X is a consulting engineer. He has obtained service tax registration on April 3, 20XX. X has
entered into a contract with Y for provision of consulting services on April 4, 20XX. X provides
the services on April 15, 20XX but Y has communicated that he will be able to pay the
consideration only after six months owing to his poor financial condition.
X has not issued any invoice or bill for the said service as he is not sure of the requirements of
an invoice issued by a registered service tax provider. You are required to guide X with
regard to content and time of issuance of an invoice.
Rule 4A of Service Tax Rules, 1994 contains the provisions in respect of invoices to be issued
by every person providing taxable service.
In terms of that rule, X has to issue an invoice or a bill, or a challan signed by him or a person
authorized by him in respect of taxable service provided by him. The invoice, bill or challan
should contain the following details and be serially numbered:
(i) Name, address and the registration number of X;
(ii) Name and address of Y (person receiving taxable service);
(iii) Description of taxable service provided or agreed to be provided;
(iv) Value of taxable service provided or agreed to be provided and
(v) Service tax payable thereon.
Such an invoice has to be issued within 30 days from the date of completion of such taxable
service or receipt of any payment towards the value of such taxable service, whichever is
earlier. Since X will receive the payment for the services only after six months, he should
issue the invoice latest by May 15, 20XX i.e., within 30 days from April 15, 20XX (date of
completion of such taxable service).
MBM Caretakers, a service tax assessee, provides the services of repair and maintenance of
electrical appliances. On April 1, 2015, it has entered into an annual maintenance contract
with P for its Air Conditioner and Washing Machine. As per the terms of contract,
maintenance services will be provided in the first week of each quarter of the financial year
2015-16 and payment for the same will also be charged quarterly after completion of such
services in each quarter. Services were provided during the year 2015-16 on April 4, July 2,
October 3, and January 3. When should MBM Caretakers issue the invoice for the services
Continuous supply of service means inter alia any service which is provided, or agreed to be
provided continuously or on recurrent basis, under a contract, for a period exceeding three
months with the obligation for payment periodically or from time to time.
Therefore, the above situation is a case of continuous supply of service as repair and
maintenance services provided by MBM Caretakers have been provided on a quarterly basis,
under a contract, for a period of one year with the obligation for quarterly payment.
In terms of rule 4A of Service Tax Rules, 1994, in case of continuous supply of service, every
person providing such taxable service has to 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.
Therefore, since the contract requires P to make payment on completion of services provided
in each quarter, MBM Caretakers should issue quarterly invoices latest by May 4, August 1,
November 2 and February 2 (within 30 days of April 4, July 2, October 3, and January 3).