CBEC vide Notification No. 21/2016-Service Tax, Dated: March 30, 2016 has inserted a proviso in Rule 7 of Point of Taxation Rules, 2011 to provide that where there is a change in provisions relating to the services taxed under reverse charge/ partial reverse charge (service taken out of reverse charge application or change in % payable by recipient under reverse charge) but the service has already been provided, invoice has been issued and the payment has not been received, then in such cases the point of taxation would be the date of issuance of invoice.
[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
NEW DELHI
Notification No. 21/2016-Service Tax,
Dated: March 30, 2016
G.S.R. 370(E) In exercise of the powers conferred by clause (a) and clause (hhh) of subsection (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Point of Taxation Rules, 2011, namely:-
1. These rules may be called the Point of Taxation (Second Amendment) Rules, 2016.
2. In the Point of Taxation Rules, 2011, in rule 7, after second proviso, the following proviso shall be inserted, namely,-
“Provided also that where there is change in the liability or extent of liability of a person required to pay tax as recipient of service notified under sub-section (2) of section 68 of the Act, in case service has been provided and the invoice issued before the date of such change, but payment has not been made as on such date, the point of taxation shall be the date of issuance of invoice.”.
[F. No. B-1/4/2016-TRU]
(K. Kalimuthu)
Under Secretary to the Government of India
Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide notification No. 18/2011 – Service Tax, dated the 1st of March, 2011 vide number G.S.R. 175(E), dated the 1st of March, 2011 and was last amended vide notification No. 10/2016 – Service Tax dated 1st March, 2016 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 258(E), dated the 1st March, 2016.
As independently percieved, the Rules as first framed selves suffer from the horrid malady of mindless , impulsive , inept drafting, without any attempt to keep in focus the several angles of relevance for imposition of the tax. That is, apart from and in addition to the two purposes namely, ‘collection’ and ‘rate’ to apply made a specific mention of in the preamble. As such, it is now left only to those professionals, in active field practice so also experts having a special knowledge / intimacy with the so called service tax to volunteer and strive their best to, after a painful study as needed, share their considered viewpoints with the rest, not barring the concerned authorities empowered / duty bound to look through and make the best use thereof , to the end of suitably modifying and encoding the rules so as to render the function of rule making as meaningful and workable as possible.
The foregoing personal observations are open to purposeful review and comment from eminent specialists on the subject topic ; especially those having a reasonable exposure and expertise in intenational tax regime, so as to serve the ultimate aim of ‘the common good’, in its altruistic sense.
Await display of my comment posted y’day;for me to put in my addl. input/feedback, before my chain of thoughts suffers a break !
Yes; the clarity which the amended rule purports to bring about , as tentatively perceived, is most wanting . For that matter, even the rules as originally framed and made law are , it appears, in certain respects, quite difficult to understand ; not only for the administering authorities but also to tax experts at large for purposes of applying or following with ease. Pithily stated, in framing the rules, the fundamental principles considered / believed to have been well settled, once for all, governing the rudimentary concepts of accrual, renceipt , etc., and in turn , accordingly determining the point in time for fixation of tax liability do not seem to have been kept in full focus.
Needless to add, what is called for is a total look through then subject rules, a truly mindfull review, and modifications as are found warranted.
International tax experts , eminent among them , in field practice, it is hoped, would not fail but
fervently seize the opportunity to volunteer and be of active assistance to the empowered authorities to the end of accomplishing the needed outcome.
Please explain this notification, unable to understand actual changes