RECORDS AND INVOICES IN SERVICE TAX

[Dr. Sanjiv Agarwal]

Co-Author: Nikita Agarwal  ACA, ACS

Taxable service to be provided or credit to be distributed on invoice, bill or challan (Rule 4A of Service Tax Rules, 1994)

Every person providing taxable service shall not later than  thirty days from the date of provision of  such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier, issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him in respect of such taxable service  provided or agreed to be provided and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely:—

(i)     the name, address and the registration number of such person;

(ii)    the name and address of the person receiving taxable service

(iii)   description and value of taxable service provided or agreed to be provided; and

(iv)   the service tax payable thereon.

In case the provider of taxable service is a banking company or a financial institution including a non-banking financial company providing service to any person, an invoice, a bill or, as the case may be, challan shall include any document, by whatever name called, whether or not serially numbered, and whether or not containing address of the person receiving taxable service but containing other information in such documents as required above.

In case the provider of taxable service is a goods transport agency, providing service to a customer, in relation to transport of goods by road in a goods carriage, an invoice, a bill or, as the case may be, a challan shall include any document, by whatever name called, which shall contain the details of the consignment note number and date, gross weight of the consignment and also contain other information as required.

In case the provider of taxable service is a banking company or a financial institution including a non-banking financial company providing service to any person, the period within which the invoice, bill or challan, as the case may be, is to be issued, shall be forty-five days. In case the provider of taxable service is providing the service of transport of passenger, an invoice, a bill or as the case may be, challan shall include ticket in any form by whatever name called and whether or not containing registration number of the provider of service and address of the recipient of service but containing other information in such documents as required under this sub rule:

Wherever the provider of taxable service receives an amount upto rupees one thousand in excess of the amount indicated in the invoice and the provider of taxable service has opted to determine the point of taxation based on the option as given in Point of Taxation Rules, 2011, no invoice is required to be issued to such extent.

Rule 4A was amended vide Notification No. 3/2011-ST dated 1.3.2011 w.e.f. 1.4.2011, prescribing that invoice or bill or challan shall have to be issued within fourteen days of provision of service or receipt of payment towards the value of such taxable service, whichever is earlier. This implies that service provider need not wait for completion of service but raise services at the stage of provision of service. W.e.f. 1-4-2012, invoice is required to be issued within a period of thirty days (45 days in case of banking companies, NBFC). The service shall be deemed to be provided as per Point of Taxation Rules, 2011.

Invoice by input service distributor

Every input service distributor distributing credit of taxable services shall, in respect of credit distributed, issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him, for each of the recipient of the credit distributed, and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely:—

(i)    the name, address and registration number of the person providing input services and the serial number and date of invoice, bill or challan issued

(ii)   the name, and address of the said input service distributor;

(iii)  the name and address of the recipient of the credit distributed;

(iv)  the amount of the credit distributed.

In case the input service distributor is an office of a banking company or a financial institution including a non-banking financial company providing service to any person an invoice, a bill or, as the case may be, challan shall include any document, by whatever name called, whether or not serially numbered but containing other information in such documents as required.

Rule 4A states that every person providing taxable service, not later than fourteen days from the date of completion of such taxable service, or receipt of any payment towards the value of such taxable service whichever is earlier, shall issue an invoice, a bill or as the case may be, a challan signed by such person or a person authorised by him in respect of such taxable service provided or to be provided and such invoice, bill or as the case may be, challan shall be serially numbered.

Commissioner of Service tax, New Delhi has vide Trade Notice No. 15/ST/2011 dated 17.10.2011 clarified that as per Service Tax Rules, 1994, an invoice should be issued within a period of 14 days from the completion of the taxable services. The invoice needs to indicate inter-alia the value of service so completed. Thus, it is important to identify the service so completed. This would include not only the physical part of providing the service but also the completion of all other auxiliary activities that enable the service provider to be in a position to issue the invoice. Such auxiliary activities could include activities like measurement, quality testing etc., which may be essential pre-requisites for identification of completion of service. The test for the determination whether a service has been completed would be the completion of all the related activities that place the service provider in a situation to be able to issue an invoice. However, such activities do not include flimsy or irrelevant grounds for delay in issuance of invoice. The above interpretation also applies to determination of the date of completion of provision of service in case of "continuous supply of service".

W.e.f. 1-4-2012, the time period for issuance of invoice has been increased from 14 days to 30 (thirty) days. For banks, financial institutions, non-banking finance companies etc. providing banking and other financial services, time period within which the invoice, bill or challan is to be issued shall be 45 (forty five) days. (Refer Notification No. 3/2012-ST, dated 17-3-2012).

Life Insurance Policy Notices are not Invoices

Vide Circular No. 166/1/2013-ST dated 1.1.2013, CBEC has provided a clarification in respect of notices / reminders issued for life insurance policies to the effect that the reminder letters/ invoices for insurance policies not being invoices under Rule 4A of the Service Tax Rules, 1994 would not invite Levy of Service Tax.

Following are the extracts of circular -

"It has been represented by life insurance companies that in terms of the practice followed, reminder notices / letters are being issued to the policy holders to pay renewal premiums. Such reminder notices only solicit furtherance of service which if accepted by policy holder by payment of premium results in a service. Clarification has been desired whether service tax needs to be paid on the basis of such reminders.

The matter has been examined. Under the Point of Taxation Rules 2011, the point of taxation generally is the date of issue of invoice or receipt of payment whichever is earlier. The invoice mentioned refers to the invoices as issued under Rule 4A of the Service Tax Rules 1994. No tax point arises on account of such reminders. Thus it is clarified that reminder letters/notices for insurance policies not being invoices would not invite levy of service tax. In case of issuance of any invoice, point of taxation shall accordingly be determined.

The above clarification is issued only for life insurance sector."

Consignment Note

Rule 4B states that any Goods Transport Agency which provides service in relation to transport of goods by road in a goods carriage shall issue a consignment note to the customer. Where any taxable service in relation to transport of goods by road in a goods carriage is wholly exempted, the Goods Transport Agency, shall not be required to issue the consignment note.

Consignment note means a document issued by Goods Transport Agency, against the receipt of goods for the purpose of transport of goods by road in a goods carriage which is serially numbered and contains the name of the consignor and consignee, registration number of the goods carriage in which the goods are transported, details of the goods transported, details of the place of origin and destination, person liable for paying service tax, whether consignor, consignee or the Goods Transport Agency.

TR-6 (GAR 7) Challan

Rule 6(2) states that the assessee shall deposit service tax in Form TR-6 (GAR 7) or in any other manner prescribed by CBEC.

 Records (Rule 5 of Service Tax Rules, 1994)

The records including computerised data as maintained by an assessee in accordance with the various laws in force from time to time shall be acceptable.

Every assessee shall furnish to the Superintendent of Central Excise at the time of filing of return for the first time or the 31st day of January, 2008, whichever is later, a list in duplicate, of—

(i)    all the records prepared or maintained by the assessee for accounting of transactions in regard to,-

a)      providing of any service

b)       receipt or procurement of input services and payment for such input services;

c)      receipt, purchase, manufacture, storage, sale, or delivery, as the case may be, in regard of inputs and capital goods;

d)      other activities, such as manufacture and sale of goods, if any.

(ii)   all other financial records maintained by him in the normal course of business.

All such records shall be preserved at least for a period of five years immediately after the financial year to which such records pertain.

W.e.f. 1-3-2006, Service Tax Rules, 1994 were amended vide Service Tax (Amendment) Rules, 2006 vide Notification No. 05/2006-ST dated 1.3.2006 to provide as follows:

• Rule 5(3) makes it obligatory for an assessee to preserve records at least for a period of five years.
• Rule 5(4) makes it obligatory for an assessee to make available records maintained by him to a Central Excise Officer for the purpose of inspection or examination. However, such inspection or examination can be undertaken only after the written approval of the jurisdictional Assistant/Deputy Commissioner. It may also be noted that the assessee is required to make available the records in his registered premises.

In B.B. Verma v. CCE, Raipur 2010 (12) TMI 472 - CESTAT, NEW DELHI, where assessee recorded receipts on cash basis and paid service tax in part, it was held that, there is no specific provision on specific method of authority to be followed under service tax. There is no mandate under law to press assessee to change method of accounting to mercantile basis.

In Kapilansh Dhatu Udyog Pvt. Ltd v CCE, Nagpur 2011 (9) TMI 486 - CESTAT, MUMBAI, where assessee maintained proper records and book of accounts, it was held that there could be no suppression of facts. The suppression was not borne out by the records.