applicable rate

This query is : Resolved

Guest

Guest (Querist)

10 April 2009 Hello everyone
My query is regarding applicable rate of service tax.Suppose advance payment for a service is received in january 2009 at 12% and the same is paid to goverment.service is yet to be rendered in march 2009.What should be applicable rate?10% or 12%

As per my opinion and case of reliance industries ltd-2008 it should be 10
% as the point of levy is at time of rendering of services.please help.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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10 April 2009 service tax besicly on payment basis so if you have paid service tax @ rate applicable at that time then its ok. if you are issuing or receiveing bill in march or april rate will be 10%

Guest

Guest (Querist)

11 April 2009 Sir
As per my opinion we must see rate at the time of point of levy.ans as said in the case of reliance industries ltd.2008 that there is no specific provision in the service tax to decide about the rate and in absence of such specific provision the rate at the time of rendering of services is to be seen and therefore irrespective of the fact when payment is received point of levy should be seen to ascertain the applicable rate.l

HUZAIFA HUSSAIN

HUZAIFA HUSSAIN (Expert)
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11 April 2009 ACTUALLY RATE PREVAILING AT THE TIME OF RENDERING SERVICES SHALL THE RATE TO BE APPLIED. IN UR CASE SINCE U HAVE RECD. THE PAYMENT IN ADVANCE AND REMITTED TO GOVT. AND IF THE REMIANING PAYMENT IS YET TO BE RECD. THAN THE EXCESS PAYMENT OF S.T. SHALL BE ADJUSTED AGAINST THE PAYABLE.

Guest

Guest (Querist)

13 April 2009 Actually if it is correct that rate has to be seen of the date of rendering of services then in the example quoted above refunds should be given of 2 % subject to the doctrine of unjust enrichment.Isn't it?

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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15 April 2009 The levy is attracted at the time of receiving the advacne due to the ST payments being on services provided or to be provided in future.
The Rules prescribe that within 14 days of the same an invoice for the advacne be raised.
In my view there is no doubt that the rate of service tax would have to 12.36% ONLY.
Once the advacne is over then the balance of the billing ( beyond the advacne amount) would be @10.3%.

Guest

Guest (Querist)

18 April 2009 But sir then what about decision in the case of reliance industries ltd 2008 in that it was stated that there is no specific provision for deciding the rate so it should be seen at the time of levy and levy is attracted only at the time of rendering of services.

Dayal

Dayal (Expert)
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18 April 2009 To avail 10% service tax you will need to give a credit note for the difference of tax to the client. And whatever you have paid can be treated as advance in view of the change post receipt of payment and deposit to the government treasury.

You will also need to justify that service has been rendered in March and not in January.

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