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I have a dry cleaning business. I pay service tax. So far I have been paying service tax on the amounts collected in a particular month by 5 th of next month. It was easy and going on smoothly. I was told that this method of payment of service tax has been amended and from 1.4.2011, I have to pay service tax on service rendered, bill issued or payment received, whichever is earlier. I tried to visualise the quantification of tax liability in a month from 1.4.2011, and I find it very difficult and I have to employ atleast two or three people exclusively for monitoring the service tax liability.

Let me explain with an example.

In the month of April 2011, let us assume I received clothes from Mr. X, Mr. Y and Mr. Z. I get some advance from X, and no advance was received from Y and Z.? The washing of all the clothes given by Y was completed in April. I raised the Bill on Z in April, but no washing was done in April. Now I have to compute the liability as:

X - Advance received is liable to tax in April 2011

Y- Service rendered is taxable in April 2011

Z- Bill issued so tax has to be paid in April 2011.

In May, I completed the washing of clothes given by X in April. I also issued the Bill to X and Y and got the payments.? I washed the clothes of Z in May 2011. I got fresh clothes from Y and some advance in May 2011 in addition to the amount for April 2011. Z paid the amount for the old bill and I washed some new clothes for him in May 2011, and no bill was issued or advance collected. Now my liability for May is

X - Service rendered advance received in April 2011

Y - No service tax on amount collected for April bill. The Advance is taxable in May 2011

Z - No service tax is due since already paid in April. But service is rendered for fresh clothes washed which is taxable in May 2011.

This is the confusion if I have three customers. Imagine if I have 200 of them. Do the lawmakers need to trouble the taxpayers so much? Why can't they prescribe one single mode for determining the liability based on Bill issued or payment received? I wish only one thing. Those who make the laws should spend atleast six months with a business house to understand how business takes place. You can't just sit in an ivory tower and make laws which are difficult to follow. Give the service tax Return to any officer of the department and ask him to fill it without any mistake in a single attempt. Then they will understand the difficulty.

What applies to the Dhobi applies mutatis mutandis to the advocate.

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