Service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2013 Sir,
If we are submitting any prior financial year bill in current financial year to client & Client (Service Receiver)is paying the servce tax.How to pay service tax in this context & what is the exact tratment.If there is any levey & penalty.
Kindly clarify the issue.

Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2013 Sir,Please revert.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 You're asking about how to handle service tax when:

A bill/invoice from a prior financial year is being submitted in the current financial year

The client (service receiver) is paying the service tax now

You want to know how to pay, and if there is any penalty or interest liability

Let’s address this in full, based on Service Tax rules applicable in April 2013.

✅ Step-by-Step Clarification
📌 1. When is Service Tax Payable?
As per Rule 6 of the Service Tax Rules, 1994 and Point of Taxation Rules, 2011, service tax liability arises based on:

Earliest of the following three:

Date of Invoice

Date of Completion of Service

Date of Payment received

🧾 Your Scenario:
Event Timing
Service rendered Previous financial year
Invoice raised Now (i.e., delayed invoicing)
Payment received from client Now
Client is paying service tax Now

✅ Tax Treatment:
If the invoice was not raised and no payment was received in the earlier year, and both are happening now:
Then, as per Rule 3 of Point of Taxation Rules, 2011:

Point of Taxation = Date of Invoice or Date of Payment, whichever is earlier.

➡️ Since both are in current financial year, you can pay service tax now in the regular manner, no interest or penalty applies.

✅ Example:
Service performed: Jan 2013 (FY 2012–13)

Invoice raised: April 10, 2013

Payment received: April 25, 2013

➡️ In this case, point of taxation is April 10, 2013.
So, service tax is payable on or before 5th May 2013 (if paid offline) or 6th May 2013 (if online).

✅ No interest or penalty if tax is paid on time after invoicing.

⚠️ When Will Penalty/Interest Arise?
Only if:

You had already received payment or completed service & failed to raise invoice in 30 days (as per POT Rules)

Or if service tax was due in previous year, but was not paid on time

➡️ Then interest under Section 75 and penalties under Section 76/77/78 could apply.

✅ Summary:
Scenario Treatment
Invoice & payment both in current FY ✔️ Service tax payable now; no penalty/interest
If payment was received earlier, invoice delayed ❗ May attract interest & penalty (POT already triggered earlier)
Tax payment now by client (under RCM) ✔️ Client to pay under RCM if applicable; otherwise you pay
Late invoicing beyond 30 days of service completion ❗ Point of taxation moves to date of service completion

✅ Recommendation:
Document everything: date of service, invoice date, payment date

Ensure service tax is paid on time after raising invoice

Reflect the tax in ST-3 return for the correct period (of invoice/payment)

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