Circular 158/9/2012 of 8th May Stayed by Delhi High Court on 27 July

To:

From: rebecca.andrews88@yahoo.in
Date: Sat, 28 Jul 2012 12:24:16 +0800
Subject: [aaykarbhavan] Circular 158/9/2012 of 8th May Stayed by Delhi High Court on 27 July

The Service Tax Department vide Circular No.158/9/2012-ST dated 8th May 2012 demanded differential service tax of 2% in respect of 8 categories of service providers who were required to pay service tax on receipt basis even after introduction of Point of Taxation Rules, 2011. The aforesaid Circular was challenged in Writ Petition (c) No. 4456 of 2012 titled "Delhi Chartered Accountants Society v UOI" before the Hon'ble Delhi High Court. The matter was listed before the Division Bench of Hon'ble Acting Chief Justice A.K. Sikri and Hon'ble Mr. Justice Rajiv Sahai Endlaw. Mr. Ruchir Bhatia, Advocate appeared on behalf of the Petitioner; and I am pleased to inform you that the Hon'ble Court was pleased to hear; and after hearing was pleased to stay (the coercive recovery of) the differential  demand of service tax of 2% on services provided and invoices issued prior to 01.04.2012 by all the 8 categories of professionals including Chartered Accountants. Text of Notification is as follows : Circular No. 158/9/ 2012 – ST   F.No 354/69/2012- TRU Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs Tax Research Unit Room No 146, North Block, New Delhi Dated : 8th May 2012 To Chief Commissioner of Customs and Central Excise (All) Chief Commissioner of Central Excise & Service Tax (All) Director General of Service Tax Director General of Central Excise Intelligence Director General of Audit Commissioner of Customs and Central Excise (All) Commissioner of Central Excise and Service Tax (All) Commissioner of Service Tax (All)   Madam/Sir,   Subject: - Clarification on Rate of Tax - regarding.         1.             The rate of service tax has been restored to 12% w.e.f. 1st April 2012.  Representations have been received requesting clarification on the rate of tax applicable wherein invoices were raised before 1st April 2012 and the payments shall be after 1st April 2012. Clarification has been requested in case of the 8 specified services provided by individuals or proprietary firms or partnership firms, to which Rule 7 of Point of Taxation Rules 2011 was applicable and services on which tax is paid under reverse charge. 2.             The rate of service tax prevalent on the date when the point of taxation occurs is rate of service tax applicable on any taxable service. In case of the 8 specified services and services wherein tax is required to be paid on reverse charge by the service receiver the point of taxation is the date of payment. Circular No 154/5/2012 – ST dated 28th March 2012 has also clarified the same. Thus in case of such 8 specified services provided by individuals or proprietary firms or partnership firms and in case of services wherein tax is required to be paid on reverse charge by the service receiver, if the payment is received or made, as the case maybe, on or after 1st April 2012, the service tax needs to be paid @12%. 3.             The invoices issued before 1st April 2012 may reflect the previous rate of tax (10% and cess). In case of need, supplementary invoices may be issued to reflect the new rate of tax (12% and cess) and recover the differential amount. In case of reverse charge the service receiver pays the tax and takes the credit on the basis of the tax payment challan. Cenvat credit can be availed on such supplementary invoices and tax payment challans, subject to other restrictions and conditions as provided in the Cenvat Credit Rules 2004. 4.             Trade Notice/Public Notice may be issued to the field formations accordingly. 5.             Please acknowledge the receipt of this circular. Hindi version to follow.   (Dr. Shobhit Jain) OSD, TRU Fax: 011-23093037   Kind regards, Rebecca Andrews