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2022 (2) TMI 1077 - HC - Service TaxDemand of Interest on 50% of the service tax, which was not paid - Applicability of reverse charge mechanism - Works Contract Service - appellant raised invoices for 100%, however, remitted tax only for 50% - period December 2013 to 05.07.2014 - HELD THAT:- In the present case, as admitted by both the parties, the reverse charge mechanism is not applicable to the appellant company. The reverse charge mechanism is applicable only to the individuals, Hindu Undivided Family, etc., where, the Department would normally adjust the amount paid by the service Recipient and re-credit the same to the service provider's account. Though it is strongly contended that the 50% amount paid by the service recipient cannot be re-credited to the appellant, the fact remains that the Department has re-credited the said amount from the service recipient's account to the appellant's account with effect from 28.02.2014. Thus, when the service provider (appellant) has paid entire 50% of the amount towards service tax and the service Recipient also paid the balance 50% of the service tax in time directly to the Service Tax Department on the assumption that the reverse charge mechanism is applicable, and when the Department also re-credited the said 50% of the service tax from the service recipient's account to the service provider's (appellant's account) with effect from 28.02.2014, instead of giving effect to the same from the date, on which, original payment was made by the service recipient, it is not open to the Department to turn down and say that reverse charge mechanism is not applicable, thus, the appellant is liable to pay interest on the belated payment. The procedure adopted by the service recipient cannot be found fault with as long as there is no specific bar under the Act to make tax remittance directly to the account of the service provider. Further, service recipient admitted that, they misunderstood that reverse charge mechanism is applicable to the appellant's Company and this mistake happened only in the first transaction and subsequently, 100% of the service tax has been collected by the service provider from the service recipient and remitted the same to the Department without any default/delay - the contention of the respondent- Department that 100% service tax has to be collected from the service recipient by the service provider and the same has to be remitted to the Department does not hold water. Appeal allowed.
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