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 reverse charge: recipient must pay tax based on payment or completion timing, even without invoice.
Point of taxation under reverse charge ties the recipient's PoT to the date of payment, but where payment is not made within six months of the invoice date the PoT is the date of completion of service. In practice, if invoices are delayed or not received the recipient is expected to compute and pay the tax due on services consumed-potentially with interest-using contractual terms or work orders; providers are expected to issue invoices within the prescribed period and parties may amend invoice dates to avoid reporting complications.