[Notification 30/2012-ST dated 20-6-2012 (Amended by N.No. 7/2015-ST dated 1-3-2015) and Section 68 (Applicable from 1-7-2012) deal with Reverse Charge in Service Tax Law ]

Section 68(2) of the Finance Act, 1994 has been suitably amended by the Finance Act 2012 whereby a proviso has been added to the said section authorising Central Government to notify the services and extent of service tax payable by service receiver/provider.

Services on which any person liable for paying service tax other than the service provider is Liable to pay ENTIRE SERVICE TAX- 

S.No Description of Service
1 Insurance agent providing service to Insurance co.
1A Recovery agent service to a banking company or a financial institution or a non-banking financial company
1B in respect of services provided or agreed to be provided by a mutual fund agent or distributor, to a mutual fund or asset management company
1C in respect of service provided or agreed to be provided by a selling or marketing agent of lottery tickets to a lottery distributor or selling agent
2 Goods transport agency providing service to any person where the person liable to pay freight  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 there under;

(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;

Note: The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for this purpose.

3 Sponsorship service provided to any body corporate or Partnership firm
4 Arbitral tribunal service provided to business entity
5 Legal service provided by Individual advocate or firm of advocates to business entity(having turnover of more than Rs. 10 lacs in the preceding financial year)

legal service” means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.

5A Service Provided by a Director of a company or a body corporate to the said company or the body corporate
6 Support service by Government or local authority to business entities excluding,-

(i)                 Renting of immovable property;

(ii)               Services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;

(iii)             Services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

(iv)             Transport of goods or passengers.

support services” means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis;

7 Any taxable Service provided by any person located in non-taxable territory and received by the person located in taxable territory for the purpose of business.
8 Supply of manpower for any purpose or Security Services

supply of manpower” means supply of manpower, temporarily or otherwise, to another person to work under his superintendence or control.

“Security Services” means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity;”

(Reverse Charge on Security Service applicable w.e.f  7-8-2012)

9 in respect of any service provided or agreed to be provided by a person involving an aggregator in any manner




Partial Reverse Charge/ Joint Charge

With effect from 1.7.2012 a new mechanism of Partial Reverse Charge in Service Tax Law is introduced wherein both the service provider and service receiver will be considered as persons liable to pay service tax on notified taxable services in the prescribed ratio. Presently this mechanism is made applicable for following 3 services:

S. No Description of Service Provider of service Recipient of service
% of service tax payable
1 Renting of a motor vehicle designed to carry passengers on non abated value (i.e. no abatement taken by the service provider from the value of taxable service while charging service tax in his bills. It is worth to mention here that for such service 60% abatement is available to the service provider under N. No. 26/2012 dated 20-6-12) 50% 50%
Renting of a motor vehicle designed to carry passengers on abated value Nil 100%
2 Service portion in execution of works contract.

works contract” means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property.

50% 50%



  1. Partial Reverse charge is applicable from 01.07.2012.
  2. Partial Reverse charge is applicable where the service provider is either an individual or HUF or a firm or AOP and the recipient is a business entity registered as body corporate.
  3. Where the service recipient is the person liable to pay service tax, as mentioned above then all the provisions relating to registration, payment etc shall apply to such person. He hasto get itself registered under service tax with jurisdictional Central Excise department. For registration, application is to be made in the Form ST-1 to the concerned superintendent of Central Excise. Each unit /office from where the service is provided/received is to obtain registration within 30 days.
  4. Further service recipient is not eligible to claim general exemption limit of Rs. 10 lakhs. Thus the service recipient has to pay service tax under reverse charge from the beginning itself.
  5. Where the liability tax under reverse charge or partial reverse charge is on service recipient, then the point of taxation shall be the date of payment.
  6. Service recipient has to deposit service tax by 5th of the following month in which he has made payment to the service provider. It has also to file service tax return on half yearly basis. Even the Nil return is required to be filed.
  7. The CENVAT credit of tax paid by the service recipient would be available on the basis on the tax payment challan, subject to conditions specified in the said Rules.
  8. In works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service.
  9. Services provided by government security agencies are covered by the main portion of the definition of support service as similar services can be provided by private entities. In any case it is also covered by the inclusive portion of the definition. However the tax will be actually payable on reverse charge by the recipient.
  10. For any service whose point of taxation has been determined and whole liability affixed before 1.7.2012 the new provisions will not apply. Merely because payments are being made after 1.7.2012 will not add any additional liability on the service receiver in respect of such services.
  11. It is further clarified that the provisions of partial reverse charge would also be applicable in respect of such services where point of taxation is on or after 01.07.2012 under the applicable rule in respect of the service provider.
  12. The liability of the service provider and service recipient are different and independent of each other. Thus in case the service provider is availing exemption owing to turnover being less than Rs 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient shall have to pay service tax which he is obliged to pay under the partial reverse charge mechanism.

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