The Service Tax Department vide Circular No.158/9/2012-ST dated 8^th May 2012 demanded differential service tax of 2% in respect of 8 categories of service providers who were required to pay service tax on receipt basis even after introduction of Point of Taxation Rules, 2011.

The aforesaid Circular was challenged in “Delhi Chartered Accountants Society v UOI” before the Hon’ble Delhi High Court.

The matter was listed before the Division Bench of Hon’ble Acting Chief Justice A.K. Sikri and Hon’ble Mr. Justice Rajiv Sahai Endlaw. Mr. Ruchir Bhatia, Advocate appeared on behalf of the Petitioner; and I am pleased to inform you that the Hon’ble Court was pleased to hear; and after hearing was pleased to stay (the coercive recovery of) the differential  demand of service tax of 2% on services provided and invoices issued prior to 01.04.2012 by all the 8 categories of professionals including Chartered Accountants.

 

Rakesh Chitkara, Advocate

Differential service tax stay suspends coercive recovery for professionals on pre-rule invoices, protecting taxpayers pending adjudication. A departmental circular demanded a differential service tax from eight categories of professionals who paid tax on receipt basis despite the Point of Taxation Rules, 2011. The Delhi High Court granted an interim stay on coercive recovery of the challenged differential demand for services and invoices issued before the relevant cutoff, preventing immediate enforcement against the affected professionals while the legal challenge is pending.