Whether Service Tax is payable on Proforma Invoice

[Narayan Mahale]

Whether under service tax rules, service tax is payable on Proforma Invoice?. Few of the customers, without knowing the requirement under statutory provisions, demand for a proforma invoice, which has no validity under Sales Tax or Service Tax. Proforma being a mere estimate no expenses or assets could be booked under accounts.

Despite this, some of the service receiver ask for Proforma Invoice as a precondition of release of Adhoc or advance payments.

Therefore, whether under service tax read with point of taxation rules, 2011, service tax is payable or not?

No Advance has been received or service has been provided but as per terms of agreement service provider is required to issue a Proforma Issue?

Please clarify this.

AI Summary

Service tax on proforma invoices is not payable because only statutory invoices trigger tax liability under the Finance Act.
The statutory scheme recognises a valid Invoice for triggering service tax; a Proforma Invoice is a preliminary commercial estimate and is not a recognised tax document. Issuance of a proforma invoice alone does not create service tax liability under the point of taxation rules, and tax consequences depend on receipt of consideration or issuance of a statutory invoice.