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Central Government vide Notification No. 35/2016-ST dt June 23, 2016, has exempted taxable services with respect to which the invoice for the service has been issued on or before May 31, 2016, from the whole of KKC leviable thereon, subject to condition that the provision of service has been completed on or before May 31, 2016.

From reading of above notification it is now clear that, no KKC shall be payable in cases where the following two conditions satisfied : 

-   Where invoices have been raised prior to 01.06.2016; and

-   Where provision of service has been completed on or before 01.6.2016.

Now as per this clarification the concern of the industry that KKC shall be levied on the opening debtors i.e. remaining unpaid as on 31.03.2016 and if service completed but payment released after 1st june 2016, has been duly answered and no KKC shall be levied on such amounts. Though the notification is effective from 23.6.2016, payments of opening debtors as received between 01.6.2016 and 22.6.2016 can still be a cause of litigation

It is also important to mention that the provision of service should be completed in total and no relief in terms of proportionate completion is mentioned in the notification.  

Thus, the levy of KKC can be explained as under: 

Situation

Services provided

Invoice Issued

Payment received

KKC applicable or not

A

Before 01.06.2016

Before 01.06.2016

Before 01.06.2016

No (rule 5)

B

Before 01.06.2016

Before 01.06.2016

After 31.05.2016

Exempted (35/2016)

C

Before 01.06.2016

After 31.05.2016

After 31.05.2016

Yes

D

Before 01.06.2016

On or before 14.06.2016

Before 01.06.2016

No (rule 5)

E

Before 01.06.2016

After 14.06.2016

Before 01.06.2016

Yes

F

After 31.05.2016

On or before 14.06.2016

Before 01.06.2016

No (rule 5)

G

After 31.05.2016

After 14.06.2016

Before 01.06.2016

Yes

H

After 31.05.2016

Before 01.06.2016

Before 01.06.2016

No (rule 5)

I

After 31.05.2016

Before 01.06.2016

After 31.05.2016

Yes

J

After 31.05.2016

After 31.05.2016

After 31.05.2016

Yes

The author can also be reached at caparasjain@gmail.com 

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