Issue of Invoice, Bill or Challan [Rule 4A] :
Rule 4A merits importance as the credit on invoices which are not in accordance with rule 4A can be denied. As per rule 4A, every person providing taxable service shall issue an invoice or a bill, or a challan signed by such person or a person authorized by him in respect of such taxable service provided or agreed to be provided. The invoice, bill or challan shall be serially numbered.
A. CONTENTS OF INVOICE/BILL/CHALLAN
The invoice, bill or challan shall be serially numbered and shall contain the following details, namely:
(i) Name, address and the registration number of such person;
(ii) Name and address of the person receiving taxable service;
(iii) Description of service provided or agreed to be provided;
(iv) Value of the taxable service provided or a agreed to be provided and
(v) Service tax payable thereon.
Relaxations:
(i) Banking companies and financial institution: A banking company or a financial institution including non-banking financial company providing services to any person enjoys the relaxation that invoice may not be serially numbered and may not contain the address of the service receiver.
| 1. Banking company: “Banking company” has the meaning assigned to it in section 45A(a) of the Reserve Bank of India Act, 1934 [Rule 2(1)(bb)].
As per section 45A(a) of the Reserve Bank of India Act, 1934, banking company means a banking company as defined in section 5 of the Banking Regulation Act, 1949, and includes the State Bank of India any subsidiary bank as defined in the State Bank of India (Subsidiary Banks) Act, 1959, any corresponding new bank constituted by section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and any other financial institution notified by the Central Government in this behalf.As per section 5 of the Banking Regulation Act, 1949, “banking company” means any company which transacts the business of banking in India. Explanation. — Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of this clause. 2. Financial institution: Financial institution has the meaning assigned to it in section 45-I(c) of the Reserve Bank of India Act, 1934 [Rule 2(1)(bd)]. As per section 45-I(c) of the Reserve Bank of India Act, 1934, financial institution means any non-banking institution which carries on as its business or part of its business any of the following activities, namely:– (i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own: (ii) the acquisition of shares, stock, bonds, debentures or securities issued by a Government or local authority or other marketable securities of a like nature: (iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire-Purchase Act, 1972*: (iv) the carrying on of any class of insurance business; (v) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being in force in any State, or any business, which is similar thereto; (vi) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in lumpsum or otherwise, by way of subscriptions or by sale of units, or other instruments or in any other manner and awarding prizes or gifts, whether in cash or kind, or disbursing monies in any other way, to persons from whom monies are collected or to any other person, but does not include any institution, which carries on as its principal business, – (a) agricultural operations; or (aa) industrial activity; or (b) the purchase or sale of any goods (other than securities) or the providing of any services; or (c) the purchase, construction or sale of immovable property, so however, that no portion of the income of the institution is derived from the financing of purchases, constructions or sales of immovable property by other persons. 3. Non-banking financial company: Non-banking financial company has the meaning assigned to it in section 45-I(f) of the Reserve Bank of India Act, 1934 [Rule 1(ccc)]. As per section 45-I(f) of the Reserve Bank of India Act, 1934, non-banking financial company means– (i) a financial institution which is a company; (ii) a non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the RBI may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. |
(ii) Goods transport agency: In case the service provider is a goods transport agency, an invoice, a bill or, a challan shall include a document containing the details of the consignment note number and date, gross weight of the consignment and other required information. It implies that the document issued by a goods transport agency need not necessarily be nomenclatured as “challan”.
(iii) Passenger transport service: In case of transport of passengers [by any mode of transport], the ticket (in any form, including electronic form, whatever may be the name) would be deemed to be the invoice/bill/challan for the purposes of the rule. The ticket would be a valid invoice/ bill /challan even if it does not contain registration number of the service provider or address of the service receiver.
| For instance, in case of air-travel, the airlines or the agent may not issue a separate invoice to the passenger but may issue the ticket showing the price of such ticket as well. In such a case, the ticket issued by the airlines would be a valid invoice. |
(iv) Invoice not required in case where payment upto Rs 1,000 received in excess of the invoiced amount: Wherever the provider of taxable service receives an amount Rs 1,000 in excess of the amount indicated in the invoice and the provider of taxable service has opted to determine the point of taxation based on the option as given in the Point of Taxation Rules, 2011 (date of invoice or completion of service), no invoice is required to be issued to such extent.
Reminder letter to pay renewal premiums is not an invoice: Life insurance companies issue reminder notices/letters to the policy holders to pay renewal premiums. Such reminder notices only solicit furtherance of service which if accepted by policy holder by payment of premium results in a service. No tax point arises on account of such reminders. Thus, reminder letters/notices for insurance policies not being invoices would not invite levy of service tax [Circular No. 166/1/2013 ST dated 01.01.2013].
B. TIME LIMIT FOR ISSUE OF INVOICE/BILL/CHALLAN
Such an invoice has to be issued within 30 days from the date of:-
(i) completion of such taxable service or
(ii) receipt of any payment towards the value of such taxable services
whichever is earlier.
Time limit for issue of invoice/bill/challan in case of:
(a) Continuous supply of service
In case of continuous supply of service, every person providing such taxable service shall issue an invoice, bill or challan, as the case may be, within 30 days of the date when each event specified in the contract, which requires the service receiver to make any payment to service provider, is completed.
(b) Banking and other financial institution including NBFC
The time-limit for issuance of invoice, bill or challan, as the case may be, shall be 45 days in case where the service provider is:
(i) A banking company
(ii) A financial institution including a non-banking financial company
providing service to any person.
C. DOCUMENTS TO BE ISSUED BY INPUT SERVICE DISTRIBUTOR
Every input service distributor distributing credit of taxable services shall, in respect of credit distributed, issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him, for each of the recipient of the credit distributed, and such invoice, bill or, as the case may be, challan shall be serially numbered.
(a) Contents of invoice/bill/challan: It shall contain the following details, namely: –
(i) Name, address and registration number of the person providing input services and the serial number and date of invoice, bill, or as the case may be, challan;
(ii) Name and address of the said input services distributor;
(iii) Name and address of the recipient of the credit distributed;
(iv) Amount of the credit distributed.
(b) Exemption to banking companies and financial institution: An input service distributor which is an office of a banking company or a financial institution including non – banking financial company providing services to any person enjoys the relaxation that invoice may not be serially numbered.
(c) Centralized registration and Input Service Distributor (ISD) being mutually exclusive: It may be noted that the centralized registration and ISD are mutually exclusive. One can be centrally registered, but still would have to be registered as ISD to enable credit from those locations where there is no service being provided. Further, one who is not centrally registered may like to accumulate the credits at one point and redistribute the same to the units whenever there is a need.