The Hindu Business Line : Invoices made mandatory for taxable services

This regulatory requirement also applicable to the "input service distributors", whose meaning has now been spelt out in the Cenvat Credit Rules 2004 issued by the Finance Ministry on September 10.

New Delhi , Sept. 13

THE Finance Ministry has stipulated that taxable services can only be provided against serially numbered invoices, bills or challans to be issued by the service providers. The Centre has so far brought 72 services under the service tax net.

The move requiring service providers of taxable services to compulsorily issue serially numbered invoices, bills or challans comes nearly 10 years after the introduction of service tax in the country.

The Finance Ministry has now said that the invoices to be issued by the service providers would have to specify the name, address and registration number of the service provider; the name and address of the recipient of the taxable service; description, classification and value of taxable service provided or to be provided, and the service tax payable on such services.

This regulatory requirement is not confined to service providers alone. It is also applicable to the "input service distributors", whose meaning has now been spelt out in the Cenvat Credit Rules 2004 issued by the Finance Ministry on September 10.

The Revenue Department has said that input service distributors would be required to issue a serially numbered invoice, bill or challan for the credit distributed.

Some tax experts, however, said that issuance of invoices may not be "practically possible" with respect to certain taxable services where the general business practice may be unique or different. A case in point could be that of financial leasing including equipment leasing and hire purchase.

"The Finance Ministry had itself acknowledged in 2001 that in the case of leasing or hire purchase, the lease rental or hire purchase amount is recovered in equated monthly instalments (EMIs) over the period of lease or hire-purchase as indicated in the agreement through post-dated cheques, and no separate bills are raised for the monthly recovery. They (Finance Ministry) have to take care of such situations in the rules if they are going to insist on invoices," Mr J.K. Mittal, a service tax expert, told Business Line.