Service tax liability on revised bill

Hi Arun,

Under Service tax law, the point of taxation as per Point of Taxation Rules, 2011 (POTR) determines the time when you are required to pay Service tax.

As per Rule 7 of the POTR, the point of taxation gets triggered at the time of making of payment for services covered under reverse charge mechanism, provided such payments are made within 3 months from the date of invoice. Otherwise, the point of taxation would be the 1st day after the expiry of such 3 months. Please refer to the following extracts of Rule 7 of POTR as under -

“Notwithstanding anything contained in rules 3,4, or 8, the point of taxation in respect of the persons required to pay tax as recipients of service under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Act, shall be the date on which payment is made :

Provided that where the payment is not made within a period of three months of the date of invoice, the point of taxation shall be the date immediately following the said period of three months:”

Thus, if you have made the payment for such excess amount within 3 months from the date of invoice, then Service tax on such amount would get triggered in the month of payment, else the 1st day of the next month.

In case of any delay in payment, based on the point of taxation as mentioned above, you would be required to pay appropriate interest.

I believe you can decide now yourself.