Reverse Charge

[sunil jain]

Query regarding point of taxation under service tax on reverse charge:

 

What will be the point of taxation for a service receiver if bill is not received by the service receiver for a long period say more than 6 months however the receipt of service is completed every month?

 

  As per rule 7 of point of taxation rules, PoT for 'Recipient of service' is the date on which payment is made. However if payment is not made within 6 months from date of invoice then the said rule shall not apply. 

This means that rule 3 of PoT rules will apply which says that if invoice is not issued within prescribed time then PoT shall be date of completion of service. 

Now the question is how can 'Recipient of service' pay service tax from back date that is from the date of completion of service when he has not received the invoice. Also how can he be treated as a defaulter in paying service tax when the invoice is not being received. 

AI Summary

Point of Taxation Under Service Tax: Rule 7 vs Rule 3 in Delayed Invoice Situations for Reverse Charge Services A query was raised regarding the point of taxation under service tax on reverse charge when the service receiver does not receive the invoice for over six months, despite the service being completed monthly. According to Rule 7, the point of taxation is the payment date, but if payment isn't made within six months of the invoice date, Rule 3 applies, making the completion date the point of taxation. Respondents suggested calculating tax liability based on the service order price and paying with interest, regardless of invoice receipt. They advised ensuring timely invoice issuance to avoid complications.