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GST: NO TRANSITION PROVISION FOR PAYMENT OF SERVICE TAX |
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GST: NO TRANSITION PROVISION FOR PAYMENT OF SERVICE TAX |
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Service Tax was payable on receipt on accrual basis on a monthly or quarterly basis, as applicable. Since India has migrated to GST w.e.f. 1.7.2017, there is no charge and levy of Service Tax w.e.f. 1.7.2017. However, Service Tax charged till 30.06.2017 has to be deposited with the Central Government. If it was payable on accrual basis, there is no issue as it would have been paid in July, 2017 itself. However, in cases where Service Tax was payable on cash basis, it was payable on collection of Service tax by the provider of service in the following month/quarter. There are, therefore, bound to be a large number of transactions where Service Tax was charged and billed but not recovered. In such cases, Service Tax may be received at any point of time in future, may be even after one or two years. Central Government has already notified the utility and last dates for filing last return of Service Tax for the period April – June 2017 and as such, there will be no return of Service Tax after 15 August, 2017. Another related issue is that in case of small service providers and service providers who were sole proprietors or firms, there was a provision for paying Service Tax on a quarterly basis in place of monthly basis. Based on these two scenarios, the provisions of GST law does not address the following issues:
It is submitted that the return to be submitted now before 15th August, 2017 can not (and should not) be the last return. It is desirable that the Central Government should immediately act upon addressing these issues failing which there may be loss of tax revenue as well as non-compliances on the part of assessee. Unfortunately, while the transition provisions in GST law talk of migration, input tax credit, refunds, recovery etc, there is no specific transition provisions for payment of tax arrears. An important miss indeed !!
By: Dr. Sanjiv Agarwal - August 1, 2017
Discussions to this article
One more Scenario is as follows. If the services subject to reverse charge was received in Pre-GST regime, and Invoice was raised by the service provider in Pre-GST regime and the same is received and accounted in post GST regime, how the tax liability be discharged? There was a Service Tax Levy on the date of receipt of service on RCM basis. But the Point of Taxation will be in GST regime. Transitional provisions are silent on these issues and there is no clarity on how to pay the service tax and how to take credit of such service tax..
Bills pertaining to pre GST but received and accounted in July 2017 for the service covered under RCM then service tax should be tax. The service tax so paid should be disclosed in ST-3 to be filed on or before 15th August 2017. If the credit for the tax paid under RCM is eligible then the same should be disclosed in GSTR TRAN 1 form. This is my view.
Dear Sir, Thanks for you Timely and relevant article. We have paid huge amount of service tax on import of services ( Royalty ) under reverse charge mechanism in the month of July 17. The service tax of June 17 normally paid on 06, July, 2017. Since this is an eligible service tax credit to be taken, is there any provision to take credit of this payment based on payment challan ?
Yes, I had raised this issue few days back, but there is no any clarification from the authorities.
Dear Sir, My doubt is on advance service tax paid before GST Regime, bill raised after gst regime then how will be treatment that sales in GSTR With regards, Thanuj
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