Service tax liability along with interest

according to explanation 1 to Rule 6 of POT Rules, in case of continuous services, date of completion of provision of service is termed as date of completion of event as specified in agreement for determination of provision of service over a period of time. In this case, period considered is F.Y. 2015-16 for annual maintenace contract. Therefore, date of provision of service would be 31.03.2016.

Since bill is raised during period of service, POT will be earlier of:

(i) Date of Invoice, or

(ii) date of payment to the extent it is recd.

Since, full service tax liability is discharged within 6 months of date of invoice, there is no violation of service tax rules. Therefore, penalty should not be levied.