TMI BlogTaxability of newly made ‘taxable services’X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxability of newly made ‘taxable services’ - By: - Bimal jain - Service Tax - Dated:- 1-4-2015 - - Taxability of newly made taxable services The Finance Bill, 2015 vide Clause 107 has proposed certain amendments in the Negative List of services given under Section 66D of the Finance Act, 1994 ( the Finance Act ) thereby removing certain services from the Negative List. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow, in this case, the issue may crop up that the services rendered prior to the date of notification are exigible to Service tax when payments for such services are received later or invoices pertaining to services are raised later. Levy and Collection of Service tax under the Finance Act In any taxing statute, the statutory provision containing the charging Section is of foremo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st importance. It is well settled law that levy of tax is one thing and collection thereof is quite different thing. Once the levy is attracted, the collection of tax may be at any different point/stage/ event. Under the Finance Act , Section 66B of the Finance Act is the charging Section which levy Service tax on taxable services . We are reproducing herewith Section 66B of the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce Act for the ease of convenience: 66B . Charge of service tax on and after Finance Act, 2012 . There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. on the value of all services, other than those services specified in the negative list , provided or agreed to be provided in the taxable territory by one person to anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her and collected in such manner as may be prescribed . The literal interpretation of the charging Section 66B of the Finance Act means that the levy of Service tax is on those service other than the one specified in the Negative List , provided or agreed to be provided . However, the collection of Service tax may be shifted to any point/ stage/event, in any manner, as prescribed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Rules made in this behalf. Further as already quoted above, the Hon ble Supreme Court of India in the case of Association of Leasing and Financial Service Companies Vs. Union of India [ 2010 (10) TMI 4 - SUPREME COURT OF INDIA ] specifically observed that the taxable event under the Service tax law is the rendition of service. Now, in view of the above discussions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the levy of Service tax is on the provision of service and accordingly, the service must be taxable service at the time of its rendition in order to attract Service tax levy. In other words, if at the time of rendition of service, it is covered under the Negative List, then as per Section 66B of the Finance Act , no Service tax may be levied on the same irrespective of the date of its payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r raising of invoice. However, in this regard, Rule 5 of the POT Rules governing Point of taxation in case of new services provides contradictory provisions. Rule 5 of the POT Rules Rule 5 of the POT Rules provides that where a service is charged to tax for the first time, then: (a) no tax shall be payable to the extent the invoice has been issued and the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment received against such invoice before such service became taxable; Our Comments: As per this Rule, No Service taxis payable even if services are rendered after such service becomes taxable only when the invoice has been issued and the payment received against such invoice before such service became taxable. (b) no tax shall be payable if the payment has been received befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the service becomes taxable and invoice has been issued within 14 days of the date when the service is taxed for the first time. Manifestly, the stated Rule provides that in cases of levy on new services, irrespective of date of completion of service, Service tax shall be payable if the payment is received on or after the date of levy and if the invoice is not issued within 14 days of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of levy. Key concerns: In view of the above discussed provisions, the matter is subjected to debate as to whether Service tax would be leviable on a service which was not a taxable service at the time of its rendition as being covered under the Negative List, merely because its payment is received on or after the date of levy and the invoice is not issued within 14 days of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of levy. Here it would not be out of place to mention that POT Rules were framed by the Central Government in exercise of the powers conferred under Section 94 of the Finance Act and such delegated legislation cannot be extended to go beyond the vires of the Finance Act . - - Scholarly articles for knowledge sharing authors experts professionals Tax Management India - taxm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... 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