Payment of service tax on services rendered prior to 18-4-2006 – Commissioner clarifies
The rate of service tax has been increased to 12% from 18-4-2006; now what would be rate of service tax for service rendered prior to 18-04-2006 but payment received later?
The Commissioner of service tax, Mumbai has the answer. He says in Trade Notice No. 3/2006 Service tax dated 20-04-2006 that for payments received after 18-04-2006, service tax has to be paid at the enhanced rate. Perhaps the learned commissioner is not aware of the proviso to rule 6(1) Service Tax rules which clearly stipulate that the time of payment received is not the criterion for deciding the taxability. It would be apparent even to a common man that for the service rendered prior to 18-04-2006, tax cannot be levied at 12% just because payment is received after 18-04-2006. But commissioners are not ordinary mortals and they have the right to confuse even when issues are very clear. Now even before you can say Service Tax, other Commissioners will start demanding Service Tax at the higher rate for the lower period. What happened to Board’s instructions barring Commissioners from issuing trade notices on policy matters? If confused, you must let there be one solitary authority to do so and the Board is perhaps the best equipped authority.