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Changes in time of payment of service tax

Service tax department has amend some changes in the matter of time of paying service tax. Service tax department has issued a notification no. 4 dated 17-03-2012 regarding this issue. In this notification the service tax department has changed the following term of payment of service tax.

Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 17
th March, 2012
Notification No.4/2012 - Service Tax
G.S.R. (E).- In exercise of the powers conferred by clause (a) and clause (hhh) of 
sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central 
Government hereby makes the following rules further to amend the Point of Taxation 
Rules, 2011, namely:—

1.  (1) These rules may be called the Point of Taxation (Amendment) Rules, 2012.
     (2) They shall come into force on the 1st day of April, 2012.
2.  In the Point of Taxation Rules, 2011 (hereinafter referred to as the said rules), in 
rule 2, —
(a) after clause (b), the following clause shall be inserted, namely :—
(ba) “change in effective rate of tax”  shall include a change in the portion of value 
on which tax is payable in terms of a notification issued in the Official Gazette 
under the provisions of the Act, or rules made thereunder;

(b) in clause (c), for the words “or to be provided continuously, under a contract, 
for a period exceeding three months,” , the words “or to be provided continuously 
or on recurrent basis, under a contract, for a period exceeding three months with 
the obligation for payment periodically or from time to time,” shall be substituted.

3. After rule 2 of the said rules, the following rule shall be inserted, namely:—
„2A. Date of payment.— For the purposes of these rules,  “date of payment” shall be 
the earlier of the dates on which the payment is entered in the books of accounts or 
is credited to the bank account of the person liable to pay tax:
        Provided that —

(A)  the date of payment shall be the date of credit in the bank account when —(i) there is a change in effective rate of tax or when a service is taxed for 
the first time during the period between such entry in books of 
accounts and its credit in the bank account; and 

(ii) the credit in the bank account is after four working days from the date 
when there is change in effective rate of tax or a service is taxed for the 
first time; and

(iii) the payment is made by way of an instrument which is credited to a 
bank   account, 

(B) if  any rule requires determination of the time or date of payment received, 
the expression “date of payment”  shall be   construed to mean such date on 
which the payment is received;‟.

4.   In rule 3 of the said rules,-
          (a)  in clause (a), for the proviso,  the following  proviso  shall be substituted, 
        “Provided that where the invoice is not issued within the time period specified 
in rule 4A of the Service Tax Rules,1994, the point of taxation shall be the date of 
completion of provision of the service”;

         (b) after clause (b), the following proviso shall be inserted, namely:—
“Provided that for the purposes of clauses (a) and (b), —

(i)    in  case of continuous supply of service where the provision of the whole 
or part of the service is determined periodically on the completion of an 
event in terms of a contract, which requires the receiver of service to 
make any payment to service provider, the date of completion of each 
such event as specified in the contract shall be deemed to be the date of 
completion of provision of service;

(ii) wherever the provider of taxable service receives a payment up to rupees 
one thousand in excess of the amount indicated in the invoice, the point 
of taxation to the extent of such excess amount, at the option of the provider of taxable service, shall be determined  in accordance with the 
provisions of clause (a).”

5. In rule 4 of the said rules, the Explanation shall be omitted.

6. For rule 5 of the said rules, the following shall be substituted, namely:—
“5. Payment of tax in case of new services.— Where a service is taxed for the first 
time, then,—

(a) no tax shall be payable to the extent the invoice has been issued and the 
payment received against such invoice before such service became taxable;

(b) no tax shall be payable if the payment has been  received before the service 
becomes taxable and invoice has been issued within fourteen days of the date when 
the service is taxed for the first time.”.

7. Rule 6 of the said rules shall be omitted.

8.   For rule 7 of the said rules, the following rule shall be substituted, namely:—

„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 the persons required to pay tax as recipients of service under the rules made in 
this regard in respect of services notified under sub-section (2) of section 68 of the 
Act, shall be the date on which payment is made:

                 Provided that, 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:

                 Provided further that in case of “associated enterprises”, where the 
person providing the service is located outside India, the point of taxation shall be 
the date of debit in the books of account of the person receiving the service or date 
of making the payment whichever is earlier.‟9.   After rule 8 of the said rules, the following rule shall be inserted, namely:—

“8A. Determination of  point of taxation in other cases.- Where the point of 
taxation cannot be determined as per these  rules as the date of invoice or the date 
of payment or both are not available, the Central Excise officer, may, require the 
concerned person to produce such accounts, documents or other evidence as he 
may deem necessary and after taking into account such material and the effective 
rate of tax prevalent at different points of time, shall, by an order in writing, after 
giving an opportunity of being heard, determine the point of taxation to the best of 
his judgment.”.
[F. No. 334 /1 /2012- TRU]
(Samar Nanda)
Under Secretary to the Government of India
Note.- The principal notification was published in the Gazette of India, Extraordinary, 
Part II, Section 3, Sub-section (i), vide notification number. 18/2011 - Service Tax, dated 
the 1
st March, 2011, G.S.R. 175 (E), dated the 1
st March, 2011 and was last amended by 
notification number. 41/2011-Service Tax, dated the 27
t h
June, 2011 vide number G.S.R. 
490 (E), dated the 27
June, 2011.

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