Is there a provision to raise supplementary invoices by service providers?
DDT received a mail from a concerned netizen, the excerpts of which are as follows:
“Whether any circular/public notices etc have been issued by the department having effect that the service provider can pass the service tax liability through Supplementary invoice. This supplementary invoice will have the cross reference of all the invoices issued earlier without charging service tax.”
As this issue may be of concern to service providers at large, we decided to put this issue in the public domain and also state our viewpoint on this issue as follows:
In terms of Rule 4A of Service Tax Rules, 1994, every person providing taxable service shall issue an invoice, signed by such person (or a person authorized by him), 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. Such invoice should contain all the details as specified in the said Rule.
Further, in cases 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 shall be issued by the person providing such taxable service, not later than fourteen days from the last day of the said period.
It may be noted that there is no specific provision in the Finance Act, 1994 or the Rules made there under providing for raising a supplementary invoice. Further, it should also be noted that there is no specific bar in raising such supplementary invoices by service providers. Therefore, what is not specifically barred by law may be regarded as impliedly allowed by it especially when there is a legal precedent allowing manufacturers to issue supplementary invoices which can be utilized by the buyers to avail CENVAT credit of any differential duties indicated in such supplementary invoices (subject to the conditions prescribed in the relevant rule i.e. Rule 9(b) of CENVAT Credit Rules, 2004).
In the instant case, as indicated in the mail above, if invoices are raised in time but service tax payable is not paid within the due date, then such service tax liability may be discharged with applicable interest immediately. After discharging the said service tax liability if any, with applicable interest, an invoice may be raised on the client/s giving references to the previous invoices and indicate the service tax payment details so as to enable the client/s to avail CENVAT Credit of the said service tax paid by the service provider.
Therefore, raising a supplementary invoice indicating the service tax payment details does not violate any provision of law so long as the service tax payable is discharged with applicable interest and the payment details are intimated to the jurisdictional service tax authorities and also disclosed in the periodical returns.
Since this issue has wider ramifications and may be troubling the service providers across the country, we also request the CBEC to issue a detailed clarification in this regard for benefit of all service providers.