Thursday, February 7, 2013

Circular No. 158/9/2012 dated 08-05-2012 quashed by HIgh Court

on Thursday, February 7, 2013

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


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  1. Kindly read this article on justifying the correctness of the said circular and giving contrary view to the said Hon'ble Delhi High Court Judgment. Comments and views are welcome.

    Manoj Agarwal (

    1. Good analysis ,

      However if you go to the history of old rule 7 , it has been given place in statute for benefit of the specific service provider and its overriding effect over other rules was given only to fix point of taxation to date of receipt.

      so in our view ,though point raised by you seems to be valid on technical grounds but principally courts view are correct.

    2. Dear Raja Babu,

      Thanks for your valuable comments.

      But, this overriding effect of old rule 7 over other rules has not been considered or even mentioned anywhere in the court judgement. And the service in question is CA's Services which is one of the specified service provider. So, i am still not convinced with the decision.