Service tax is a indirect tax. Where service provider is required to collect service tax from the service recipient and deposit the tax to govt.. However there are few exception to this, where instead service recipient is required to deposit the tax amount... Sec 68 of finance act provides this....eg insurance agent provide service to insurance cos, but jus bcoz of reverse charge mechanism insurance cos deposit the st amt...

Reverse Charge Mechanism in service tax is not a new concept. Under this scheme, service tax is payable by service recipient instead of service provider . Under this charge service receiver have to register himself under service tax . Further service receiver can not claim general exemption limit of 10 Lakh rupees. So he has to pay even on few rupees of service received

It will be very harsh on service receiver end where he has received services falls under reverse charge for only few hundred rupees but due to it he has to register himself in service tax and have to file service tax return on prescribed interval.Moreover under service tax act Nil return is also mandatory and every registered person have to file half yearly return

However, this reverse charge under above mentioned three services will be applicable only if, the service provider of these 3 services is an Individual or HUF or Proprietary or partnership firm or AOP and the service receiver is a Company registered under Companies Act, 1956

1 supply of manpower or security services

2 works contract

3 import of service

4 provided or agreed to be provided by a director of a company to the said company

5 services provided or agreed to be provided by an arbitral tribunal ,individual advocate

6 insurance agent  and GTA

7 services provided or agreed to be provided by way of sponsorship

8 services provided or agreed to be provided by way of support service by Government or local authority

can a service receiver claim the cenvat credit for the s.t he is paying..can u give a numerical solved e.g. of both a service provider and a receiver??

Dear Vardan,

Service provider and manufacturer can take the cenvat credit on duty paid under reverse charge system. 

ohk. thanks a lot for all