Partial reverse charge - query

satya (Executive Excise)     07 November 2013

Dear Sir,

As per RCM rules, if service provider pays wrongly 100% liability instead of his portion.

The dept will give you notice for non payment of service receipient portion.

The issue will not solve with RO/AC/DC/COMMISSIONER level, you will won by CESTAT or higher authorities.

my suggestion is pl bear your liability as per Reverse charge mechanism .

Rajat Agrawal (Practising Company Secretary)     07 November 2013

Thank you sir.

But will the answer be the same in first case i.e. when I have paid the whole 100% instead of paying 75%? 

CA. Narottam Kumar Rawat (Indirect Tax Consultant)     07 November 2013

Dear Rajat,

First of all I would like to inform that Service tax under reverse charge on "Supply of Manpower" and not on "recruitments".  

Further, In case you have paid full 100% service tax under reverse charge, you have two options:

1. you may apply for refund of 25% of service tax (excess) paid within a period of one year or;

2. You may adjust for succeeding period liability in accordance with Rule 6(4A) of Service Tax Rules.

CENVAT Credit will be allowed only for 75% not for 25% you have paid in excess subject to eligibility.

In other case, Mr. Sathya has replied you well.

Rajat Agrawal (Practising Company Secretary)     08 November 2013

Dear Narottam

If I adjust the excess 25% of excess tax paid later for my next liability, will I be able to use CENVAT for that 25%?

CA. Narottam Kumar Rawat (Indirect Tax Consultant)     08 November 2013

Of course you are eligible to take CENVAT Credit. But proper reconciliation make ready for such adjustment, so that in future you can prove the same.  

prosanta bordoloi (AAO)     09 November 2013

Whether Reverse charge is applicable for the service receiver in the following case 

(1)The service provider is a Govt PSU or a Private Limited Company and offering works contract service to a Govt PSU (SERVICE RECEIVER). Now whether the reverse charge is applicable for the service receiver ?

Thanks in advance 

CA. Narottam Kumar Rawat (Indirect Tax Consultant)     09 November 2013

Dear Prosanta,

PSU are not Govt or local Authorities. In case PSU receives services which fall under Reverse Charge then PSU is liable to pay service tax under Reverse Charge.

However, they paid through account entry only.

prosanta bordoloi (AAO)     16 November 2013

My question is this -whether   reverse Charge is applicable if  both the service provider and the service receiver is company ?

CA. Narottam Kumar Rawat (Indirect Tax Consultant)     16 November 2013

Dear Prosanta,

Yes in some cases even both service provider and recipient are company reverse charge is applicable:

1. Import of Services

2. GTA

3. Sponsorship Services

However, in case of Manpower Supply , rent a cab etc.. only in case provider is non-corporate and recipient is a Corporate.