Notification
No. 18/2011 – Service Tax
New Delhi, the 1st March, 2011
G.S.R. (E).- In exercise of the powers conferred under clause (a) and clause
(hhh) of subsection
(2) of section 94 of the Finance Act, 1994, the Central Government hereby makes
the
following rules for the purpose of collection of service tax and determination
of rate of service tax,
namely,-
- Short title and commencement.-(1) These rules shall be called the Point of
Taxation Rules, 2011.
(2) They shall come into force on the 1st day of April, 2011.
- Definitions.- In these rules, unless the context otherwise requires,-
- “Act” means the Finance Act, 1994 (32 of 1994);
- “associated enterprises” shall have the meaning assigned to it in section
92A of the Income
Tax Act, 1961 (43 of 1961);
- “continuous supply of service” means any service which is provided, or to be
provided
continuously, under a contract, for a period exceeding three months, or where
the Central
Government, by a notification in the Official Gazette, prescribes provision of a
particular service to be a continuous supply of service, whether or not subject to any
condition;
- “invoice” means the invoice referred to in rule 4A of the Service Tax
Rules, 1994 and shall
include any document as referred to in the said rule;
- “point of taxation” means the point in time when a service shall be deemed
to have been
provided;
- “taxable service” means a service which is subjected to service tax, whether
or not the same
is fully exempt by the Central Government under Section 93 of the Act;
- Determination of point of taxation.- For the purposes of these rules, unless
otherwise stated,
„point of taxation‟ shall be determined in the following manner, namely:-
- a provision of service shall be treated as having taken place at the time
when service is
provided or to be provided; and
- if, before the time specified in clause (a), the person providing the
service issues an invoice
or receives a payment, the service shall, to the extent covered by the invoice
or the payment
made thereof, be deemed to have been provided at the time the invoice was issued
or the
payment was received, as the case may be, whichever is earlier.
Explanation.- For the purposes of this rule, wherever any advance, by whatever
name known,
is received by the service provider towards the provision of taxable service,
the point of
taxation shall be the date of receipt of each such advance.
Explanation 2.- For the purposes of this rule, in respect of services taxable
under section 66A
of the Act, the point of taxation under clause (b) shall be the date on which
the invoice is
received, or the payment is made, as the case may be, whichever is earlier.
- Determination of point of taxation in case of change of rate of tax.-
Notwithstanding anything
contained in rule 3, the point of taxation in cases where there is a change of
rate of tax in respect of
a service, shall be determined in the following manner, namely:-
- in case a taxable service has been provided before the change of rate,-
- where the invoice for the same has been issued and the payment received
after the
change of rate, the point of taxation shall be date of payment or issuing of
invoice,
whichever is earlier; or
- where the invoice has also been issued prior to change in tax rate but the
payment is
received after the change of rate, the point of taxation shall be the date of
issuing of
invoice; or
- where the payment is also received before the change of rate, but the
invoice for the
same has been issued after the change of rate, the point of taxation shall be
the date
of payment;
- in case a taxable service has been provided after the change of rate,-
- where the payment for the invoice is also made after the change in tax rate
but the
invoice has been issued prior to the change of tax rate, the point of taxation
shall be
the date of payment; or
- where the invoice has been issued and the payment for the invoice received
before
the change of tax rate, the point of taxation shall be the date of receipt of
payment or
date of issuance of invoice, whichever is earlier; or
- where the invoice has also been raised after the change of rate but the
payment has
been received before the change of rate, the point of taxation shall be date of
issuing of invoice.
- Payment of tax in cases of new services.- Where a service, not being a
service covered by rule 6,
is taxed for the first time, then, –
- no tax shall be payable to the extent the invoice has been issued and the
payment received
against such invoice before such service became taxable;
- no tax shall be payable if the payment has been received before the service
becomes taxable
and invoice has been issued within the period referred to in rule 4A of the
Service Tax Rules,
1994.
- Determination of point of taxation in case of continuous supply of service.-
(1) In case of
continuous supply of service, the whole or part of which is determined or
payable periodically or from
time to time, shall be treated as separately provided at the date on which the
payment is liable to be
made by the service receiver, if such date is specified in the contract.
(2) If, before the time specified in sub-rule (1), the person providing the
service issues an invoice
or receives a payment, the service shall, to the extent covered by the invoice
or the payment made
thereof, be deemed to have been provided at the time the invoice was issued or
the payment was
received, as the case may be, whichever is earlier.
Explanation.- For the purposes of this rule, wherever any advance, by whatever
name known,
is received by the service provider towards the provision of taxable service,
the point of
taxation shall be the date of receipt of each such advance.
Explanation 2.- For the purposes of this rule, in respect of services taxable
under section 66A
of the Act, the point of taxation under sub-rule (2) shall be the date on which
the invoice is
received, or the payment is made, as the case may be, whichever is earlier.
- Determination of point of taxation in case of associated enterprises.- The
point of taxation in
respect of associated enterprises shall be the date on which the payment has
been made, or invoice
under rule 4A of the Service Tax Rules, 1994 has been issued, or the date of
debit or credit in books
of accounts of the person liable to pay service tax, whichever is earlier.
- Determination of point of taxation in case of copyrights, etc. .- In respect
of royalties and
payments pertaining to copyrights, trademarks, designs or patents, where the
whole amount of the
consideration for the provision of service is not ascertainable at the time when
service was performed,
and subsequently the use or the benefit of these services by a person other than
the provider gives rise
to any payment of consideration, the service shall be treated as having been
provided each time when
a payment in respect of such use or the benefit is received by the provider in
respect thereof, or an
invoice is issued by the provider, whichever is earlier.
- Savings.- Nothing contained in these rules shall be applicable in case of
invoices issued prior to the
date from which these rules become effective.