The Board vides its Circular No. 158/9/2012 dated 08-05-2012 read with Circular No. 154/5/2012 dated 28-03-2012 clarified that in case the individuals or proprietary firms or partnership firms providing taxable services referred to in sub-clauses (g), (p), (q), (s), (t), (u), (za) and (zzzzm) of clause (105) of section 65 of the Finance Act, 1994((Chartered Accountant, Cost Accountant, Company Secretary, Architect, Interior Decorator, Legal, Scientific and Technical consultancy services) and invoices for the same issued prior to 31-03-2012 for which payment received on or after 01-04-2012, the point of taxation shall be governed by Rule 7 of Point of Taxation Rules, 2011 (as applicable up to 31-03-2012) and thereby service shall be deemed to be provided on the date of receipt of payment and rate of service tax would be 12%.
Recently in this regards, the Hon’ble Delhi High Court in the matters of DELHI CHARTERED ACCOUNTANT SOCIETY (REGD) VS UNION OF INDIA AND ORS [W.P.(C) 4456/2012 & C.M.No. 9237/2012] finds that in such cases sub clause (ii) of clause (b) of Rule 4 - ‘Determination of point of taxation in case of change in effective rate of tax’ of Point of Taxation Rules, 2011 would be applicable (where the point of taxation will be the date of issuing invoice and accordingly rate of service tax would be 10%) instead of Rule 7 which has been substituted with new rule w.e.f. 01-04-2012 where the said specified eight services provided by individual or proprietary firms or partnership firms do not find any mention.
Moreover this Court finds that the above Circular no. 158 being contrary with the Finance Act, 1994 and the Point of Taxation Rules, 2011 cannot be allowed to govern this controversy and thereby has been quashed.
By :Atul Kumar Gupta
B Com (Hons) FCA, FCMA, MIMA, CIQA, PGDEMM