Procedures to be followed
Invoice by service provider
Assessee should prepare invoice in respect of his services. The Invoice should be prepared within 14 days from date of completion of taxable service or receipt of payment towards the value of taxable service, whichever is earlier. Invoice should contain prescribed details [Rule 4A]
Payment of service tax
If the assessee is an individual or proprietary firm or partnership firm, the tax is payable on quarterly basis within 5 days at the end of quarter (within 6 days in case of e-payment) except in March. Service tax is payable by other assessees by 5th of the month following the month in which payments are received toward value of taxable services (by 6th in case of e-payment)except in March [rule 6(1) of Service Tax Rules].
Payment of service tax in March
Service tax on value of taxable services received during month of March or quarter of March is required to be paid by 31st March in case of all the assessees.
Payment of service tax
Service tax payable on receipt basis
Service tax is not payable on basis of amounts charged in the bills/invoice, but only on amounts actually received during the relevant period, except in case of associated enterprises. If partial amount is received, tax will be payable on pro rata basis.
Exception in case of associated enterprises
The exception is that in case of service provided to associated enterprises,service tax is payable as soon as book entry is made in the books of service provider (when he is liable) or service receiver (when he is liable to pay service tax under reverse charge method).
Advance payment of service tax
A person liable to pay service tax can pay any amount in advance towards future service tax liability. After such payment he should inform Superintendent of Central Excise within 15 days [Rule 6(1A)]. When he adjusts the advance, he should indicate details in the subsequent return filed
GAR-7 challan and e-payment
Tax is payable by GAR-7 challan using appropriate accounting code. E-payment is compulsory to those who are paying service tax of more than Rs 10 lakhs per annum. For others, e-payment is optional.
Interest for late payment of service tax
Mandatory interest for late payment of service tax is 13% [section 75]. It cannot be reduced or waived.
Returns under service tax
Half yearly return
Every person liable to pay service tax has to submit half yearly return inform ST-3 in triplicate within 25 days of the end of the half-year [Rule 7].Late fees upto Rs 2,000 are payable if return is filed late.
Self Assessment
Assessment is basically self assessment. Provisional assessment is permissible.
Demands
Administration by excise department
The service tax is administered by excise department. Adjudication order is issued by excise officer.
Demand if tax short paid
If service tax was short paid, demand can be raised within period of one year from ‘relevant date’. If the short payment or non-payment was on account of suppression of facts or wilful mis-statement with intention to evade, demand can be raised within period of five years.
Rectification of order
Order passed by Central Excise Officer can be rectified by him within two years. Only mistake apparent from records can be rectified [section 74].
Appeal against order of demand
Both department or assessee can file appeal before Commissioner (Appeals) against order of demand of duty and penalty of officer lower than Commissioner.
Disclaimer: In this note, we have attempted to summarise some of the significant aspects to be kept in mind by readers to ensure compliance of tax laws and regulations. Readers should ensure to verify specific provisions as applicable to each case before taking any business decisions. It would be pertinent to note that some changes are being made to the tax laws and rules and regulations on a continuous basis by way of notifications, clarifications etc issued by the department based on their practical experience in implementing the legislation.
It may be noted that nothing contained in this note should be regarded as our opinion. Professional advice should be sought for applicability of legal provisions based on specific facts. Though reasonable efforts have been taken to avoid errors or omissions in this note we are not responsible for any liability arising to readers directly or indirectly due to any mis-statements or error contained in this note. It must be noted that the views expressed in the note are based on our understanding of the law and regulations as published by the Government authorities and we may or may not agree or subscribe to such views.
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