Case laws on point of taxation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 January 2013 whether date of accounting entry is the final evidence for the point of taxation??
one of my friend has received money in the month of April, but he has made its accounting entry in the month of December giving due narration that the amount was received in December only. As the amount is received in cash, he doesn't have proof of amount received.now the thing is service tax was exempt in the month of April which was made applicable from the month of july.As the amount is recd in the April month he is not ready to pay tax on it, while the service tax department is asking to pay the service tax on it as he has made entry in the month of December and at that time service tax was applicable.

Now please let me know whether accounting entry date should be the Criteria for leving tax??if the case laws related to this are there plase send me the link for it.....

Kaushik Vinod

Kaushik Vinod (Expert)
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26 January 2013 Rule 5 of Point of Taxation Rules covers two cases AS follows :
Where a service is taxed for the first time, then,—
(a) no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;
(b)No tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.

Two dates are relevent ie date of issue of Invoice and date of receipt of payment accounting entry in your books is not at all relevent for point of taxation.

Other aspect I want to discuss is even if the payment is received in the month of Dec but the invoice and completion of service is before the service became taxable then service tax is not payable as per Rule 3 of POT Rules,2011.

Thanks

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Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2013 thank u very much....

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