Clarification on manner of collection of service tax on telephones service reg. - Service Tax - 16/10/96

This Circular has been rescinded by Circular No. 93/4/2007-ST, Dated: May 10, 2007 SERVICE TAX CIRCULAR NO 16/10/96 DATED - 15-10-1996 Service tax - Clarification on manner of collection of service tax on telephones service reg. Certain difficulties have been pointed out by the Commissioners regarding collection of service tax on telephones. After considering the matter, the following clarifications are being issued: I. ISSUE : Difference between billed amount and amount actually collected. It has been represented that there are difference between the amount of service tax to be collected (based on billed amount) and service tax actually collected. As per Sections 67(b) and 68 of Service Tax Act: (Chapter V of Finance Act, 1994) the amount of service tax has to be levied on the value of the telephone bills received during the month and the amount of service tax collected should be paid to the credit of Central Government by 15th of the following month. DECISION: The amount of service tax may be collected on the value of the taxable services, i.e. the telephone bills received during the month rather than billed. Department may not insist at this stage for reconciliation of the figures of such service tax billed and service tax collected and may place reliance on the financial control system of Telecom Department for the reconciliation of the telephone bills which would automatically mean reconciliation of service tax. II ISSUE: Actual date of crediting of service tax to the Book account of the Central Government. As per Section 68(2), the service tax collected during any calendar month shall be paid to the credit of Central Government by 15th of the following month. Rule 6(1) of Service Tax Rules, 1994 says that Secondary Switching Area (SSA) shall deposit with the designated bank in form TR-6 by 15th of the following month and collected by him on the value of taxable services. Under Sections 75 and 76 of the Act, an interest has to be charged at the rate of 1.5% of every month or part of the month by which such crediting of tax is at the rate of 1.5% of every month or part of the month by which such crediting of tax is delayed and a penalty. The field formations are in confusion as to the date of credit so as to arrive at the calculation of interest and penalty. DECISION: The first date on which the book transfer is made in the cash section of Secondary Switching Area (SSA) may be taken as the date of crediting to the Central Government Through trade notice, Commissioners of Central Excise may prescribe a document similar to one prescribed under Rule 7 of Service Tax Rules, 1994 to be filled alongwith ST-3 in case of payment through TR-6 in designated banks, by substituting entries in column 7 (Challan No. date) by this journal slip number and date so as to calculate the penalty and interest, if any, by the date given in this column.