INVOICE FOR SERVICE TAX

[Dr. Sanjiv Agarwal]

Records as per Service Tax Rules, 1994

According to Rule 5 of Service Tax Rules, 1994, records include computerized data and means the record as maintained by an assessee in accordance with the various laws in force from time to time. Records maintained as such shall be acceptable to Central Excise Officer. Every assessee is required to furnish to the Central Excise Officer at the time of filing his return for the first time a list of all accounts maintained by the assessee in relation to Service Tax including memoranda received from his branch offices. This intimation may be sent alongwith a covering letter while filing the service tax return for the first time.

The assessee should maintain such records as would enable him to -

(i)    calculate value of taxable services as per provisions of section 67;

(ii)   calculate service tax liability correctly;

(iii)  ensure that proper credit of service tax on input services is availed.

Invoice

Rule 4A prescribes that taxable services shall be provided and input credit shall be distributed only on the basis of a bill, invoice or challan. Such bill, invoice or challan will also include documents used by service providers of banking services (such as pay-in-slip, debit credit advice etc.) and consignment note issued by goods transport agencies. Rule 4B provides for issuance of a consignment note to a customer by the service provider in respect of goods transport booking services.

These documents should disclose the required information about service provided or agreed to be provided, service provider and receiver of service.

Rule 4A prescribes that taxable services are to be provided or credit has to be distributed on invoice, bill or challan only. Such documents should be serially numbered and shall contain —

(i)    name, address and registration number of service provider,

(ii)   name and address of service receiver,

(iii)  description, classification (omitted w.e.f. 1-7-2012) and value of taxable service, and

(iv)  service tax payable thereon.

In case of banking services, such details like serial number and address of person may not be available. In case of goods transport services, consignment note or any other document containing the prescribed particulars will also be included in such documents. Similar requirement will have to be fulfilled by input service distributors. W.e.f. 1st April, 2005, the invoice/challan/bill etc. have to be issued within 14 days from the completion of provision of services or receipt of payment whichever is earlier (vide Notification No. 7/2005-ST dated 1-3-2005).

Notification No. 23/2005-ST dated 07.06.2005 provided that where any payment towards the value of taxable service is not received and such taxable service is provided continuously for successive periods of time and the value of such taxable service is determined or payable periodically, an invoice, a bill, or as the case may be, a challan shall be issued by a person providing such taxable service, not later than fourteen days from the last day of the said period.

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.

Consignment Note

Rule 4B provides that any goods transport agency which provides goods transport services shall issue a consignment note to the customers in prescribed proforma containing the following information -

(a)     Serial number

(b)     Name of the consignor and consignee

(c)     Registration number of the goods carriage in which the goods are transported

(d)     Details of goods transported

(e)     Details of the place of origin and destination

(f)      Person liable for paying service tax whether consignor, consignee or the goods transport agency.

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.

Invoice by service provider under reverse charge - Suggestions

Under reverse charge mechanism, service provider should note to also mention the following particulars -

(i)        amount of Service Tax based on his share of Service Tax liability, if any, (which service recipient is required to pay to the service provider) - in case of joint or proportionate reverse charge liability.

(ii)      fact that entire amount of Service Tax on the invoice is payable by the service recipient under reverse charge (if so).

(iii)    invoice amount is inclusive / exclusive of applicable Service Tax.

(iv)   alternatively, in case of proportionate reverse charge, service provider should charge Service Tax only on that part of the invoice for which he is liable to pay and wants to recover from the service recipient and mention that balance amount is payable by the service recipient.