Partial charge mechanism

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Nagappa B Nesur

PROPRIETOR

100 Points Joined April 2009

Dear Experts,

In case of Partial Reverse Charge of ST, obviously both are registerd under ST. If service provider(SP) being indvidual charges 100% ST to a Company and remit to Govt(after adjusting input, if it is there), whether the service receiver(SR) is deemed to have discharged its laibility as full ST is charged by SP and paid to Govt.

Or, even it is charged, collected and paid 100% by SP to Govt still the company is liabile to pay its portion under the partial reverse mechanism on the same service.? If yes, does it lead to double taxation.

Or, each party has to charge only to the extent of their proportionate liability?

Please clear my doubts.

Regards,

Nagappa

Replies (3)

Sumit Grover

Chartered Accountant

3652 Points Joined September 2008

Yes, Service receiver shall still be liable to pay his service tax liability. So, it is advisable to issue a debit note to the Service Provider(or, credit note by SP) for the amount of service tax (payable under reverse charge) charged by him in invoice.

And on the basis of Credit note by SP, SP can adjust his liability of subsequent period.

Manoj Agarwal

Service Tax Consultant Rourkela Service

3456 Points Joined March 2012

The liability created on service receiver under partial reverse charge is a statutory liability and both the SP and SR are mandotarily liable for there respective amounts. The statutory liability cannot be shifted by one to another by mutual agreement and the excess tax paid by one cannot absolve the other from his liability.

Nagappa B Nesur

PROPRIETOR

100 Points Joined April 2009

Originally posted by : Manoj Agarwal
	The liability created on service receiver under partial reverse charge is a statutory liability and both the SP and SR are mandotarily liable for there respective amounts. The statutory liability cannot be shifted by one to another by mutual agreement and the excess tax paid by one cannot absolve the other from his liability.

Deal Sir, Thanks for your reply.

I have allready paid 100% ST to SP as claimed in his bill and not paid under reverse charge in last 4 to 5 months. Now instead of raising debit note can I obtained a declaration and certificate regarding collection and deposit of ST to government.

Pl clarify with your expertise.

Regards,

Nagappa