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Liability of service tax under pre GST regmi

27 September 2021

who will pay the service tax on security service if the service provider is PVT LTD CO and service recipient is also Pvt Ltd firm

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3 Replies

Asha Kanta Sharma (Manager - Finance & Accounts) (10519 Points)
Replied 28 September 2021

By default the service provider will collect the GST na dpay the same to the Govt

Vikasanand Gupta (180 Points)
Replied 28 September 2021

@ asha kanta ji, I am asking about service tax matter not GST, pls

Asha Kanta Sharma (Manager - Finance & Accounts) (10519 Points)
Replied 30 September 2021

Hi Vikasanand Gupta - I probably overlooked the "Pre GST" wordings here.

Generally, the liability to pay service tax has been placed on the 'service provider'. However, in respect of the taxable services notified under Sec.68(2) of the Finance Act,1994, the service tax shall be paid by such person and in such manner as may be prescribed at the rate specified in Sec.66 of the Act and all the provisions of Chapter-V shall apply to such person as if he is the person liable for paying the service tax.

The following services have been notified under Sec.68(2) of Finance Act,1994:

A. the services,-

(i) in relation to telecommunication service;

(ii) in relation to general insurance business;

(iii) in relation to insurance auxiliary service by an insurance agent; and

(iv) in relation to transport of goods by road in a goods carriage, where the consignor or consignee of goods-

(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);

(b) any company established by or under the Companies Act, 1956 (1 of 1956);

(d) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India;

(e) any co-operative society established by or under any law;

(f) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder; or

(g) anybody corporate established, or a partnership firm registered, by or under any

(v) In relation to Business Auxiliary Service of distribution of mutual fund by a mutual fund distributer or an agent, as the case may be;

(vi) in relation to sponsorship service provided to any body corporate or firm located in India;

Any taxable service provided or to be provided from a country other than India and received in India, under Sec.66a of the Finance Act,1994.

( Sec. 68(2) of Finance Act,1994, Notification 36/2004-S.T. dated 31.12.2004 as amended)

In the following situations, the liability to pay service tax is as follows :

in relation to [telecommunication service]

(a) the Director General of Posts and Telegraphs,

(b) the Chairman-cum-Managing Director, Mahanagar Telephone Nigam Ltd, Delhi, a company registered under the Companies Act

in relation to general insurance business, the insurer or re-insurer, as the case may be, providing such service;
in relation to insurance auxiliary service by an insurance agent, any person carrying on the general insurance business [or the life insurance business, as the case may be,] in India;
in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;
In relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is- any factory, any company, any corporation, any registered society, any co- operative society, any registered dealer of excisable goods , any body corporate or a partnership firm;
in relation to business auxiliary service of distribution of mutual fund by a mutual fund distributor or an agent, as the case be, the mutual fund or asset management company, as the case may be, receiving such services;
in relation to sponsorship service provided to any body corporate or firm located in India, the body corporate or, as the case may be the firm who receives such sponsorship service;

( Rule 2(d) of Service Tax Rules, 1994)

1.2 From 01.06.2007 to 23.02.2009, the Service tax was payable @ 12% of the 'gross amount' plus 2% Education Cess on service tax plus 1% Secondary Higher Education Cess on service tax i.e totaling to 12.36% ( in specific cases partial deductions are allowed, refer section 67 of the Finance Act) charged by the service provider for providing such taxable service. From 24.02.2009, vide Notification No.8/2009-ST dated 24.02.2009 the rate of service tax is 10% on gross value of the taxable service plus 2% Education Cess on the service tax amount and 1% Secondary Higher Education Cess on the service tax amount.

Example: Suppose the value of taxable service is Rs.100. Service tax @ 10% will be Rs.10 and Education Cess @ 2% of the Service Tax will be Rs.0.20 and Secondary & Higher Education Cess @ 1% of the service tax will be 0.10.

https://www.cbic.gov.in/htdocs-servicetax/st-proc-home