Liability for payment of tax against advance billing-reg

[N Balachandran]

Sir,

I would like to have the clarify on the following in respect of service tax liability:

1. Invoice towards advance payment of 5% of the contract value raised prior to March 2012 but still the payment for the same  not received from the Customer?

My question is here,

a) Are we liable for payment of Service tax on the same month when we raised the invoice?.  or  When the service tax becomes payable on billing or Realisation of amount from Customer?

b) Since the customer not willing the release the service tax payment as asking us to produce the documentary evidence for having the paid the tax to the dept?.  Is it correct?.

c) Is it legally customer is correct to ask the documentary evidence for having paid the tax?

 2. When we engage subcontractors ( Partnership firm ) for execution of works contract, the service tax has to be shown in their bill 100% of tax amount or only 50% of tax amount as the contractee is liable for remittance of Service tax ( 50% of tax ) under Reverse Charge Mechanism?

Kinldy clarify

Regards

N.Balachandran

AI Summary

Point of taxation: invoice issuance triggers service tax liability, payable by due date irrespective of receipt.
Under Rule 3 of the Point of Taxation Rules, issuance of an invoice for services-including advance billing-constitutes the point of taxation, making service tax payable by the invoicing month regardless of receipt. An invoice showing service tax suffices for the recipient to claim credit; recipients lack statutory entitlement to demand proof of tax deposit. Partial reverse charge for works contracts applies where the provider is an individual/HUF/partnership and the recipient a body corporate: the contractee declares the gross taxable value and its 50% tax liability under Rule 4A, while the provider accounts for the remaining tax in line with applicable timing rules.