Rates of Service Tax or Rates of GST on services provided or to be provided shall have link to payment in certain situations says CBEC in Draft Rules – But, what is the relevant date?
By: – Surender Gupta
Service Tax
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
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onsidered to be received on or after 1.72010, such service provider is liable to pay service tax.
Therefore, in my view, the relevant provisions for determining the date of payment may be clarified 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 provid
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ontrary terms have been used, which may lead to more confusion:
In the opening para of Rule 5 and in the sub rules (a) to (c) the term or concept of the term “date of payment” has been used. Whereas in sub rule (d) of rule 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
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