The Finance Bill, 2012 has massively rattled the provisions related to service tax enshrined in the Finance Act, 1994. A New reverse charge mechanism has been proposed by the Finance Bill, 2012. And by the latest Finance Bill, Section 68 (2) of the Finance Act, 1994 has been put under amendment to put the onus of payment of service tax on reverse charge basis partly on service provider and partly on service receiver. Three specific services i.e. hiring of means of transport, construction and man power supply have been chosen for this purpose.
After the proposed amendment sub-section (2) of Section 68 of the Finance Act, 1994 reads as follow:-
“notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.
Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part to the service tax shall be paid by the service provider.”
Now, in exercise of the powers conferred by amended sub-section (2) of section 68 of the Finance Act, 1994 , The Central Government has issued Notification No.15/2012-Service Tax#, dated 17/03/2012,and suppressed the notification No. 36/2004-Service Tax, dated the 31st December, 2004,and hereby notified the following taxable services and the extent of service tax payable thereon by the person liable to pay service tax for the purposes of the said sub-section (2) of Section 68.
The taxable services (mentioned in column 2), Provided or agreed to be provide,—
|Description of a taxable service
| Extent of service tax payable in % by Service Provider
|Extent of service tax payable in % by Service Receiver
|1||by an insurance agent to any person carrying on insurance business||Nil||100%|
|2||by a goods transport agency in respect of transportation of goods by road*||Nil||100%|
|3||by way of sponsorship, , to anybody corporate or partnership firm located in the taxable territory;||Nil||100%|
|4||by an arbitral tribunal**||Nil||100%|
|5||by individual advocate**||Nil||100%|
|6||by way of support service by Government or local authority**||Nil||100%|
|7||(a) by way of renting or hiring any motor vehicle designed to carry passenger on abated value.
(b) by way of renting or hiring any motor vehicle designed to carry passenger on non abated value.
|8.||by way of supply of manpower for any purpose||25%||75 %|
|9.||by way of works contract***||50%||50%|
|10||by any person who is located in a non-taxable territory and received by any person located in the taxable territory||Nil||100%|
*where the consignor or the consignee is,—
(a) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
(b) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;
(c) any co-operative society established by or under any law;
(d) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder;
(e) any body corporate established, by or under any law; or
(f) any partnership firm whether registered or not under any law including association of persons.
** to any business entity located in the taxable territory.
***by any individual, Hindu Undivided Family or proprietary firm or partnership firm, whether registered or not, including association of persons; located in the taxable territory to any company formed or registered under the Companies Act, 1956 (1 of 1956) or a business entity registered as body corporate located in the taxable territory.
# This notification shall come into force from the date on which section 66B of the Finance Act, 1994 comes into effect.
Article Prepared by :-
Name:- Advocate Santosh Kumar
Address :- WZ-64A, Mukherjee Park , Tilak Nagar, New Delhi- 110018.