Definition of Continuous Supply of Service
It means
Continuous supply of service for 3 month or more with periodic payment
Or
Any service notified by Central Government as Continuous Supply of Service with or without condition
Point of Taxation In case of Continuous supply of service
In this case, service goes on continuously and there is no end date.
However, payment is made periodically on completion of event in contract (for example every month)
In this case, date of event shall be deemed to be date of completion of such service for the purpose of this rule
Example
Suppose Max Security Agency Pvt Ltd enters an agreement to provide Security guards to a Client A Ltd for 1 year starting from 1 June 2016 for 120000 p.a.
As per Contract,invoice is to be issued monthly for Rs 10000 per month on last day of each month.
Is it a Continuous supply of Service?
View answer
Yes,as
Service provided for more than 3 months
+
Periodic Payment
What is date of completion of Service Provided for June?
View answer
It is the end of month i.e. 30 June
What is the last date of issuing an Invoice?
View answer
It is 30 days of completion of event i.e. 30 days from 30 June i.e. 30 July
Suppose Bill actually issued on 25 July and payment received on 14 August,When is Service tax payable
View answer
Invoice is issued within 30 days of completion of event (30 June)
hence POT is
Date of invoice -25 July
or
Date of Payment-14 Aug
which ever is earlier i.e. 25 July
and to be deposited by
6th of next month i,e, 6 Aug