Under reverse charge st liability discharged by sp instead

Queries 308 views 2 replies

Keerthana

STUDENT

79 Points Joined July 2014

HI, My client(Pvt co ) has availed Security services from an agency ( Sole prop) from the year 2012 since then the agency has been raising the bill on my company for entire service tax portion and we have been paying him the amount. The security agency has been remitting the amount towards government . Recently during Excise audit , Superintend of Excise had pointed out that 75 % of service tax portion was to be paid by service reciever under reverse charge // Now my query is Will the company be treated as in Default for not paying 75% portion or can i argue that Service liability for 12.36% was paid by service Provider Kindly advice

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Replies (2)

Aditya RVS

Practice

221 Points Joined January 2009

The primary liability to pay Service Tax (75%) is of the company. However, there can be an alternative of obtaining challans from the sole proprietor for the amounts paid to the government by him/her for the given period. These challans can be produced to the aidit officials and they can be requested not to insist for payment of 75% amount, since it amounts to double payment. The situation may be explained on the grounds of natural justice, only if challans are available.

Madhukar N Hiregange

Chartered Accountant

39039 Points Joined September 2008

The present law is 100% payable by service provider. In betweenit was 75% by reciver and 25% by provider.

As long as you canget confirmation that provider has paid the whole amount, collection from reciver wouldbe double collections and not authrised by law. Several decisions are there.

Going forward however to avoid litgation you may ask the provider not to charge and reciver can pay 100%.