Service tax payment on works contract under reverse charge method.

[vinay wakde]

Kindly clarify if the payment against the Bills/invoices under works contract is made during July,12  for the services received in June,12. In this case, whether we have to pay 50% service tax under reverse charge method? or we have to pay service tax as per old provisions. 

Regards,

VINAY

 

[JAMES PG]

Please refer to Point No 10.1.7 of the Education Guide on Service Tax :

10.1.7 Is the reverse charge applicable on services provided and complete before 1.7.2012 though payments were made after 1.7.2012?

For any service whose point of taxation has been determined and whole liability affixed before 1.7.2012 the new provisions will not apply. Merely because payments are being made after 1.7.2012 will not add any additional liability on the service receiver in respect of such services.

[PRAVEEN KUMAR]

AS PER OLD PROVISION

Sir,

I have one practical point, even if pay the payment in ateror l , for the services provided before july , the justification at the time of assessment is difficult. basically as per the ST rules with in 30days of after providing the service the invoice to be raised & to be accounted. hence in the case of payment in july for june service is fine. late july payment, better the Invoice date to be considered.

AI Summary

Reverse charge applicability: services with taxation point fixed before change remain governed by prior liability rules despite later payments.
Where the point of taxation and whole tax liability for services were determined and affixed before the change in law, the reverse charge mechanism does not apply and later payments do not create additional liability; invoice timing and accounting within the prescribed period are relevant for demonstrating that liability was fixed under the prior provisions.