Service Tax – By: – C.A. Surender Gupta – Dated:- 6-8-2010 – CBEC has issued a draft circular addressing various issues relating of determination of rate of taxes in the various circumstances [See Draft Rules with Explanatory Notes] While analyzing the draft circular, I got perplexed with the query, that what is the relevant date which in my view CBEC must address while issuing final rules otherwise it would lead more confusions and complexities. What is relevant date? Since, CBEC has tried to introduce clarity and certainty in the matter of levy and collection of service tax particularly in situations of change of rate of service tax or imposition of service tax on new services and linked this issue with the time of receipt of payment, CB
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ied as under: 1 Cash transaction Relevant date shall be the date when cash is actually received by the service provider. 2 Transfer through negotiable instruments e.g. Cheque / DD etc. Relevant date shall be the date when the instrument is tendered with the bank by the service provider for clearance provided the same is honored. Where the instrument is dishonored, it should be treated as non receipt. 3 Electronic transfer e.g. NEFT / RTGS / Credit Cards etc. Relevant date shall be the date when the payment is received by the service provider 4 Barter transactions / exchange of services or receipt of consideration in lieu of money Relevant date shall be the date when the services shall be performed actually by the each party. What is relevan
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5 the term date of receipt of payment has been used. In Rule 6 of the Draft Rules, the concept of date of receipt of payment is used. In rule 7 of the Draft Rules, again contrary terms have been used which again may lead to confusion. In Rule 7(a)(i) and (ii), the concept of date of payment has been used whereas in rule 7(a)(iii) the concept of date of receipt of payment has been used. In rule 8 of the Drafts Rules, the concept of date of payment has been used. In rule 9 of the Draft Rules, the concept of date of receipt has been used. Justification It may be so that Board has something different in mind for using different terms at different places, but those aspects must be clarified. The use of concept of the term date of payment seems t
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