Central Government has vide Notification No.35/2016-Service Tax dated 23.06.2016, has exempted taxable services from levy of Krishi Kalyan Cess (“KKC”) in cases which satisfies the following two conditions:
– Where invoices have been raised prior to 01.06.2016; and
– Where provision of service has been completed prior to 01.6.2016.
Accordingly, the concern of the industry that KKC shall be levied on the opening debtors i.e. remaining unpaid as on 31.03.2016 has been duly answered and no KKC shall be levied on such amounts. Though the notification is effective from 23.6.2016, payments of opening debtors as received between 01.6.2016 and 22.6.2016 can still be a cause of litigation, however, we trust that the government would read the Notification to provide relief to their assesses for such period also. It is also important to mention that the provision of service should be completed in total and no relief in terms of proportionate completion is mentioned in the notification.
Thus, the levy of KKC can be explained as under:
|Situation||Services provided||Invoice Issued||Payment received||Whether KKC applicable|
|Situation A||Before 01.06.2016||Before 01.06.2016||Before 01.06.2016||No (rule 5)|
|Situation B||Before 01.06.2016||Before 01.06.2016||After 31.05.2016||Exempted (35/2016)|
|Situation C||Before 01.06.2016||After 31.05.2016||After 31.05.2016||Yes|
|Situation D||Before 01.06.2016||On or before 14.06.2016||Before 01.06.2016||No (rule 5)|
|Situation E||Before 01.06.2016||After 14.06.2016||Before 01.06.2016||Yes|
|Situation F||After 31.05.2016||On or before 14.06.2016||Before 01.06.2016||No (rule 5)|
|Situation G||After 31.05.2016||After 14.06.2016||Before 01.06.2016||Yes|
|Situation H||After 31.05.2016||Before 01.06.2016||Before 01.06.2016||No (rule 5)|
|Situation I||After 31.05.2016||Before 01.06.2016||After 31.05.2016||Yes|
|Situation J||After 31.05.2016||After 31.05.2016||After 31.05.2016||Yes|
Note: Rule 5 refers to Rule 5 of Point of Taxation Rules, 2011.
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