Point of taxation under reverse charge mechanism

This query is : Resolved

Guest

Guest (Querist)

25 October 2013 Firm A Propitiatory Firm providing Service Under Work Contract which is received by Company x. Invoice raised by Firm A was Certified by Consultancy Engineering Company Y.

one RA Bill not received by Company x from Firm A or From Consultant Engineer Company Y. Now Firm A wrote a letter after 8 month to Company x and gave detail of Ra Bill which not received by Company X (Certified Invoice from Consultant Engineer Still not Received by Company X).

Please Clarify When Service Tax liability arise of Service receiver to pay Service Tax?

Ganeshbabu K

Ganeshbabu K (Expert)
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25 October 2013 No reverse charge, if service provided prior to 1-7-2012

1)In case of some services, reverse charge mechanism is applicable w.e.f. 1-7-2012 i.e. service tax is payable (partly or wholly) by service receiver..

2)In view of section 67A (which is effective from 28-5-2012), service tax will not be payable by service receiver under reverse charge mechanism, if service was provided prior to 1-7-2012, even if payment is received later.

3)This will be so even if invoice was issued after 1st July 2012. However, to avoid controversy, it is advisable to date invoice prior to 30-6-2012

[Note that Point of Taxation Rules cannot override provisions of section 67A].

Ganeshbabu K

Ganeshbabu K (Expert)
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25 October 2013 1)Service tax is payable by service receiver when actual payment is made to service provider and not on receipt of Invoice from service provider. However, if payment is not made to service provider within 6 months, service tax is anyway payable. Interest is also payable.
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hence if you receive invoice back dated you supposed to pay with interest,if payment for this bill also made interest will be from date of actual payment

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