In general service tax is paid by the provider of service i.e. a person providing taxable services are liable to pay service tax, but in certain exceptional cases the receiver service termed as ‘ Service Receives ’ are liable to pay service tax.

In following cases the ‘ Service Receivers ’ are liable to pay service tax:

• Services provided to Non-resident – When a taxable service is provided or to be provided by a person from a country other than India and it is received by any person located outside India but not having any office/establishment in India (under sec 66A of the Finance Act), service tax is payable by the service receivers. In such a case, the person receiving the service will have to register.
•  Services of Insurance agents – In case of insurance auxiliary service by an insurance agent, the service tax will be paid by the insurance company (General insurance or Life insurance), who plays a role of service receivers. The insurance agent is not required to register and pay tax (also the insurance agent is not entitled to avail exemption available to a small service provider).
• Consignor/ consignee paying freight, in case of GTA services – In case of services of Goods Transport Agency (GTA), the service tax is paid by the consignor/ consignee (service receivers) who is paying freight (however, the consignor/ consignee is not entitled to avail exemption available to a small service provider).
•  Services of Agents of mutual funds – In case of distributors/ agents of mutual funds, the liability to pay service tax will be on the service receivers, namely, mutual funds ( the mutual fund agent is not entitled to avail exemption available to a small service provider).
• Body corporate or firm located in India receiving sponsorship service – In case of sponsorship service provided to a body corporate or firm located in India, the body corporate or firm receiving such sponsorship shall be liable to pay service tax.

If the recipient of sponsorship service is located outside India, service tax is required to be paid by the provider of service not by the receiver of service (this change came in effect from 1^st April, 2007).

These are the certain exceptions in which Service Receivers are liable to pay Service tax on the services they receive from Service Providers.