24 March 2016
A service provider given Single Bill dated 24/04/2015 for billing frequency period Half Year. In this bill he added Service Tax of 12.36% & then after rate of ST has been revised 12.36% to 14% with effect from 01-June-2015 a service provider raise debit note for difference of Service Tax after the revised service tax rate dated 10-Nov-2015.And we made payment on 06-Nov-2015.
So, we go through As per the Determination of Point of Taxation in case of change in effective rate of tax - Notification 14/2015 ( Rule No 4 (a)(ii) ) A service provider cannot except this
24 March 2016
Section 67 A provides that—‘The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided.’
Thus in terms of this Section, the applicable rate of service tax shall be the one prevailing at the time when a taxable service is provided or agreed to be provided. This section is standalone and is not leaving anything to delegated legislation. No reference is given to any rules framed by Central Government.
The phrase ‘provided or agreed to be provided’ is also existing current levy section i.e. Section 66B as well as in the erstwhile Section 65 (105) of the Finance Act, 1994. The phrase ‘to be provided’ is added in levy section after the words ‘provided’ during the Finance Budget, 2005. It has been then clarified that the objective of the amendment is to link payment of service tax on the advances received for the services to be provided in future.
On a harmonious construction of Section 67A in line with charging Section 66B, similar interpretation can be adopted for the phrase ‘provided or agreed to be provided’ appearing in Section 67A.Thus it can be rationally concluded that in terms of Section 67A, the rate of service tax shall be the rate in force at the time when service is provided. Similarly, in a case where advance is received for a taxable service to be provided in future, it is the rate in force on the date on which the advance amount is received.
Therefore irrespective of the provisions of POT Rules, which is a delegated legislation, the provisions of the Act will override the provisions of the Rules. SINCE THE SERVICE HAS BEEN PROVIDED, AFTER THE INCREASED RATE CAME INTO FORCE, THE SERVICE PROVIDER HAS TO PAY SERVICE TAX AT THE HIGHER RATE AND IS ALSO ENTITLED TO RECOVER THE SAME FROM THE SERVICE RECIPIENT.
25 March 2016
Sir, But I have doubt, If Service provider already collected Service tax from Service receiver in Single Bill (For a period of 6 months) And paid to the Government for old rate of service tax (i.e 12.36%)
As per your suggestion What is the importance of POT, If we pay old ST & increase ST rate to Service provider.
25 March 2016
Service Tax is an indirect tax, which the service provider is supposed to collect the duty from the service recipient and deposit it to the credit of government. In that respect you are acting as an agent of the government. If any service tax is collected and not deposited, it is a fraud on the government and one can be prosecuted for the same.
In case you issue a debit note for additional service tax and collect it - you are safe if the service recipient does not claim CENVAT Input Credit - if he does then it is party time for the Department. why invite trouble. In case more service tax is collected the same should be remitted to the Government - else you will have to prove that the full consideration was received before 1st June 2015. And unless your service is a continuous service, advance payment received should be deposited immediately and the difference on completion of service.
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