 "‘Old interest rates apply for failure to pay service tax in Dec 2015’")
We have to pay interest on service tax which was due in December 2015. Supposing we pay now, will the old rate of interest apply or the new rate? Can you also give the basis?
Notification 12/2014-ST dated July 11, 2014 had prescribed an interest rate of 18% for a delay of up to six months, 24% for a further delay of six more months and 30% for delay beyond one year. That notification was superseded by the new notification 13/2016-ST dated March 1, 2016, which prescribes the rate of 24% for collection of any amount as service tax but failing to pay the amount so collected to the credit of the Central government on or before the date on which such payment becomes due and 15% in other cases, except as respects things done or omitted to be done before such supersession. Notification 13/2016 came into effect on May 14, 2016, the date when the Finance Bill 2016 received the assent of the President.
Notification 12/2014-ST dated July 11, 2014 had prescribed an interest rate of 18% for a delay of up to six months, 24% for a further delay of six more months and 30% for delay beyond one year. That notification was superseded by the new notification 13/2016-ST dated March 1, 2016, which prescribes the rate of 24% for collection of any amount as service tax but failing to pay the amount so collected to the credit of the Central government on or before the date on which such payment becomes due and 15% in other cases, except as respects things done or omitted to be done before such supersession. Notification 13/2016 came into effect on May 14, 2016, the date when the Finance Bill 2016 received the assent of the President.
The phrase "except as respects things done or omitted to be done before such supersession" implies that the existing notification is replaced by the new notification to such an extent that the interest rate applicable would be the rates notified as per the notifications which were in force during the respective periods. So, the new notification changes the interest prospectively and will not apply to omission to pay service tax before May 14, 2016. So, the old rates of interest will apply in your case.
We have received an order from a company resident in India asking us to export goods to a party abroad. Can we make out a shipping bill mentioning the resident company as buyer and foreign party as consignee?
This transaction falls under the definition given in Para 9.60 of the FTP for ‘third party exports’, as exports made by an exporter or manufacturer on behalf of another exporter. In such cases, export documents such as shipping bills must indicate name of both manufacturing exporter/manufacturer and third party exporter(s). Bank Realisation Certificate, the SDF Form, export order and invoice should be in the name of third party exporter.
We have received an order from a company resident in India asking us to export goods to a party abroad. Can we make out a shipping bill mentioning the resident company as buyer and foreign party as consignee?
This transaction falls under the definition given in Para 9.60 of the FTP for ‘third party exports’, as exports made by an exporter or manufacturer on behalf of another exporter. In such cases, export documents such as shipping bills must indicate name of both manufacturing exporter/manufacturer and third party exporter(s). Bank Realisation Certificate, the SDF Form, export order and invoice should be in the name of third party exporter.
We provide online accounting and book keeping services to clients in the US. Last year we gave services worth Rs 8.2 lakh and this year we may cross Rs 10 lakh. Do we have to charge service tax to our foreign clients or pay under reverse charge mechanism?
As per Rule 3 of the Place of Provision of Services Rules, 2012, ‘the place of provision of a service shall be the location of the recipient of service’. Section 66B of Finance act, 1994 says that service tax shall be charged on services provided or agreed to be provided in the taxable territory by one person to another. In your case, the recipient of service is located outside India -- a non-taxable territory. The place of provision of your service is a non-taxable territory. So, the service you provide is not liable to tax.
As per Rule 3 of the Place of Provision of Services Rules, 2012, ‘the place of provision of a service shall be the location of the recipient of service’. Section 66B of Finance act, 1994 says that service tax shall be charged on services provided or agreed to be provided in the taxable territory by one person to another. In your case, the recipient of service is located outside India -- a non-taxable territory. The place of provision of your service is a non-taxable territory. So, the service you provide is not liable to tax.
