Service provided before GST and not concluded
How the transactions would be viewed legally as well as by the department which have commenced provision of service in June 2017 but the invoicing and the payment for the same are spilling over to July 2017 when the GST is effective?
|Under Existing tax (i.e. Service Tax)||Under GST regime|
|“Section 66B – Charge of service tax on and after Finance Act, 2012There shall be levied a tax (hereinafter referred to as the service tax) at the rate of fourteen per cent. on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person toanother and collected in such manner as may be prescribed.
SECTION 67A – Date of determination of rate of tax, value of taxable service and rate of exchange:
(1) The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided.
Explanation. — For the purposes of this section, “rate of exchange” means the rate of exchange determined in accordance with such rules as may be prescribed].
When tax is payable under existing law:
Under the existing service tax regime tax is payable at the point of time determined by Point of Taxation Rules 2011 which is earlier of the following events:
a) Date of invoice, if the same is issued within 30 days of completion of service, if not, the date of completion of the service;
b) Receipt of advance to the extent of such advance or receipt of payment
|Levy – Section 9 (1)There shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person.
Time of Supply 13
(2) The time of supply of services shall be the earliest of the following dates, namely:—
a) The date of issue of invoice by the supplier, if the invoice is issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
b) The date of provision of service, if the invoice is not issued within the period prescribed under sub-section (2) of section 31 or the date of receipt of payment, whichever is earlier; or
c) The date on which the recipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or clause (b) do not apply”
“Section 142(10) Save as otherwise provided in this Chapter, the goods or services or both supplied on or after the appointed day in pursuance of a contract entered into prior to the appointed day shall be liable to tax under the provisions of this Act.
Section 142(11)(b) Notwithstanding anything contained in section 13, no tax shall be payable on services under this Act to the extent the tax was leviable on the said services under Chapter V of the
Finance Act, 1994”
Examples & conclusion:
|Particulars||Service Provided||Invoice raised||Payment received||Action|
|Case 1||Before June 30||Before June 30||Before June 30||Pay Service Tax|
|Case 2||Before June 30||Before June 30||After June 30||Pay Service Tax|
|Case 3||Before June 30||After June 30(Invoice raised within 30 days)||After June 30||Always batter to pay service tax.|
|Case 4||Before June 30||After June 30(Invoice is not raised within 30 days)||After June 30||Pay Service Tax|
|Case 4||After June 30||After June 30||After June 30||Pay GST|