Government also issues clarifications
WHILE one section of the Board was busy in issuing these notifications, yet another section was busy issuing clarifications through the PIB. Maybe that Circular will be issued today.
The Board's Press Release states:
Some doubts are being raised with respect to the levy of Swachh Bharat Cess, such as,-
(i) what would be Swachh Bharat Cess on services where service tax is being paid under the alternative rates of service tax?
(ii) what would be the value of taxable services for computation of Swachh Bharat Cess?
(iii) whether reverse charge mechanism would apply for the levy of Swachh Bharat Cess?
(iv) what would be the point of taxation for Swachh Bharat Cess ?
Board clarifies that answers to the above queries are in the provisions of sub-section (5) of Section 119 of the Finance Act, 2015 by which all the provisions of service tax as contained in Chapter V of the Finance Act, 1994 have been made applicable to Swachh Bharat Cess. It is, thus, very clear that all the provisions including those related to computation of taxable value, assessment, exemption, payment, penalty applicable to service tax would also apply in respect of Swachh Bharat Cess.
If that was the case, what was the need for these notifications? Strangely, the Board Press Release does not make any mention about the notifications.
Point of Taxation:
The Press Release clarifies that:
(i) in case where payment has been received and invoice is raised before the service becomes taxable, i.e., prior to 15th November, 2015, there is no lability of Swachh Bharat Cess.
(ii) In case payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise.
(iii) Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date.
(iv) Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.
Board concludes that all issues relating to Swachh Bharat Cess are addressed in the Service Tax provisions itself by virtue of the applicability of Chapter V of the Finance Act, 1994 and the rules made thereunder.