INVOICES UNDER SERVICE TAX

[Dr. Sanjiv Agarwal]

Invoice

Time period for raising an Invoice

Rule 4A states that every person providing taxable service, not later than fourteen days from the date of completion of such taxable service, or receipt of any payment towards the value of such taxable service whichever is earlier, shall issue an invoice, a bill or as the case may be, a challan signed by such person or a person authorised by him in respect of such taxable service provided or to be provided and such invoice, bill or as the case may be, challan shall be serially numbered.

Commissioner of Service tax, New Delhi had vide Trade Notice No. 15/ST/2011 dated 17.10.2011 clarified that as per Service Tax Rules, 1994, an invoice should be issued within a period of 14 days from the completion of the taxable services. The invoice needs to indicate inter-alia the value of service so completed. Thus, it is important to identify the service so completed. This would include not only the physical part of providing the service but also the completion of all other auxiliary activities that enable the service provider to be in a position to issue the invoice. Such auxiliary activities could include activities like measurement, quality testing etc., which may be essential pre-requisites for identification of completion of service. The test for the determination whether a service has been completed would be the completion of all the related activities that place the service provider in a situation to be able to issue an invoice. However, such activities do not include flimsy or irrelevant grounds for delay in issuance of invoice. The above interpretation also applies to determination of the date of completion of provision of service in case of “continuous supply of service”.

W.e.f. 1-4-2012, the time period for issuance of invoice has been increased from 14 days to 30 (thirty) days. For banks, financial institutions, non-banking finance companies etc. providing banking and other financial services, time period within which the invoice, bill or challan is to be issued shall be 45 (forty five) days. (Refer Notification No. 3/2012-ST, dated 17-3-2012).

Contents of an Invoice

Rule 4A states that the Invoice shall contain the following -

(i) the name, address and the registration number of such person,

(ii) the name and address of the person receiving taxable service,

(iii) description, classification and value of taxable service provided or to be provided, and

(iv) the service tax payable thereon.

In CCE, Surat-I v. Shree Khedut Sahakari Khand Udyog Mandli Ltd. 2013 (12) TMI 323 - CESTAT AHMEDABAD, where insurance policy showed the amount of premium and amount of Service Tax paid and documents were serially numbered as insurance policy always has a serial number, it was held that such document showed all necessary details and complied with Rule 4A of Service Tax Rules, 1994. Consequently cenvat credit was to be allowed.

Life Insurance Policy Notices are not Invoices

Vide Circular No. 166/1/2013-ST dated 1.1.2013, CBEC has provided a clarification in respect of notices / reminders issued for life insurance policies to the effect that the reminder letters/ invoices for insurance policies not being invoices under Rule 4A of the Service Tax Rules, 1994 would not invite levy of Service Tax.

Following are the extracts of circular –

“It has been represented by life insurance companies that in terms of the practice followed, reminder notices / letters are being issued to the policy holders to pay renewal premiums. Such reminder notices only solicit furtherance of service which if accepted by policy holder by payment of premium results in a service. Clarification has been desired whether service tax needs to be paid on the basis of such reminders.

The matter has been examined. Under the Point of Taxation Rules 2011, the point of taxation generally is the date of issue of invoice or receipt of payment whichever is earlier. The invoice mentioned refers to the invoices as issued under Rule 4A of the Service Tax Rules 1994. No tax point arises on account of such reminders. Thus it is clarified that reminder letters/notices for insurance policies not being invoices would not invite levy of service tax. In case of issuance of any invoice, point of taxation shall accordingly be determined."

The above clarification is issued only for life insurance sector.

Banking Companies

In the case of a banking company or a financial institution including a NBFC or any other body corporate, or commercial concern, providing service to a customer, in relation to banking and other financial services, an invoice, a bill or as the case may be, challan shall include any document by whatever name called, whether or not serially numbered and whether or not containing address of the person receiving taxable service but containing other information in such documents as required under this law.

Goods Transport Agency

In the case of provider of taxable service is a Goods Transport Agency, providing service to a customer, in relation to transport of goods by road in a goods carriage, an invoice, a bill or as the case may be, a challan shall include any document by whatever name called, which shall contain the details of the consignment note, number and date, gross weight of the consignment and also contain other information as required under this law.

Aircraft Operators

According to fourth proviso to Rule 4A of Service Tax Rules 1994, in case of aircraft operators providing the service of air transport of passengers, an invoice, bill or challan shall include an air ticket in any form and called by whatever name which may or may not contain the registration number of service provider, classification of taxable service received and address of service receiver but it must contain the other information in such documents as required in Rule 4A (vide Notification No. 39/2010-ST dated 28.6.2010).

Continuous Services

Where any payment towards the value of taxable service is not received, and such taxable service is provided continuously, for successive periods of time and the value of such taxable service is determined or payable periodically, an invoice, a bill or as the case may be, a challan shall be issued by a person providing such taxable service, not later than fourteen days, from the last day of the said period.

Input Service Distributor

Every input service distributor distributing credit of taxable services, shall, in respect of credit distributed, issue an invoice a bill, as the case may be, a challan signed by such person or a person authorised by him, for each of the recipient of the credit distributed, and such invoice bill or as the case may be, challan shall be serially numbered and shall contain the following namely -

(i) the name, address and registration number of the person providing input services, and the serial number and date of invoice, bill or as the case may be,

(ii) the name and address of the said input service distributor,

(iii) the name and address of the recipient of the credit distributed,

(iv) the amount of the credit distributed.

Input Service Distributor being a Banking Company

In case the input service distributor is an office of a banking company, or a financial institution including a NBFC or any other body corporate or commercial concern, providing service to a customer, in relation to banking and other financial services an invoice, a bill or as the case may be, challan, shall include any document whatever name called whether or not serially numbered, but containing other information in such document as required under this law.

Consignment Note

Rule 4B states that any Goods Transport Agency which provides service in relation to transport of goods by road in a goods carriage shall issue a consignment note to the customer. Where any taxable service in relation to transport of goods by road in a goods carriage is wholly exempted, the Goods Transport Agency, shall not be required to issue the consignment note.

Consignment note means a document issued by Goods Transport Agency, against the receipt of goods for the purpose of transport of goods by road in a goods carriage which is serially numbered and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax, whether consignor, consignee or the Goods Transport Agency.

Discussions to this article

[kedar s]

Sir

What are the consequences of late of invoice. Is there any time limit for issue of supplementary invoice/debit note??. As cenvat credit can be taken based on supplementary invoice/debit note, whether cenvat credit can be if supplementary invoice/debit note is issued after 6 months??

[Dr. Sanjiv Agarwal]

Dear Sir,

As per Rule 3 of the Point of Taxation Rules, 2011, point of taxation shall be determined in the following manner:

· Date of invoice or payment, whichever is earlier, if the invoice is issued within the prescribed period of 30 days from the date of completion of the provision of service.

· Date of completion of the provision of service or payment, if the invoice is not issued within the prescribed period as above.

As such, if the invoice is not issued within 30 days from the completion of service, the point of taxation shall be date of completion of the service.

Therefore, if the invoice is not issued within the time, the point of taxation shall be completion of service and the interest shall be levied from the date following the due date for payment of Service Tax determined as per the point of taxation rules.

There is no time limit for issue of supplementary invoice/debit note.

W.e.f 01.03.2015 time limit for availment of CENVAT Credit on input or input services is one year from the date of issue of invoice.

CENVAT Credit can be taken on the basis of supplementary invoice provided original invoice be there.

Regards,

CA Neha Somani

[Vishal Goel]

Sir,

Please suggest how a Invoice will be prepared by service provider where service recipient is liable to pay tax under reverse charge mechanism.

Please quote relevant section, rule or case law.

Thanks