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TMI BlogIssues under Service Tax Return vis-a-vis Corresponding GST ProvisionsX X X X Extracts X X X X X X X X Extracts X X X X ..... Issues under Service Tax Return vis-a-vis Corresponding GST Provisions - By: - Anuj Bansal - Goods and Services Tax - GST - Dated:- 7-8-2017 - - The day is not far when service tax return will be filed for the last time on 15 th August, 2017 which is the due date for filing the last Service Tax return. But some things in life leave us in pain and so is the service tax return. Market is flooded with issues, queries and dilemmas for what to do and what not to do. Over here, effort is made to highlight few issues assessees are facing while filing the service tax returns and while entering the GST regime. Firstly, let s discuss few issues in filing service tax return. Invoices received after filing of service tax return i.e. 15 th Augu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, 2017 One of the major issues is invoices pertaining to previous regime which the assessee will be receiving after the due date of filing of service tax return. Question is how to book the invoices in the service tax return. As per the GST Laws, if return is revised later and there is any increase in the input tax credit then such increased credit will not be allowed as carried forward. One can only receive cash refund of the same. In case credit is reduced by any chance then that reduced credit in the revised return will be carried forward in GST regime. As per service tax provisions assessee can book credit upto one year from the date of issue of invoice. But such GST provisions are in contradiction with present CENVAT credit rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. How to deal with such kind of situation? Whether to book notional credit and reduce later in revise return? Whether to book actual credit and claim cash refund later or forgo such credit related to invoices received after filing of service tax returns? These are the crucial decisions to be taken by the assessees before filing the service tax returns. Surprisingly, few vendors are issuing invoices with dates post 1st July 2017 but they are still charging Service Tax on the invoice which is lawfully incorrect, since post 1 st July, 2017 only GST can be charged on invoice and not Service tax. Payments under Reverse Charge Mechanism Another important issue is payments under Reverse charge which are related to services of pre GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regime but payments are made by the recipients who are liable to pay tax under RCM post GST. Now there is a legal dispute in this transaction, under the service tax regime the point of taxation under RCM is date of payment and provided if payment is not made within 3 months of the date of invoice, the point of taxation shall be date immediately following the said period of three months. Let s take an example of manpower services, where services were rendered pre-GST and payment is to be made post GST then POT of such transaction is date of payment . Now date of payment is falling under post GST where manpower services are not covered under reverse charge. In such a case the recipient is not liable to make any payment under reverse charge a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thus why will he pay any tax on such transaction? That s why few companies followed the principal of paying taxes for the services in which they were liable to pay taxes under RCM before 30 th June, 2017. Again dilemma arises that whether to pay service tax on such transactions post GST? If the assessee pays such service tax then he is legally incorrect and if he does not pay then neither the taxes were paid to government pre GST nor post GST. Again the question is what to do? What not to do? Now let s discuss few scenarios related to GST transition. Taxes paid Pre-GST, Invoices Goods / Services received post GST There are certain situations where taxes are paid pre-GST and goods / services invoice is received post GST. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee shall be entitled to carry forward such credit in GST regime only when that invoice or any other duty or taxpaying document related to such transaction was recorded in the books of accounts of such person within a period of 30 days from the appointed date. A separate column is provided in GST TRAN-1 to record such details. What if such invoices are not booked or not received within time and the assessee fails to record such transaction in his books? Is it not over ruling the provisions of service tax laws, for availment of credit upto one year from the date of issue of invoice? What about construction services where payment is made before appointed date and goods will be received let s say after 3 months of appointed date? Is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this not total injustice on part of government? Upward / Downward revision of prices post GST Another example is where services were given pre-GST and due to increase in prices the assessee wants to issue debit note post GST. Can he do so? Can he issue debit note and charge applicable rate of GST on same? As per the CGST laws, if there is any downward or upward revision of prices of goods / services post GST related to transactions under taken pre-GST then one can issue credit / debit note depending on the situation. However, SGST laws covers revision in prices of goods only, i.e. one cannot charge SGST on such debit / credit note for revision in prices post GST for services rendered pre-GST. Secondly, IGST Act does not have any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch provision pertaining to issue of debit / credit notes with respect to invoices issued pre-GST regime. Now how such kind of situation will be dealt? In GST offline tool, taxes are auto-calculated, i.e. once we fill the detail of value of debit / credit note and applicable rate then CGST, SGST or IGST as the case may be will be auto calculated by the system. Again there is an issue here, legally one cannot charge SGST on debit / credit note related to invoices post GST but in GSTR-1 taxes will be auto calculated then how such tax will be reversed and how such debit / credit notes will be issued? Such debit / credit notes have to be linked with original invoices. Is it valid to link the invoices of service tax VAT with debit / credit not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es issued under GST regime? Different people are analyzing the situation differently. On same transaction diversified views are being received which are in total contradiction with each other. This is really a very crucial moment to decide what is to be done in such circumstances. A single wrong decision can leave us in pain for a longer period of time. - Reply By KASTURI SETHI as = Timely and nice article. Hope your voice will reach the concerned officers of the Department. Dated: 7-8-2017 Reply By Ganeshan Kalyani as = Lot of issues are creeping in. Next six months is going to be very busy for both assessee as well as for consultants. Thanks. Dated: 8-8-2017 Reply By Mohammed Lakkadsha as = For the Services Provided on or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore 30th June , Service Tax is applicable even though Invoice is dated after 30-June as the Service Tax rule 4A allows to issue the Invoice within 30 days. Dated: 8-8-2017 - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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