The Hindu Business Line : `Mandatory invoices on advance payments can prevent misuse'

SERVICE tax payments received in advance, as announced in the Union Budget with regard to mandatory issue of invoices within 14 days, in the event of deals not materialising can on their own be adjusted by the assessee himself, and there is no need for filing any refund application.

Speaking at an interactive session on indirect tax proposals in the Union Budget, organised by the Merchants Chamber of Commerce here, Mr Kamal Jyoti, Commissioner of Service Tax, Kolkata, said such relief would not be allowed for any other case where refund applications have to be made to the department.

Describing the proposed new provisions pertaining to service taxas "extraordinary piece of legislation", he said the provision of issue of mandatory invoices on advance payments within 14 days has been brought in to prevent misuse and the deliberate delays that occur in this regard.

Seeking a re-look at this provision, Mr Aditya Agarwal, President of the chamber, said the Government should clarify that no service tax shall be payable on advance payments if services are not rendered. The Service Tax Rules have been sought to be amended to provide that an invoice is issued within 14 days from the date of completion of services or on receipt of payment, whichever is earlier.

Citing the many retrospective amendments with regard to central excise in the Budget, particularly those relating to Cenvat credit Rules in the situation of manufacture of both dutiable and exempted goods, Mr Agarwal, said "We cannot appreciate the very concept of retrospective amendments, as it makes a mockery of the certainty of law".

Pointing out that industry was aware that such retrospective amendments are made by the Government to demand duties for past periods of time, he said "this is made in spite of the fact that assesses disputed the matter in courts of law including the Supreme Court which have upheld the contention of the assesses". He felt the assessees have no means of recovering the tax from the customers to whom the goods were sold a long time back.

"Such a proposal lends great uncertainty to business transactions and acts as a major inhibiting factor for industrial growth and FDI inflows. We feel that the retrospective amendments proposed in the Budget should be withdrawn in the interest of healthy growth of the Indian economy."

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