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Service tax liability on services provided before 30-06-2011

Shailesh (CA Final) (127 Points)

28 September 2011

My Question is that what will be the service tax liability in following cases?

Case 1: Suppose Service is provided before 31-03-2011 and No payment is received in 1st and 2nd Qtr of 2011. Whether Service provider is liable to pay service tax on due basis for this service?

Case 2: Suppose Service provider opt to pay service tax for 1st Qtr (Upto 30-06-2011) on payment basis (As per POT Rules, 2011). In 2nd Qtr, No further payment is received against service provided in qtr 1 (for which he had opted to pay service tax on payment basis). Whether Now Service provider is liable to pay service tax on balance amount of service for which payment has not been received?

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3 Replies

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 29 September 2011

Originally posted by : Shailesh
	My Question is that what will be the service tax liability in following cases? Case 1: Suppose Service is provided before 31-03-2011 and No payment is received in 1st and 2nd Qtr of 2011. Whether Service provider is liable to pay service tax on due basis for this service? Case 2: Suppose Service provider opt to pay service tax for 1st Qtr (Upto 30-06-2011) on payment basis (As per POT Rules, 2011). In 2nd Qtr, No further payment is received against service provided in qtr 1 (for which he had opted to pay service tax on payment basis). Whether Now Service provider is liable to pay service tax on balance amount of service for which payment has not been received?

transitional provisions ended on 30-06-11, and all such non paid bills are deemed to be paid by the department, and service tax liability has to be discharged by the service provider.

in case any adjustment arise, the same can be adjusted within return period or 90 days from the return filing by way of revised return.

service tax rules are in process to bring the situation at par with excise or vat where the liability of tax get enforced on the date of billing and paid by month end.

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Shailesh (CA Final) (127 Points)
Replied 30 September 2011

As Per Notification No. 18/2011 (Point of Taxation Rules, 2011)

In point no. 9, There is a saving provision. As per point no. 9 of above Notification, Nothing contained in these rules shall be applicable in case of invoices issued prior to the date from which these rules become effective.

As Per Notification No. 25/2011 (Point of Taxation Rules, 2011)

In point no. 6, There is a transitional Provisions. As per point no. 6 of above Notification,

For rule 9, the following rule shall be substituted, namely:-

“9. Transitional Provisions.- Nothing contained in this sub-rule shall be applicable,-

(i) where the provision of service is completed; or

(ii) where invoices are issued

prior to the date on which these rules come into force.

Provided that services for which provision is completed on or before 30^th day of June, 2011 or where the invoices are issued upto the 30^th day of June, 2011, the point of taxation shall, at the option of the taxpayer, be the date on which the payment is received or made as the case may be.”

As per above Notificatios, I understand that POT Rules, 2011 will not apply on bill issued on or before 30-06-2011. Means Service Tax is payable on these invoices on payment basis.

Sushma Mevacha (Executive) (394 Points)
Replied 30 September 2011

Agree with Shailesh.... You have to make the saperate records for the Bills issued Up to June 2011 and bill raise from 1st July onwards, as well as U can also split the detors . And the Service Tax payment will be done On billing Base + Payment Base i.e. for the month of July Service Tax will be discharges as per the liability araised in your bills along with the Payment received.