Controversy Concerning Price of Service Tax

Historical past of Part 67A: Part 67A of the Finance Act, 1994 was launched by The Finance Act, 2012 with impact from 28-05-2012 which is reproduced beneath: “67A. The rate of service tax, value of a taxable service and rate of exchange, if any, shall be the rate of service tax or value of a taxable service or rate of exchange, as the case may be, in force or as applicable at the time when the taxable service has been provided or agreed to be provided. Explanation.-For the purposes of this section, “price of trade” means the rate of exchange determined in accordance with such rules as may be prescribed”. Plain studying of the above provision recommend that the speed of service tax prevailing on the date of provision of service shall be related for the needs of dedication of service tax legal responsibility. Nonetheless, such an interpretation would make the Level of Taxation Guidelines, 2011 redundant for the needs of figuring out service tax legal responsibility which was the principle goal of framing such guidelines. After the insertion of part 67A, the assessee, professionals and the tax officers have been confused and divided on the problem. A doubt rose within the minds of many who the above part has restricted the scope of Level of Taxation Guidelines, 2011 (POT Guidelines) as a result of it’s nicely settled legislation that the provisions contained within the Act has overriding impact over the provisions contained within the Guidelines made thereunder. Many consultants have been of the view that the POT Guidelines was redundant to the extent of battle with part 67A. So, it was being interpreted that as per part 67A, price in pressure or the speed of service tax on the date of completion of provision of service shall be the relevant price of service tax and the POT Guidelines remained related just for the aim of figuring out the due date of fee of tax. Creator’s Interpretation of Current Provision: An important issue for figuring out the speed of service tax is the purpose in timewhen the service has been supplied or agreed to be supplied. The powers to make guidelines to find out the cut-off date has been conferred on the Central Authorities beneath part 94 of the Act as beneath: 94. Energy to make guidelines. – (1) The Central Authorities could, by notification within the Official Gazette, make guidelines for finishing up the provisions of this Chapter. (2) Specifically, and with out prejudice to the generality of the foregoing energy, such guidelines could present for all or any of the next issues, specifically: – (a) assortment and restoration of service tax beneath sections 66B and 68; … … (hhh) the date for dedication of price of service tax and the place of provision of taxable service beneath part 66C; In train of the powers conferred as above, beneath part 94(2)(a) and (hhh), the Central Authorities issued Notification No. 18/2011 dated 01-03-2011 which is called Level of Taxation Guidelines, 2011 and is made efficient from 01-04-2011. Underneath Rule 2(e) of POT Guidelines, the ‘Level of Taxation’ means the purpose in timewhen a service SHALL be DEEMED to have been supplied. The phrase showing in part 67A, ‘as relevant on the time when the taxable service has been supplied or agreed to be supplied’ means the cut-off date when a service shall be deemed to have been supplied after making use of the related guidelines of the POT Guidelines. Final however not the least, the aim of inserting part 67A was clearly talked about in Explanatory Memorandum to Union Funds 2012-13 beneath Service Tax Level III (1) which is self explanatory and reproduced as beneath: “A new section 67A is being inserted to prescribe that the value of taxable service (particularly in the case of import and export of taxable services) and the rate of tax shall be determined in terms of Point of Taxation Rules, 2011”. Thus, on the idea of above evaluation, it might be interpreted that if Part 67A is learn in concord with POT Guidelines, the service tax quantity must be computed on the price of service tax in pressure as per POT Guidelines and never on the date of provision of service per-se. However the controversy endured resulting in pointless litigation and uncertainty.

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