Point of service tax liability

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 November 2013 A firm is providing taxable services since four years. Gross receipt remained less than nine lac in every financial year. In the month of november of the financial year 2013-14 it is expected that the collection will exceed Rs 10 lac.And the firm wants to apply for service tax registration. Now the question is,(1) whether the firm will have to pay service tax on payments received from 1st April 2013 to the date of registration. (2) If any bill raised before Nov.2013 without charging service tax, is there service tax liability on its collevtion after Nov.2013.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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05 November 2013 Registration for Service Tax is mandatory as and when the gross receipts of taxable service(s) exceeds Rs.9 lakhs. Non registration is an offence subject to penalty of Rs.100/- per day of default. However, in view of the CBEC Circular since no ST-3 return need be filed for people with turnover below threshold limit, this provision is rarely if ever implemented.

In the first year of registration, when the threshold limit of Rs.10 lakhs is crossed, service tax is payable only on the excess over the threshold limit. Therefore all invoices issued before the turnover crosses Rs.10 lakhs will not be subject to service Tax.

Under the Point of Taxation Rules, the liability for Service Tax payment arises on the earliest of the following dates:
(a) Date of issue of tax invoice within 30 days of completion of service:
(b) Else Date of Completion of Service
(c)Receipt of consideration in cash whether as advance or in settlement of tax invoice.

Hence on invoices issued before registration, in your case, no liability to Service Tax will arise on receipt basis.

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