19 February 2016
The context here is : On 19.05.2015 , it was announced that effective date of revised Service tax at 14% will be from 1st June 2015 My Builder generated demand letter on 18.05.2015 , towards fit-out possession and asked me to do payment with 15 days. He did not intimate that if i pay after May he will charge 14% ST. I did payment on 02.06.2015 . The payment included base amount & Service Tax which was charged @12.36% .
Now in 2016, while taking final possession , he is asking me to pay some pending amount towards ST as he is saying that payment was done on 2nd June 2015 so ST@14% and not 12.26% should be applied. For all below components he is now charging ST@14%. I have already paid ST on below components @12.36%. Should i be paying as per revised tax@14%? Society Maintenance Charges Legal charges Formation & Registration of Society Civic Governance Charges Club Charges automatic metering system(Power infrastructure charges)
20 February 2016
Under Point of Taxation Rules, a service provider is liable to pay service tax on issue of the invoice or completion of service whichever is earlier. I presume your builder issued you an proper invoice dated 18/05/2015. If he has done so he is liable to pay service tax @ 12.36% on 6th June 2015, if corporate assessee or on 6th July 2015 in case of non-corporate assessee (quarter 1st April 2015 to 30th June 2015.) Under POT Rules, the service provider is automatically liable to pay service tax on invoices, irrespective of whether the debtor has paid him or not.
Therefore, presumably your builder discharged his liability at 12.36%. I also presume he has made his demand in writing for payment of service tax on receipt basis, in spite of an invoice to the contrary. Tell him you are willing to pay him 14% Service Tax if he can issue you a revised invoice dated 18th May 2015 charging 14% Service Tax, which he will refuse. You can also tell him you are planning to approach the Service Tax Commissionerate, with his invoice and your bank statement, to seek their advice whether you are liable to pay service tax @ 14% since you settled his invoice dated 18th May 2015, within 15 days on 2nd June 2015, as was the practice with his earlier invoices - AND SIT BACK AND ENJOY THE FUN. The property will come to you at super fast speed. However if any of these services are billed after 1st June 2015, then Service Tax will be payable @ 14%.
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