No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge

Last updated: 29 April 2026

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The CESTAT Hyderabad has ruled that a demand for tax under the Reverse Charge Mechanism (RCM) cannot be made if the service provider has already paid the entire service tax liability. This prevents double taxation on the same transaction. However, the benefit is contingent on the assessee conclusively proving that the service provider indeed paid the full tax.

Court :
CESTAT, Hyderabad

Brief :
The CESTAT, Hyderabad in the case of M/s Arunachala Logistics (P) Ltd. v. Commissioner of Central Tax, Hyderabad [Service Tax Appeal No. 30548 of 2018, Final Order No. A/30129/2026, order dated February 27, 2026] held that where the entire service tax liability has already been discharged by the service provider, any further demand on the service recipient under the Reverse Charge Mechanism (RCM) would amount to double taxation; however, such benefit is subject to the assessee conclusively proving that the tax has indeed been paid by the service provider.

Citation :
Service Tax Appeal No. 30548 of 2018, Final Order No. A/30129/2026, order dated February 27, 2026

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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