Security Services also Under Reverse Charge
BY the same Notification Government has amended Notification No. 30/2012-ST bringing Security services also under Reverse Charge. Now the Security Agency has to pay 25% and service recipient has to pay 75%.
But there is a strange problem here. As per the notification, security services by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory is only covered under the Reverse Charge Mechanism.
So, if a Security Service Agency is providing the service to a person other than a body corporate, the reverse charge mechanism will not apply.
That means up to and inclusive of 6th August, the service provider is liable to pay on full Service tax, from 7th August, he is liable to pay 25% of service tax and a Body Corporate has to pay 75% service tax. If the service provider has already issued invoice on 6th August and payment is received after 7th August, the service provider is liable to pay full service tax. Instead of making things complex for the taxpayers, why can't they amend the Notifications from 1st day of any month? They are anyway not losing revenue, as it is only a distribution of liability between the service provider and the recipients. What's wrong in making the Notifications effective from 1st September 2012 instead of hurriedly pushing them on 7th August 2012?
A leading Advocate wrote to us,
So if a security agency provides service to body corporate, the body corporate will pay ST under reverse charge. If they provide service to other than body corporate (in the absence of any exemption), they have to pay Service Tax themselves?
for 6 days security agencies will pay and from 7th, reverse charge????
Notification No., Dated: August 7, 2012