Saturday, September 8, 2012

ISSUE OF INVOICE BILL IN SERVICE TAX CONTENT- TIME PERIOD


on Saturday, September 8, 2012

Every taxable service provider is required to issue a document (i.e. invoice, bill or challan) within 14 days ( up to 31.03.2012) from either the date of completion of provision of service or receipt of any service charges (whichever is earlier). 

W.e.f.1 April,2012, This time limit has been increased to 30 days ordinarily and 45 days in case of bank and financial institution including NBFC . 

Issue of Invoice Date is Important for service tax due date : Issue of invoice In time is very important as Point of taxation is directly related to Date of Invoice .As per genral rule of point of taxation ,point of taxation will be as under in two situation.

If invoice is issued within prescribed period of 30(45 days for banks) days from the date of completion of service  
  • Date of Invoice
  • Date of Payment (including advance) whichever is earlier
If invoice is not issued within the prescribed period
  •  Date of completion of the provision of service or payment (including advance) 
Example: Service is provided on 05.07.2012 ,Date of Payment: 05.09.2012 
Point of taxation  in different situation is given as under.
  1. Bill issued on 01.08.2012(with in 30 days )= PoT is 01.08.2012 date of invoice in this case.
  2. Bill issued on 10.08.2012(after 30 days ) =POT is 05.07.2012 date of completion of service.
So due to late issuance of Bill in second case PoT , advanced to completion date ,so service provider has to pay interest on the late deposit of Tax.

Note : Pls Note that wef 01.04.2012 , if turnover of person is up to 50 lakh ,he can pay service tax on the basis of payment received from service receiver.(read more here)

Invoice should be serially numbered and should contain 
  • The name, address and registration number of the service provider. 
  • The name and address of the service receiver
  • Date of raising of invoice 
  • Description and value of taxable service provided.
  • The amount of ST and Education cess/SHE Cess charged on such service tax
  • Breakup of the amount charged towards the service 
  • Details as to exemption being claimed with reference to the concerned notification 
  • The Education Cess and SHE Cess to be shown separately in the invoice in order to comply with the requirements of CENVAT Credit Rules to facilitate the availment of CENVAT credits by recipient-para 5.1 of Circular No.97/8/2007-ST  dated 23.8.2007. 

• In case any payment towards value of service is not received and such taxable service is provided continuously for successive periods of time and the value of such taxable service is determined or payable periodically, taxable service provider is required to issue an invoice/ bill/ challan within a period not later than 14 days from end of such period. The time limit is extended to 30 days vide Notification No.3/2012-ST dated 17th March,2012


What does a service provider need to indicate on the invoice when he is liable to pay only a part of the liability under the partial reverse charge mechanism?

The service provider shall issue an invoice complying with Rule 4A of the Service Tax Rules 1994. Thus the invoice shall indicate the name, address and the registration number of the service provider; the name and address of the person receiving taxable service; the description and value of taxable service provided or agreed to be provided; and the service tax payable thereon. As per clause (iv) of sub-rule (1) of the said rule 4A ‘’the service tax payable thereon’has to be indicated. The service tax payable would include service tax payable by the service provider.

Special requirements for Goods Transport agency :Besides issuing invoice or bill or challan containing prescribed particulars, Rule-4A(1) requires Goods Transport Agency (other than GTAs whose services are wholly exempted in relation to transport of goods by road) to issue serially numbered consignment note containing: 

  • (i) name of consignor and consignee; 
  • (ii) registration number of goods carriage in which goods are transported; 
  • (iii) details of goods transported; 
  • (iv) details of place of origin and destination; 
  • (v) person liable for paying service tax whether consignor, consignee or GTA. 

Special requirements for Input service provider : Rule 4A(2) requires, every ‘input service distributor to issue serially numbered invoice or bill or challan duly signed by him or person authorized by him containing following details: 

  • (i) Name, address, registration number, serial number and date of invoice or bill or challan of input service provider; 
  • (ii) Name & address of input service distributor; 
  • (iii) Name and address of recipient of credit; 
  • (iv) Amount of credit distributed. 

• In case of input service distributor being an office of a Banking and Other Financial Service provider, any document containing prescribed particulars would be considered as invoice/bill/challan and such document need not contain serial no  

No Bill For excess payment received up to 1,000: 6th proviso to Rule 4A is inserted w.e.f 1 April,2012 vide Notification No 3/2012-ST dated 17th March, 2012 whereby no invoice is required to be issued where the service provider receives an amount upto ` 1,000/- in excess of the amount indicated in the  invoice & such service provider has opted to determine the point of taxation as per the Point of Taxation Rules, 2011.

Cenvat Credit Is now available to Service Receiver on Receipt of Invoice : Rule 4(7) of the CCR,2004 has been amended providing that Credit of Service tax is to be taken on receipt of invoice, however if no payment of supplier invoice is made within three months, then such CENVAT Credit will have to be reversed and will be allowed only after making its payment.

When Service are not provided after receipt of payment /Adjustment of excess bill :When payment is received in advance for service to be provided but subsequently the services are not actually provided and the consideration for same & the service tax  thereon is refunded back to the service recipient, then service tax paid on such advance received is liable to be refunded back by way of adjustment against other liabilities of service tax for subsequent period. 

W.e.f. 1st April,2011 Service tax Rule 6(3) substituted, whereby excess service tax paid by the service provider in respect of services not so provided or such excess payment is on account of renegotiation of  Invoice due to deficient provision of service, or any term of contract either wholly or partially, such excess payment is allowed to be adjusted against his service tax liability for subsequent period subject to conditions that: 

(i) Assessee has refunded the payment or part thereof, along with service tax thereon to the receiver of service; or 

(ii) Assessee has issued a credit note for value of service not so provided.


Rule 6(3) of Service Tax Rules,1994 which is given below for ready reference:

“Where an assessee has issued an invoice or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reason, or where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract, the assessee may take the credit of such excess service tax paid by him, if the assessee:-
(a) Has refunded the payment or part thereof, so received for the service provided to the person from whom it was received; or
(b) Has issued a credit note for the value of the service not so provided to the person to whom such an invoice has been issued.”


Penalty u/s 77 

Penalty of up to Rs  10,000 /-

• Failure to issue correct invoice with complete details and account for the invoice in his books of accounts.

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  1. wHAT IS THE RECOURSE IF CERTAIN ENTITIES AVAILING SERVICES FROM A REGISTERED aSSESEE DOES NOT REIMBURSE THE sERVICE TAX COMPONENT ??

    ReplyDelete
    Replies
    1. You should bifurcate amount collected in basic amount and service tax and deposit tax on the basis of that bifurcated amount.

      Delete
  2. Dear sir, Pls let me know

    Whether invoice should contain service tax payable both service provider and receiver or it should contain oly service provider liability?

    ReplyDelete
    Replies
    1. Every Service Provider is liable to charge service tax to extent what he is liable to pay. Hence invoice is to contain service tax payable by service provider only.

      Delete
    2. every service provider is authorised to charge only that amount of service tax which he is liable to pay.

      Delete
  3. Hey please let me know why 45 days limit has been given to banks and financial inst. instead of 30 days

    ReplyDelete
    Replies
    1. only govt can tell, why this rule has been notified

      Delete
    2. Number of transaction are very high and all relates to service tax only

      Delete
  4. if i have got my service tax no. can i issue the invoice without charging service tax,my turn over is below ten lakh ,also can i avail exemption of Rs. 10 lacs, plz guide me

    ReplyDelete
    Replies
    1. Yes ,you can issue bill without service tax even if you have taken the service tax number .But you have to file nil service tax return.No exemption from service tax return.Further your last year return shuold also be less than 10 lakh to claim 10 lakh general exemption

      Delete