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Unit 7: Collection and Recovery of Service Tax and Assessment Procedure
Pooja, Lovely Professional University

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

CONTENTS
Objectives

Introduction
7.1 Levy and Assessment
7.2 Legal Provisions
7.3 Administrative Mechanism

7.4 Non-recovery of Service Tax in certain situations
7.5 Recovery of Service Tax
7.6 Assessment Procedure of Service Tax in India
7.7 Summary

7.8 Keywords
7.9 Review Questions
7.10 Further Readings

Objectives

After studying this unit, you should be able to:

 Know about collection of service Tax
 Know about Recovery of Service tax
 Understand about Assessment Procedure

Introduction

The Finance Ministry has decided to take a relook at the recent move to collect service tax on an
accrual basis. Indications are that the Finance Minister, Mr Pranab Mukherjee, may come up
with some relief for service providers on this front during his reply to the discussions on the
Finance Bill 2011 this week.
“We have received many representations on this new rule. We will take a relook and act
accordingly”, official sources said.
The Centre had, in Budget 2011-12, announced a shift in the basis of collection of service tax from
receipt basis to an accrual basis with effect from April 1. The Finance Ministry’s decision to
review this move comes in the wake of representations from many industry associations, who
have suggested that status quo be maintained and service tax collections be continued on receipt
basis.
For instance, the Federation of Indian Chambers of Commerce and Industry (FICCI) had suggested
that the new rule (Point of Taxation rule) should not be introduced and status quo be maintained.
The point of taxation rule determines the point in time when the services would be deemed to
be provided. As a general rule, the time of provision of service would be earliest of the date on

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