under r c m

Abhay Sethia (stundent) (300 Points)

30 December 2015

I am requesting to you to please guide me, Is service tax payable by patnership firm under Reverse Charge Maccanisum for RENT A CAB and GTA and Legal service And Manpower service and secqurity services receive by us. please take it at your earlist becouse we are under service tax audit. and is there and chage if service provider is a Company.

your are welcomed for all other relevent information in this regard, and please also guide me for care to be taken for service tax audit in detail.

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9 Replies

Mayur Kashinpure (Student) (341 Points)
Replied 30 December 2015

Originally posted by : Abhay Sethia
	I am requesting to you to please guide me, Is service tax payable by patnership firm under Reverse Charge Maccanisum for RENT A CAB and GTA and Legal service And Manpower service and secqurity services receive by us. please take it at your earlist becouse we are under service tax audit. and is there and chage if service provider is a Company. your are welcomed for all other relevent information in this regard, and please also guide me for care to be taken for service tax audit in detail.

Service Tax under partial reverse charge is to be paid only if rent a cab, manpower supply and security services are received by an entity registered by a body corporate and it is a business entity (cases covered in partial reverse charge). Please take a note of the fact that manpower & security services are now covered under full reverse charge.
In your case, since its a partnership firm (i:e not a body corporate unless it is registered as a Limited Liability Partnership), no partial reverse charge is applicable in rent a cab, manpower supply and security services and thus there does not arise any liability of service tax on your account. For other 2 cases i:e GTA & Legal service, reverse charge is applicable if service receiver is business entity in case of legal services and soceity/factory/firm/person registered under excise act/body corporate in case of GTA services.
Further, in case service provider is a company as specified by you, then too there does not arises any liability of service tax on your account as partial reverse charge is applicable regarding the services covered in partial reverse charge only if service provider is Individual/HUF/Propreitor/Partnership Firm. In case of GTA and Legal services, service provider has to be GTA & individual advocate/firm of advocates respectively.

Abhay Sethia (stundent) (300 Points)
Replied 31 December 2015

Sir,

Thanks For your reply,

Now I am rerquesting to you please clear that as per your reply there is no service on which we need to pay tax under Reverse Charge Maccanisum (RCM) out of all five services we are receiving by name

1. RENT A CAB

2. GTA

3. Legal service

4.Manpower supply service

5. Secqurity services.

And more important query is that curentlly we have collecting and paying service tax on first three so what precation we need to take on the matter during audit by service tax deptt.

your are welcomed for all other relevent information in this regard, and please also guide me for care to be taken for service tax audit in detail.

I am requesting to all for detailes and healthy discussion at urgent.

Ronak (Partner) (24 Points)
Replied 31 December 2015

As you had communicated you are working as a partnership firm. So given your scenario we need to analyze each service specifically. Reverse charge largely depends upon who is receiving the service being service tax is consumption based tax. So -

1) Rent a cab , 4) Manpower , 5) Security Services

Reverse Charge is applicable if service is provided to

(i) Any company registered under the Companies Act

(ii) business entity registered as body corporate which is not in similar line of business located in the taxable territory

Thus in your case it is not applicable.

2) GTA Service - Services provided by Goods Transport Agency

Reverse Charge is applicable in given case if service is being provided by GTA irrespective of the recipient of service on the abated value

Thus in your case it will be applicable

3) Legal Service – When service is being provided by Individual Advocate or a Firm of Advocates by way of support services located in the taxable territory to a business entity whose turnover is more than 10 lacs in the preceding financial year then reverse charge is applicable.

Thus you need to analyze your case for its applicability.

For the other query clarify what you meant by “ collecting the amount” . and if collected then whether the same is being paid to the government or not.

Thanks

CA Ronak Kothari

ASRK & Associates

Abhay Sethia (stundent) (300 Points)
Replied 31 December 2015

Dear,CA Ronak Kothari

Thanks for your reply.

In respect of piont 3 we have turnover more than 10 lakhs, please clerify.

“ collecting the amount” it means we are collecting and paying to the deptt., the service tax but in some cases we by mistake not coollected and paid, so what precation we need to take on the matter during audit by service tax deptt.

your are welcomed for all other relevent information in this regard, and please also guide me for care to be taken for service tax audit in detail. I am requesting to all for detailes and healthy discussion at urgent.

Mayur Kashinpure (Student) (341 Points)
Replied 31 December 2015

In case you have crossed the turnover limit of 10 lakhs, then you will have to pay the full service tax (i:e 100% reverse charge) if the service provider is a firm of advocates.

Abhay Sethia (stundent) (300 Points)
Replied 31 December 2015

Sir

Please sumarries the status which is I am only liable to pay service tax in RCM for GTA and Legal.

and not on the Rent a cab, secquirty, and manpower service.

but I have paid so what action to be taken in Rent A Cab services.

on some service I dont have paid by mistake in case of GTA And legal.

Ronak (Partner) (24 Points)
Replied 02 January 2016

Abhay

In case of reverse charge the amount will not be collected from the service provider but to be paid by you ie if there is a bill of Rs 100 then if the service falls under partial reverse charge of 50% then the service provider will bill 100 +7.25 (considering 14.5% as service tax) and 7.25% will have to be paid by you to the government.

Incase you have collected more than your entitlement then you need to ensure the same is paid to the government. Make a reconciliation for the services for reverse charge has been paid but you were not required to.

If you are taking credit for the services then ensure that the service tax credit for the reverse charge is taken in the subsequent month and not in the month service tax is paid

Also the service tax registration needs to be modified according to the services for which you are liable to pay service tax under reverse charge.

Regards

Ronak Kothari

ASRK & Associates

Abhay Sethia (stundent) (300 Points)
Replied 13 January 2016

Respected Sir,
Can you please guide me what is the reason that (1) rent a cab (2). man power (3.) secqurity services are not applicable on our firm under RCM.

Abhay Sethia (stundent) (300 Points)
Replied 15 January 2016

Respected Sir/Madam,
Can any one please guide me that in case, If I not collecting service tax on the bill of GTA and legal service and consultancy under RCM (reverse charge macnisum) moreover the party is also not charging any service tax on there bill.
we are a partnership firm but not a LLP.
Now please guide me that in this case where both the parties are in default of not charging the service tax so what can we do, please guide me in detail, more importantly when we are under service tax audit.