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Unit 7: Collection and Recovery of Service Tax and Assessment Procedure

Self Assessment Notes

Fill in the blanks:
1. The. ..................................... Ministry has decided to take a relook at the recent move to
collect service tax on an accrual basis.
2. The point of. ..................................... rule determines the point in time when the services
would be deemed to be provided.
3. The Finance Act of. ..................................... further extended the scope of service tax to cover
a larger number of services rendered by the following service providers, from the dates
indicated against each of them.
4. As a general rule, the time of. ..................................... of service would be earliest of the date
on which service is provided or to be provided; date on which invoice is issued; and date
of receipt of payment for a taxable service.

5. The Finance Ministry’s. ..................................... to review this move comes in the wake of
representations from many industry associations, who have sugg ested thatstatus quo be
maintained and service tax collections be continued on receipt basis.

7.3 Administrative Mechanism

Service Tax is administered by the Central Excise & Service Tax Commissionerates and the
Service Tax Commissionerates working under the Central Board of Excise & Customs,
Department of Revenue, Ministry of Finance, Government of India. LTUs are also collecting
Service Tax in respect of the Large Tax Paying units registered with them. The unique feature of
Service Tax is reliance on collection of tax, primarily through voluntary compliance.

Government has from the very beginning adopted a flexible approach concerning Service Tax
administration so that the assessees and the general public gain faith and trust in the tax measure
so that voluntary tax compliance, one of the avowed objectives of the Citizens Charter, is
achieved. Substantive and procedural liberalization measures, adopted over the years for this
purpose, are clear manifestations of the above approach. Following are some of the measures
adopted in that direction:

(i) Under Section 67 of the Finance Act, 1994, Service Tax is levied on the gross or aggregate
amount charged by the service provider on the receiver. Rule 6(1) of the Service Tax Rules, 1994
has provided that Service Tax shall be paid to the credit of the Government account in respect of
the services deemed to be provided as per the rules framed in this regard. Point of Taxation
Rules, 2011 has provided the point in time when a service shall be deemed to have been provided;
Rule 3 of the said Rules provides that for the purposes of these rules, unless otherwise provided,
‘point of taxation’ shall be,-

(a) the time when the invoice for the service provided or to be provided is issued:
Provided that where the invoice is not issued within 14 days of the provision of the service, the
point of taxation shall be date of such completion.
(b) In a case, where the person providing the service, receives a payment before the time specified
in clause (a), the time, when he receives such payment to the extent of such payment.
Explanation – For the purpose of this rule, wherever any advance by whatever name known, is
received by the service provider towards the provision of taxable service, the point of taxation
shall be the date of receipt of each such advance.

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