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TMI Blog2013 (2) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly the rate of tax payable is the rate in force on the date of providing the service. 2. The petition came to be filed in this manner. The Finance Act, 1994 introduced the levy of service tax for the first time in India. Section 66 provided for the charge of service tax. Section 66A provided for the charge of service tax on services received from outside India. Section 67 provided for the valuation of taxable services for the purpose of charging service tax. This section underwent certain changes under the Finance Act, 2006 w. e. f. 18.04.2006 but we are not concerned with them. Section 68 provided for the payment of service tax. There are other procedural provisions to give effect to the levy and collection of service tax with which we are not concerned. Section 93 conferred power upon the Central Government to grant exemption from the levy of service tax. Section 94 conferred power upon the Central Government to make rules for carrying out the provisions of Chapter V of the Finance Act, 1994. 3. A question arose as to what is the taxable event for the purpose of levy of service tax. In Association of Leasing and Financial Service Companies Vs. UOI & Ors. : (2011) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as as below: "7. Determination of point of taxation in case of specified services or persons. - Notwithstanding anything contained in these rules, the point of taxation in respect of,- (a) the services covered by sub-rule (1) of rule 3 of Export of Services Rules, 2005; (b) the persons required to pay tax as recipients under the rules made in this regard in respect of services notified under sub-section (2) of section 68 of the Finance Act, 1994; (c) individuals or proprietary firms or partnership firms providing taxable services referred to in sub-clauses (g), (p), (q), (s), (t), (u), (za), (zzzzm) of clause (105) of section 65 of the Finance Act, 1994, shall be the date on which payment is received or made, as the case may be: Provided that in case of services referred to in clause (a), where payment is not received within the period specified by the Reserve Bank of India, the point of taxation shall be determined, as if this rule does not exist. Provided further that in case of services referred to in clause (b) where the payment is not made within a period of six months of the date of invoice, the point of taxation shall be determined as if this rule does not exist. Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es - regarding. 1. Notification No.4/2012 - Service Tax dated the 17th March 2012 has amended the Point of Taxation Rules 2011 w.e.f. 1st April 2012, inter- alia, amending Rule 7 which applied to individuals or proprietary firms or partnership firms providing taxable services referred to in sub-clauses (g), (p), (q), (s), (t), (u), (za) and (zzzzm) of clause (105) of section 65 of the Finance Act, 1994. Rule 7 determined the point of taxation in such cases as the date of receipt of payment. The provisions have been amended both in the Point of Taxation Rules 2011 and the Service Tax Rules 1994 such that from 1st April 2012 the payment of tax shall be allowed to be deferred till the receipt of payment upto a value of Rs. 50 lakhs of taxable services. The facility has been granted to all individuals and partnership firms, irrespective of the description of service, whose turnover of taxable services is fifty lakh rupees or less in the previous financial year. 2. Representations have been received, in respect of the specified eight services, requesting clarification on determination of point of taxation in respect of invoices issued on or before 31st March 2012 where the payment has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after 1st April 2012, the service tax needs to be paid @12%. 3. The invoices issued before 1st April 2012 may reflect the previous rate of tax (10% and cess). In case of need, supplementary invoices may be issued to reflect the new rate of tax (12% and cess) and recover the differential amount. In case of reverse charge the service receiver pays the tax and takes the credit on the basis of the tax payment challan. Cenvat credit can be availed on such supplementary invoices and tax payment challans, subject to other restrictions and conditions as provided in the Cenvat Credit Rules 2004. 4. Trade Notice/Public Notice may be issued to the field formations accordingly. 5. Please acknowledge the receipt of this circular. Hindi version to follow. (Dr. Shobhit Jain) OSD, TRU Fax: 011-23093037" 9. The grievance of the petitioner is that the circulars cannot override the provisions of the Finance Act, 1994 or the rules made thereunder and in so far as they seek to levy the enhanced rate of service tax of 12% in respect of the 8 specified services, though the services were rendered and the invoices were issued but payments were received after 01.04.2012, are ultra vires the Act/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are impugned in the present writ petition proceed on the erroneous basis that Rule 7 inserted w.e.f. 01.04.2012 covers the services rendered by chartered accountants. Circular No.154 when it states that invoices issued on or before 31.3.2012 shall continue to be governed by Rule 7 as it stood before 01.04.2012 is erroneous because on and from 01.04.2012, the old Rule 7 was no longer in existence, having been replaced by new Rule 7. Circular No.158, insofar as it states that in the case of the eight specified services (which includes the services of chartered accountants), if the payment is received or made, as the case may be, on or after 01.04.2012, the service tax needs to be paid at 12% is again without any statutory basis. The new Rule 7 does not cover the services which were earlier referred to in Clause (c) of Rule 7 (including services of chartered accountants) as it existed up to 31.3.2012. The circular seems to have overlooked this crucial aspect. 12. We still have to reckon with Section 66B of the Finance Act, 1994 inserted by the Finance Act, 2012 w.e.f. 1.7.2012 vide notification No.19/2012-ST, dated 5.6.2012. This Section is as follows:- "66B.Charge of service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the change in the effective rate of tax, but the invoice for the same was issued after the change. In such case the point of taxation shall be the date of payment which will be deemed to be the date on which the service was provided. The petitioner's case is not governed by this sub-clause either. 14. The case of the petitioner is governed by sub-clause (ii). Under this clause where the taxable service has been provided before 01.04.2012 and the invoice was also issued before 01.04.2012, but the payment is received after 01.04.2012, then the date of issuance of invoice shall be deemed to be the date on which the service was rendered and, consequently, the point of taxation. 15. The result of the discussion will be that where the services of the chartered accountants were actually rendered before 01.04.2012 and the invoices were also issued before that date, but the payment was received after the said date, the rate of tax will be 10% and not 12%. The circulars in question have not taken note of this aspect, and as noted earlier have proceeded on the erroneous assumption that the old Rule 7 continued to govern the case notwithstanding the introduction of the new Rule 7 which do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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