TaxTMI 
TaxTMI 
01 Aug 2017 
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:
- How the payment of Service Tax would be made for the amounts collected after 30th June, 2017.
- Will the e-payment window be available in ACES for a considerable time to deposit all such payments of Service Tax to the credit of Central Government, as and when received.
- How will the Service Tax dues be captured in last return to be filed for April-June, 2017 period ? This is not there which may lead to loss of non-collected but billed revenue in absence of which revenue leakage is bound to be there. Further, there may not be a tracking by the department of such tax revenue to be collected.
- How will the tax payer deposit the collections- on monthly basis or quarterly basis?
- For example, July collections should be deposited in August 2017 or July – September 2017 collections should be deposited in October, 2017.
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 !!