Service tax on receipt basic applicability of sbc

No SBC would be applicable on the services provided before levy. i.e before 15th Nov 2015.

With regard to returns, we shall wait for the amended ST-3 format for the period Oct 15 to Mar 16 by CBEC via aces. However there could be a pop up messgae/alert for non disclosue/payment of SBC.

Hello Jyothis,

As regards Point of Taxation of SBC, since this levy has come for the first time, all services (except those services which are in the Negative List or are wholly exempt from service tax) are being subjected to SBC for the first time. SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of Taxation Rules would be applicable in this case.

Therefore, in cases where payment has been received and invoice is raised before the service becomes taxable, i.e. prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. In cases  where payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise.

However, Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015. (Point 15 of "FAQ on SBC" released by CBEC - https://www.cbec.gov.in/resources//htdocs-cbec/press-release/faq-sbc.pdf)

In your case, since payment has not been received before 15.11.2015 eventhough invoicing and service was completed, SBC applies (Strict interpretation of Rule 5) which may be collected from customer by issue of debit/credit note as applicable.  

However, this strict interpretation goes against Section 67A of the Finance Act, 1994 wherein the rate of service tax is rate prevailing at the provision of service.