178

S.No. (iii)

Systematic Approach to Service Tax

Chap. 22

Particulars Amount (`) Bills in respect of which payment was not received until 31.03.2012 //// o ad!ustment is re"uired #ecause accordin$ to Rule 3 of Point of Taxation Rules, 2011 where invoice is issued within 1% days from the date of completion of the service& the 'oint of (a)ation will #e earlier of the followin$ two dates* (a) Issue of Invoice for the service provided or to #e provided+ or (b) ,ate of payment to the e)tent it is received -n the a#sence of any specific information in the "uestion& it is assumed that invoice has #een issued within 1% days from the date of completion of the ta)a#le service. .onse"uently& service ta) is re"uired to #e paid on the basis of issue of invoice even if no payment has #een received until 31.03.2012. (iv) Add* 0mount of advance received on 21.03.2012 is to #e included in 1&00&000 the ta)a#le value of services #ecause accordin$ to Explanation appended to Rule 3 of Point of Taxation Rules, 2011 wherever any advance #y whatever name 2nown is received #y the service provider towards the provision of ta)a#le service& the point of ta)ation shall #e the date of receipt of each such advance. `1,10,300 100 110.3 !alue of Taxable "e#vices 17&00&000 $b% &'ount of se#vice tax pa(able S.No. Particulars Amount (i ) 3alue of (a)a#le 4ervices 17&00&000 (ii) 4ervice (a) 5 10.306 1&71&100 $c% )ast date of se#vice tax pa(able 4ince the 4ervice (a) is re"uired to #e paid for the month of 7arch 2012& last date for ma2in$ payment of 4ervice (a) paya#le will #e 31.03.2012 in accordance with second proviso to 8ule 9(1) of 4ervice (a) 8ules& 1::%.

22.* +hat ,ill happen if the effective #ate of se#vice tax chan-es befo#e o# afte# #ende#in- of a se#vice .Rule /0 ;hen there is a chan$e in rate of service ta) the point of ta)ation shall #e determined in the followin$ manner* 1. ;here a ta)a#le service has #een provided #efore the chan$e in effective rate of ta) and the invoice for the said ta)a#le service has #een issued and the payment for the same has #een received after the chan$e in effective rate of ta) then the point of ta)ation shall #e the date of payment or the date on which the invoice has #een issued& whichever is earlier. 2. ;here a ta)a#le service has #een provided #efore the chan$e in effective rate of ta) and the invoice has #een issued #efore the chan$e in effective rate of ta) #ut the payment for the same has #een received after the chan$e in effective rate of ta) then the point of ta)ation shall #e the date on which the invoice has #een issued. 3. ;here a ta)a#le service has #een provided #efore the chan$e in effective rate of ta) and the payment for the same is received #efore the chan$e in effective rate of ta) #ut the invoice has #een issued after the chan$e in effective rate of ta) then the point of ta)ation shall #e the date when the payment has #een received. %. ;here a ta)a#le service is provided after the chan$e of effective rate of ta) and the payment is received after the chan$e in effective rate of ta) #ut the invoice for the said ta)a#le service is issued prior to the chan$e in effective rate of ta) then the point of ta)ation shall #e the date of payment.

17:

Systematic Approach to Service Tax

Chap. 22

1 ;here a ta)a#le service is provided after the chan$e in effective rate of ta) and the invoice for the same is issued and the payment for the said invoice is received #efore the chan$e in effective rate of ta) then the point of ta)ation shall #e the date when the payment was received or the date when the invoice was issued whichever is earlier. 9 ;here a ta)a#le service is provided after the chan$e in effective rate of ta) and the invoice is issued after the chan$e in rate #ut the payment is received #efore the chan$e in rate of ta) then the point of ta)ation shall #e the date when the invoice has #een issued. &n Exa'ple* (a) 8ate upto 30.:.2011 10.306 (a) 8ate from 1.10.2011 12.396 Situation Service Invoice Payment Point of Rate s Provided Raised Received Taxation 1 28.:.2011 3.10.2011 10.10.201 3.10.2011 12.396 1 2 28.:.2011 30.:.2011 10.10.201 30.:.2011 10.36 1 3 28.:.2011 3.10.2011 30.:.2011 30.:.2011 10.36 % 3.10.2011 28.:.2011 1.10.2011 1.10.2011 12.396 1 3.10.2011 28.:.2011 30.:.2011 28.:.2011 10.36 9 3.10.2011 1.10.2011 28.:.2011 1.10.2011 12.396 22.1 Pa('ent of tax in case of a ne, se#vice .Rule *0 -n case of new service which was hitherto not covered under any of the clause of section 91(101) and is ta)ed for the first time&/ (a) no ta) shall #e paya#le to the e)tent the invoice has #een issued and the payment received a$ainst such invoice #efore such service #ecame ta)a#le. (he word <and< is very important and si$nifies that mere issuance of invoice is not sufficient+ the payment should also have #een received #efore the service #ecame ta)a#le. -n other words& all payments reali=ed after the service #ecame ta)a#le shall suffer ta) even thou$h invoice has #een issued prior to the date when the service was #rou$ht within the ta) net. (b) no ta) shall #e paya#le if the payment has #een received #efore the service #ecomes ta)a#le and invoice for the said payment has #een issued within the period referred to in rule %0 of the 4ervice (a) 8ules& 1::% (i.e. within 1% days). 22.2 3ete#'ination of point of taxation in case of 4continuous suppl( of se#vice4 .Rule 10 -n case of continuous supply of service& <the point of ta)ation< shall #e determined as under* Sl. No. 1. 2. 3. Situation -nvoice issued within 1% days from the completion of milestone for payment. -nvoice >( issued within 1% days from the completion of milestone for payment. 0dvance received #efore completion of milestone for payment. Point of Taxation ,ate of invoice ,ate of milestone for payment ,ate of receipt to the e)tent of such advance.

Chap. 22 Sl. No. %.

Payment of Service Tax

180

Situation Point of Taxation -nvoice issued #efore completion of milestone for ,ate of invoice payment. 1. o milestone for payment a$reed in the contract ,ate of invoice and no amount received till completion of service and -nvoice raised with 1% days from completion. 9. o milestone for payment a$reed in the contract ,ate of completion of and no amount received till completion of service service and invoice not issued. 7. o milestone for payment and part amount ,ate of such receipt. received #efore completion Note./7ilestone means the completion of an event a terms of a contract. 22.5 3ete#'ination of point of taxation in case of specified se#vices o# pe#sons .Rule 20 0s per the provisions of rule 7& in case of followin$ specified classes of persons? services& the point of ta)ation shall #e the date of ma2in$ or receivin$ the payment& as the case may #e& namely* (i) @)port of services as per @)port of 4ervices 8ules& 2001+ (ii) 'ersons& where the o#li$ation to pay ta) is on the service recipient in terms of rule 2(1)(d) read with section 98(2) of the Ainance 0ct& 1::%+ (iii) -ndividuals& proprietorships and partnership firms providin$ followin$ ta)a#le services+ namely/ (a) .hartered 0ccountant& (b) .ost 0ccountant& (c) .ompany 4ecretary& (d) 0rchitect& (e) -nterior ,ecorator& (f) Be$al .onsultancy 4ervice. ( ) 4cientific and (echnical .onsultancy 4ervice. (h) .onsultin$ @n$ineer 4ervice& (he #enefit shall not #e availa#le in case of any other service also supplied #y the person concerned alon$ with the specified services.
1. In case of export of services referred to in clause ( i) above, where payment is not received within the period specified by the Reserve Bank of India, the point of taxation shall be determined, as if this rule does not exist i.e. instead of the date of receipt of payment, point of taxation shall be determined as discussed above in rule 3 of these rules. In the case of services where the recipient is obligated to pay service tax referred to clause (ii) above, if the payment is not made within six months of the date of invoice, the point of taxation shall be determined as if this rule does not exist i.e. instead of the date of making the payment, point of taxation shall be determined as discussed above in rule 3 of these rules. In case of "associated enterprises", where the person providing the service is located outside India, the point of taxation shall be the date of credit in the books of account of the person receiving the service or date of making the payment whichever is earlier.

2.

3.

Illust#ation 22.2 C& a practicin$ .hartered 0ccountant provides the followin$ particulars for the Duarter endin$ 31.12.2011. 0ll #ills raised #y C are inclusive of "e#vice Tax, if applicable. !ate Particulars Amount 21.0:.201 Bill o. 1010 in r?o 4tatutory 0udit Aee char$ed to 8 Btd. 3&00&000

181
!ate 1 01.10.201 1 1:.10.201 1

Systematic Approach to Service Tax

Particulars Bill o. 1011 in r?o -nternal 0udit Aee char$ed to 4 Btd. 0mount 8eceived from 8 Btd. in respect of Bill o. 1010

Chap. 22
Amount 2&%0&000 3&00&000