Case Law Details
HIGH COURT OF DELHI
Delhi Chartered Accountants Society (Regd.)
V/s.
Union of India
WP (C) NO. 4456 OF 2012
AND CM NO. 9237 OF 2012
JULY 27, 2012
ORDER
1. It is the contention of the learned counsel for the petitioner that impugned Circular dated 08.05 2012 is ultra vires the Point of Taxation Rules, 2011 and even the provisions of Finance Act, 1994. Learned counsel for the petitioner has drawn our attention to Point of Taxation Rules, 2011. Rule 2(e) whereof defines Point of Taxation as under:
“(e) “point of taxation” means the point in time when a service shall be deemed to have been provided.”
2. The determination of point of taxation is provided in Rule 4 in the case of change in effective rate of tax. Sub-rule (a) thereof is relevant for our purpose which reads as under:
“4. Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a change in effective rate of tax in respect of a service, shall be determined in the following manner, namely:-
(a) in case a taxable service has been provided before the change in effective rate of tax.
(i) where the invoice for the same has been issued and the payment received after the change in effective rate of tax, the point of taxation shall be date of payment or issuing of invoice, whichever is earlier, or
(ii) where the invoice has also been issued prior to change in effective rate of tax but the payment is received after the change in effective rate of tax, the point of taxation shall be the date of issuing of invoice: or
(iii) where the payment is also received before the change in effective rate of tax, but the invoice for the same has been issued after the change in effective rate of tax, the point of taxation shall be the date of payment.”
3. The service tax in respect of a category of services was @10% before 31.03.2012 which has been increased to 12% with effect from 1.4.2012. The petitioner has raised the issue in respect of those services which were provided before 01.04.2012 and even invoices were issued before 01.04.2012 and payment is received after 01.04.2012. By impugned circular dated 08.05.2012, it is clarified that even in respect of those services which were provided before 01.04.2012 and invoices issued before that date but payment is received on or before 01.04.2012, the service tax needs to be paid at the rate of 12%.
3A. Prima facie, from the reading of Rule 4, it becomes apparent that in such case, the rate of tax would be 10% and not 12%.
4. Learned counsel for the respondents wants to take instructions in the matter. We also issue formal notice.
5. Learned counsels for the respondents accept notice Counter affidavits, if any, be filed within one week. Rejoinder within one week thereafter.
6. List for final arguments and disposal on 14th August, 2012. it is made clear that since a pure question of law is involved, even if counter affidavits are not filed, the matter shall be heard finally. In the meantime, no coercive action shall be taken for non-payment of differential service tax.
Dasti to counsels for the respondents.
CM No. 9238/2012 (for exemption)
Allowed, subject to just exceptions.
The application is disposed of.
Any updates on the above hearing scheduled on 14 August 2012?
My sincere appreciation to All the members of Delhi Chartered Accountants Association , for taking up the matter to Delhi – High court . It is quite logical service tax should not be @ Rs 12% instead of Rs 10% in the circumstances cited in the petition . Further Why lawyers services should not leveled with CA. CAs, and other professional ? Small and medium practitioners ( Chartered Accountants ) should be exempted for paying service tax and /or their limit should be raised to Rs 50, 00,000/ ( minimum ) instead of Rs 10,00,000/ – The Small and medium size practitioners in India are more than the big firms and /or other firm of Chartered Accountants ( in partnership ) who are sincerely devoted themselves for the profession and tried to assist all the regulator requirements including Service Tax by advising their clients to pay service Tax , collection of service tax suggested / collected from their clients of those firms of practitioners / Chartered Accountants are more than so-called organized firms. The efforts taken by Delhi Chartered Accountants Association is very much appreciable . Hope, the Association will take up other issues with the appropriate regulators.to quote Maimonides , the Jewish Philosopher ” The risk of wrong decision is preferable to the terror of indecision ‘
CA. Subhash Chandra Podder, FCA
Kolkata
08/08/2012
DELHI CHARTERED ACCOUNTANTS SOCIETY HAS DONE GOOD JOB. WE SHOULD RAISE THE OBJECTIONS. OUR INSTITUTE OF CHARTERED ACCOUNTANTS AND OTHER ONE’S ASSOCIATION ALSO SHOULD FILE THE CASE AGAINST THE GOVERNMENT.
Could you Please provide a copy of the said order.
good job done by CAs
Good job done by Chartered Accountants Society.
To,
Delhi Chartered Accountants Society.
Good attempt by you to challenge levy of additional tax on receipt basis (circular in this regard) when service was actually rendered when lower rate was applicable.
Levy of service tax on CA, CWA, and CS, particularly in relation to legal services is not justified- there is no intelligible differentiation between advocates and other legal professionals. This should also be challenged.
Furthermore, in case of all professionals , small service providers (who are self employed persons) and property owners better course can be to exempt them and levy service tax on service receivers – who are more organized than service providers and can handle service tax more efficiently. ST levy on service receiver shall also improve tax collection because service provided by many exempted service providers shall also become taxable.