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Service TAx

soundhirarajan (Accountant) (34 Points)

18 November 2010

We have raised bill to our party. but we have received payment after 90 days only. what is the procedure to pay the service tax.

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9 Replies

RAHUL KUMAR TAANK (CS PURSUING ) (672 Points)
Replied 18 November 2010

Actually, 25 october 2010 was the date of return filing , and if you have not file return you will be eligible for as per section 70 (1) & rule C.

RAHUL KUMAR TAANK (CS PURSUING ) (672 Points)
Replied 18 November 2010

The facility of e-filing of returns on the website (https://exciseandservicetax.nic.in), as provided in the CBEC Circular No.791/24/2004 CX dated 1.6.2004 has been withdrawn and the assessees are required to file their returns online or by uploading the downloadable off-line return utilities to the new ACES website (https://www.aces.gov.in). Detailed instructions regarding usage of ACES and procedure of getting the login and password are available on this site. Further, to make it easy for the assessees to file returns in ACES, an XML scheme has been hosted on the ACES website. By suitably modifying their own software application and using this scheme the assessees can also generate an up-loadable form of return directly from their own database without the need to make fresh data entry.

A.Deepa (CA ) (195 Points)
Replied 18 November 2010

Service tax has to be remitted to the department on the concept of "receipt basis". For example Bill date is 18/11/2010, credit period- 90 days, Payment received on 2/1/2011. Then service tax payment has to be remitted to the department on or before 5/2/2011. The same analogy to be followed for the all bills. Maintain seperate records for the bills received, part payment or full payment, date of payment etc, so that it will be useful to calculate the service tax liability for each month.

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
Replied 18 November 2010

hi,

A. Deepa is correct.

A.Deepa (CA ) (195 Points)
Replied 18 November 2010

Thanks Jeevesh

V.Santharam (Internal Auditor) (37 Points)
Replied 18 November 2010

Please let me know the service tax applicability to the construction of flats constructed/sold before April 2010 with service tax department circular number

Regards and thanks

Santharam,V

A.Deepa (CA ) (195 Points)
Replied 18 November 2010

In the Finance Act, 2010, an Explanation has been added w.e.f. 1-7-2010, to the definition of ‘commercial or industrial construction’ and ‘construction of residential complex’, as follows -

Explanation.— For the purposes of this sub-clause, construction of a complex which is intended for sale, wholly or partly, by a builder or any person authorised by the builder before, during or after construction (except in cases for which no sum is received from or on behalf of the prospective buyer by the builder or a person authorised by the builder before the grant of completion certificate by the authority competent to issue such certificate under any law for the time being in force) shall be deemed to be service provided by the builder to the buyer.

However, on basis of Court decisions and CBE&C circulars, it was more or less settled that a builder entering into contract for sale of flat or industrial unit (gala) or shop or a developer entering into contract for construction of an individual flat for personal residential use of client are not liable to pay service tax.

Thus, by a ‘deeming provision’, an activity which is not ‘service’ as per Court decisions and CBE&C’s own earlier circulars will be a ‘deemed service’ for the purpose of levy of service tax.

The effect of the change is that the service tax will not apply only when a builder sales a ready flat or shop or industrial unit (gala) after Building completion certificate is obtained from local authority (like Municipal Corporation, Municipality, Gram Panchayat etc.) and entire consideration is obtained only after building completion certificate is obtained.

In all other cases, the builder will be liable to pay the service tax. It is well known that in most of the cases, builder constructs buildings mainly on raising funds from prospective buyers. Further, even after building is completed and ready for occupation, there is delay in obtaining building completion certificate from the authorities (Now the delay will be more and ‘cost’ of obtaining the certificate will rise further).

Thus, practically in all cases, the builder/developer will be liable to pay service tax. Though the amendment is termed as ‘Explanation’, it is not merely to clarify the intention of Parliament but to put a completely artificial meaning to the ‘construction service’ by introducing a deeming provision. The Explanation is not merely explaining or clarifying the scope but expanding the scope of taxable service.

Therefore the above provisions will be applicable w.e.f 1.7.2010.