1) GENERAL:-
Q.1.1) What is Service Tax? Is it an indirect tax ?
Ans :- Service Tax is an indirect tax levy imposed under Chapter v of the Finance Act, 1994 as amended. The tax is applicable to services specified in the Section 65 & 66”.
Q.1.2) What is the rate of Service Tax?
Ans:- At present the rate of Service Tax is eight percent to be levied on the “value of taxable service”. Generally speaking “value of taxable service” means the gross amount received by the service provider for the taxable service rendered by him.
Q.1.3) Who is liable to pay Service Tax to the Govt.?
Ans:- The person who provides the taxable service on receipt of charges is responsible for paying the Service tax to the Government.
Q.1.4) Who is liable to pay Service Tax in case service is provided by a person other than Indian resident or who does not have any establishment in India?
Ans:- In this case the services receiver in India is liable to pay Service Tax.
2) REGISTRATION :-
Q.2.1) Whom & where should one approach for registration?
Ans:- Generally, all Commissionerates of Central Excise, have a Service Tax Cell, headed by Assistant Commissioner/Deputy Commissioner. However, in certain Commissionerates, separate Service Tax Divisions have been constituted. The work is also delegated to Central Excise Divisions in many Commissionerates. A prospective assessee of Service Tax can approach the Assistant Commissioner/Deputy Commissioner in charge of Service Tax cell of the jurisdictional Commissionerates or Central Excise Division for registration depending upon the arrangements made in the Commissionerates.
Q2.2.) What is the procedure for registration?
Ans:- A prospective taxable service provider seeking registration should file an application in Form ST-1(in duplicate) before the jurisdictional Central Excise officer/Service Tax officer within thirty days from the date of notification of the taxable service. Department is required to issue the registration certificate within 7 days of the receipt of the application. In case of failure to issue registration certificate within 7 days, the registration applied for is deemed to have been granted and the assesee can carry on with his activities.
Q.2.3) Who should apply for registration under Service Tax law? Is there any provision for Centralised Registration?
Ans: All persons providing taxable services are required to register with the Central Excise department. They would have to take only one registration even if they operate from more than one premise but have centralised billing at one place. However, if such persons do not have Centralised billing at one place, then they will have to register at each place separately. Besides, only one registration is required to be taken even if an individual provides more than one service but from the same premises.
Q.2.4) What is to be done with the registration when
a) a registered assessee transfers his business to another person, or
b) a registered assessee ceases to carry on the activity for which he is registered?
Ans:- a) When a registered assessee transfers his business to another person the transferee should obtain a fresh certificate of registration.
b) When a registered assessee ceases to carry on the service activity for which he is registered, he should surrender his registration certificate to the Central Excise authorities.
Q.2.5) What is that time limit within which the Service provider should register with the Central Excise department for the service tax purpose once the service is notified or once the assessee commences the business of rendering the taxable service?
Ans:- Every person liable to pay the service tax should make an application to the concerned Central Excise officer for registration within a period of 30 days of the Service tax having come into force. In cases where a person commences the business of providing a taxable service after such service has been notified, he is required to make an application for registration within a period of 30 days from the date of commencement of his activities.
Q.2.6) Whether a service provider can make payment of service tax and file returns before the grant of registration by the proper officer?
Ans :- Yes. A service provider can pay service tax and file returns immediately after applying for registration.
Q2.7) Is there any penal provision for non-registration?
Ans :- Yes. Any offence of failure of non-registration will attract a mandatory penalty of rupees five hundred.
Q2.8) Is obtaining a PAN No. from Income Tax Department a must for obtaining Service Tax Registration?
Ans:- It is not mandatory to have a PAN for obtaining registration in Service Tax. However, it is advisable for Service tax assessees to have a PAN No. as Service Tax Code (STC) Number based on PAN allotted by Income tax department has been introduced in Service Tax also. The main objective of allocating a number is to identify the concerned person where he is located and registered.
3) PAYMENT OF SERVICE TAX :-
Q.3.1) How and where to pay Service Tax?
Ans:- The Service Tax amount is required to be paid in Form TR-6 Challan (yellow in colour) in the specified branches of designated banks. The list of such Banks and Branches is available in every Commissionerate of Central Excise. Different heads of accounts have been specified for different taxable service by the Govt. under which payment has to be made. While making the payment of service tax to the credit of Central Govt., head of account should be correctly and properly indicated under major and minor heads and sub-heads to avoid misclassification.
Q.3.2.) When is Service Tax required to be paid?
Ans:- If the assessee is an individual or a proprietary or partnership firm, the Service tax is to be paid on quarterly basis. The payment is to be made by the 25th day of the month following the quarter. For example, Service Tax for the quarter ending 30th June is to be paid by 25th July.
In respect of other categories, the tax is payable on monthly basis and is to be paid by 25th day of the succeeding month.
Q3.3.) Whether the payment of Service tax is to be made for the billed amount or for the value received?
Ans:- The Service Tax for a particular period is payable on the value of taxable service received in that period and not on the gross amount billed to the client.
Q.3.4) Whether Service tax deposited by the assessees in non-designated bank will amount to non-payment of Service Tax?
Ans:- Yes. For payment of service tax, specific Bank has been nominated for every Central Excise Commissionerate. If Service Tax amount is deposited in a branch of Bank other than nominated Bank, it amounts to non-payment of Service Tax.
Q.3.5) What is the date of payment of Service Tax? Is it the date on which the cheque for the same is deposited/tendered in the designated Bank or the date on which the amount is credited?
Ans:- The date of deposit of cheque is the date of payment of Service Tax. The Service Tax Rules as amended provide that it would suffice if the cheque is presented to the bank by the 25th of the month. However, if the cheque bounces, it would mean as if the tax has not been paid and the necessary penal consequences would follow.
Q.3.6) How do you describe the expression “person” appearing in the definition of taxable service?
Ans:- The expression refers to a “legal person” and would include any individual, proprietary firm or partnership firm, company, trust, institution and society etc.
Q.3.7) Would services provided in India for the foreign client be liable for payment of Service tax?
Ans:- Yes, the service tax is payable on all taxable services rendered in India, whether to an Indian or foreign client
Q3.8) Would the service provided abroad liable for payment of service tax?
Ans:- No, the services rendered abroad shall not attract service tax as the levy covers only the services provided within India.
Q.3.9) When payment is made by a client or customer to an assessee after deducting his Income tax liability under “Tax Deducted at source” provision, whether the service tax liability of the assessees is only towards the amount actually received from his client or customer or tax is to be paid on the amount of income tax deducted at source also?
Ans:- The Service tax is to be paid on the value of taxable services which is charged by an assessee. Any income tax deduced at source is included in the charged amount. Therefore, Service tax is to be paid on the amount of income tax deducted at source also.
Q.3.10) What is the interest rate applicable on delayed payment of Service Tax?
Ans:- Every person, liable to pay the tax in accordance with the provisions of Section 68 or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at the rate of fifteen percent per annum for the period by which such crediting of the tax or any part thereof is delayed.
Q.3.11) Is the amount for Service Tax charged from the client compulsorily to be indicated separately in the Bills/Invoices raised on him?
Ans:- Yes it is compulsory to separately indicate the amount of Service tax charged in the Bills/Invoices raised on clients in terms of Section 83 of Finance Act, 1994 read with Sec.12A of Central Excise Act, 1944. It is also advisable for the service providers to separately bill the amount of Service tax in the invoice/bill on the basis of taxable value of service rendered, especially so if he requires to avail the input credit scheme.
Q.3.12) Is there any exemption for payment of Service Tax if the receiver/provider of the service is the Central Govt./State Govt. organisation and/or Public Sector undertaking? Can any one of the above claim immunity from the liability to pay or make provision for paying the Service tax?
Ans:- No, there is no such general exemption, exempting the services received/provided by the Central Government/State Government organisation or Public Sector Undertakings. Non one can claim immunity from payment of service tax until specifically provided in law.
Q.3.13) Whether any general exemption from Service tax is available for small scale service providers, as in the central excise?
Ans:- No. At present there is no such general exemption available for small scale service providers.
Q3.14) What are the penal provisions if the service tax is not paid?paid late?
Ans:- Any person liable to pay service tax in accordance with the provisions of Section 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of Section 75, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay?
Q.3.15) Can any adjustment of tax liability be made by an assessee on his own in cases where Service tax has been paid in excess?
Ans:- Yes. As per Rule 6(3)”where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him(calculated on a pro-rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received”. In all other cases of excess payment, the refund claims have to be filed with the department.
4. FILING OF RETURNS:-
Q.4.1) How to file Service Tax Returns on what interval and with whom?
Ans:- The Service Tax assessees are required to file a half yearly return in Form ST-3 or ST-3A as applicable in duplicate, to the Superintendent, Central Excise, dealing with Service Tax work. The return is to be filed within 25 days from the last day of the half year it relates to and should be accompanied by copies of all TR-6 Challans issued in the relevant period. Thus, returns for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively.
Q.4.2.) What is e-filing of Service Tax returns?
Ans:- E-filing is a facility for the electronic filing of Service tax returns by assesee from his office, residence or any other place of choice, through the Internet, by using a computer. The assessee can go to the e-filing site “Home page” by typing the address http://servicetaxefiling.nic.in in the address bar of the browser.
Q4.3) Who can e-file their returns?
Ans:- Any Assesses having a 15 digit STP code can avail of the facility of electronic filing of their “Return”. Circular number 71/1/2004-ST dated 2/1/04 may be seen for full details at http://www.servicetax.gov.in/servicetax/st-cirmainpg.htm
The assessee should take care to ensure that he has been indicating his 15 digit STP code in the challans used by him from September 2002. An assessee who has not done this may also opt for e filing but he will have to submit copies of challans manually to the department after e filing his return, evidencing payment of duties, after indicating his 15 digit STP code on each challan.
Q.4.4) What is the procedure for e-filing?
Ans: Those assesses who have 15 digit Service Tax Payer Code allotted to them, should file an application to their jurisdictional AC/DC as laid out in Trade Notice insured in this regard. They should mention a trusted e-mail address in their application, so that the department can send them their username and password to help them file their return. They should long on to the Service Tax E-filing Home page using the Internet. On entering their STP code, user word and password in the place provided on the Home page they will be permitted access to the E filing facility. They should then follow the instructions given therein..
Q.4.5) What is to be done when no services are provided for in a half-year?
Ans:- If no service have been provided during a half year no Service Tax payable; the assessee may file a Nil Return within the prescribed time limit.
Q.4.6) What is the penalty for non-filing or delayed filing of half yearly returns?
Ans:- As per Section 77, “if a person fails to furnish in due time the return which he is required to furnish under Section 70 or the rules made there under, he shall be liable to penalty which may extend to an amount not exceeding one thousand rupees”.
Q.4.7) Whether a single return is sufficient when an assessee provides more than one service or separate return is to be filed for each service?
Ans: A single return would suffice. However, details in each of the column in Service Tax the Forms ST-3 has to be furnished separately for each of the taxable service rendered by the assessee.
5. RECORDS :-
Q.5.1) Is there any statutory documents prescribed by the Govt. such as specified invoice proforma, specified registers etc. for use by the Service Providers.
Ans:- No specific records have been prescribed to be maintained by a Service Tax assessee. The records including computerised data if any being maintained by an assessee as required under any other law in force. (e.g. Income Tax, Sales Tax) is acceptable to the Central Excise Department for the purpose of Service tax.
Q5.2.) From where do the Service Tax assessee get the forms viz. ST-1, Service Tax-2 etc.?
Ans:- The Forms are available on the websites as well as with the jurisdictional Central Excise Commissionerates.
Q.5.3) Can be Department ask for more information than what assessee is submitting to it in the Form ST-1 and ST-3?
Ans:- Yes, if required the Department can always ask for additional information.
6. REFUNDS:-
Q.6.1) Is the Service Tax payable by the assessee even in cases where his clients do not pay for the service rendered or pay only a part of the bill raised in this regard?
Ans:- The Service Tax is required to be paid only on the value of taxable service received in a particular month or quarter as the case may be and not on the gross amount billed to the client. However, in all such cases where the amount received is less than the gross amount charged/billed to the client, the Service tax assessee are required to amend the bills either by rectifying the existing bill or by issuing a revised bill and by properly endorsing such charge in the billed amount. In case an assessee fails to do so, his liability to pay Service Tax shall be on the amount billed by him to the client for the services rendered.
Q.6.2) What is the procedure for claiming refund?
Ans:- The procedure for claiming refund for the amount due from the Department is as mentioned below:-
i) Submission of application in prescribed Form-R in triplicate to the jurisdictional Assistant Commissioner.
ii) Application should be filed within the prescribed period, i.e. before the expiry of six months from the relevant date as defined in Section 11B of the Central Excise Act, 1944 which has been made applicable to service tax refund matters also.
Application should be accompanied by documentary evidence to establish that the amount claimed as refund is amount paid by him in excess of the service tax due and the incidence of such tax has not been passed on to any other person.
Q.6.3) What is the “Relevant Date” for calculation of limitation period of six months in respect of filing refund claims related to Service Tax?
Ans:- The “Relevant Date” for the purpose of refund(under section 11B of CEA,1944) is date of payment of Service Tax. Thus, the limitation period of six months is to be calculated from the said date.
7) APPELLATE REMEDIES:-
Q.7.1) Who should be approached when an assessee is aggrieved by an order of Assistant Commissioner/Deputy Commissioner in respect of Service Tax?
Ans:- An assessee aggrieved by the order of Assistant Commissioner/Deputy Commissioner in respect of Service Tax, may file an appeal to the Commissioner of Central Excise (Appeals) in Form ST-4, in duplicate along with a copy of order appealed against. The appeal should be presented within three months from the date of receipt of the decision or order of the Central Excise Officer.
Q.7.2) What is the procedure for filing of appeal against the order of Assistant Commissioner/Deputy Commissioner of Central Excise?
Ans:- Any person aggrieved by any order passed by any assessing officer or adjudicating authority below the rank of Commissioner may file an appeal before the Commissioner, Central Excise(Appeals).
i) The appeal shall be filed in the prescribed Form ST-4
ii) It shall be presented within three months from the date of receipt of order which is being appeal against.
iii) It should be filed in duplicate.
iv) It should be accompanied by a copy of the order appealed against.
Q.7.3) Can the time limit of three months for filing the appeal to the Commissioner (Appeal) be extended, if yes, under what circumstances?
Ans:- Yes, if the Commissioner of Central Excise (Appeals) is satisfied that the appellant was prevented by sufficient cause, from presenting the appeal within the statutory period of three months, he may allow the appeal to be presented within a further period of three months.
Q.7.4) Can an appeal be filed against the order of Commissioner of Central Excise or Commissioner of Central Excise (Appeals)?
Ans:- Yes, the law provides for filing an appeal against the order of Commissioner of Central Excise or Commissioner(Appeals). Such appeals can be filed with the CESTAT within them three months of the date of receipt of the order sought to be appealed against.
Q.7.5) What is the procedure for filing appeal against the order of Commissioner of Central Excise or Commissioner (Appeals)?
Ans:- i) Any assessee aggrieved by the Commissioner of Central Excise or the Commissioner (Appeals) may file an appeal before the Appellate Tribunal i.e. CESTAT.
ii) The appeal should be filed within three months from the date of receipt of the order appealed against.
iii) It should be filed in the prescribed from ST-5.
iv) It shall be filed in quadruplicate.
v) It should be accompanied by a copy of the order appealed against, one of which should be a certified copy.
vi) The appeal should be accompanied by a fee of Rs. Two hundred only.
8. SERVICE TAX CREDIT SCHEME:-
Q.8.1) Whether credit of Service Tax is available for all the input services used? If so what are the records to be maintained?
Ans:- Yes, An output service provider is allowed to avail Service Tax credit of the Service Tax paid on all input services in the following manner, namely:-
a) where the input service falls in the same category of taxable services as that of output service, Service tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the sixteenth day of August, 2002.
b) in any other case, Service Tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the fourteenth day of May, 2003;
The invoice or bill or challans as the case may be shall contain the following details:-
i) Serial number of the document
ii) Date of issue.
iii) Description and value of input service.
iv) Amount of Service Tax paid
v) Service Tax Registration No.
vi) Address of Input Service provider.
Q.8.2) Is there any prescribed document/register for availing Input Service Credit?
Ans:- The out service provider availing service tax credit shall maintain proper records in which the relevant information regarding the Sr.no. and date of document on which Service Tax credit is availed, Service tax registration no. and name of the input service provider, description and value of input service, service tax credit availed, service tax credit utilised for payment of service tax on output service shall be recorded. The burden of proof regarding the admissibility of Service tax credit shall lie upon the person taking such credit.
Q.8.3) How to avail Service Tax credit?
Ans:- The output service provider to avail Service Tax credit shall submit to the Superintendent of Central Excise, a return in the form annexed to the Service Tax credit Rules, 2003 along with Form ST-3.
Q.8.4) Whether Input credit can be accumulated and adjusted at the time of payment of Service Tax?
Ans:- Service tax credit availed on input service may be utilized for payment of Service Tax on output service. Since no refund of any excess credit available is admissible, the assessee has to utilize the same on payment of Service tax. While paying Service Tax on the output service, the service tax credit shall be utilized only to the extent such credit is available on the last date of the month for payment of Service Tax relating to the month or in case where the assessee is an individual or proprietary or partnership firm to the extent the credit is available on the last day of the quarter for payment of Service Tax relating to the quarter.
Q.8.5) How do the service provider operate within the scheme of service tax credit when he is providing both taxable and non taxable or exempt services?
Ans:- Where a service provider avails credit on any input service and renders such output services which are chargeable to service tax as well as exempted services or non taxable services, as the case may be, then the service provider shall maintain separate accounts for receipt and consumption of input service meant for consumption in relation to rendering of output services which are chargeable to service tax and the inputs service meant for consumption in relation to rendering of output services which are exempted services or non-taxable services, as the case may be. The service provider shall take credit only on that portion of input service, which is intended for use in relation to rendering output services, which are chargeable to service tax.
In case the service provider, opts not to maintain separate accounts of input service meant for consumption in relation to rendering of such output services which are chargeable to service tax as well as exempted services or non-taxable services, he shall be allowed to utilize service tax credit for payment of service tax on any output service only to the extent of an amount not exceeding thirty-five percent of the amount of service tax payable on such output service.
Q.8.6.) What happens to the Service Tax credit lying unutilized in the account of an assessee when he shifts his establishment to another site or his establishment is transferred on account of change in ownership or on account of sale, merger, lease or transfer of such establishment?
Ans:- The output service provider is allowed to transfer the service tax credit lying unutilized in his account to such transferred sold, merged or amalgamated establishment.
Q.8.7) What is the provision regarding Service Tax credit on the service provided in relations to telephone connection?
Ans:- Service tax credit on the service provided in relation to the telephone connection is allowed only in respect of such telephone connections which are installed in the business premises from where output services is provided. Mobile phones are not covered.
SERVICE SPECIFIC ISSUES WITH REFERENCE TO SERVICES INTRODUCED IN THE TAX NET IN YEAR 2003-04.
1. COMMERCIAL TRAINING AND COACHING CENTERS :-
Q.1.1)Whether intensive tuition/coaching institutes/group of individuals for various competitive exams./correspondence and foreign degree courses/spoken language course liable for service tax ?
Ans:- Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams., like entrance examinations for IIT, Joint Entrance Exams./Premedical Tests, Civil Services Exam., etc. are chargeable to Service tax
However, services in relation to Commercial Coaching and training, provided by:-
a) Vocational Training Institute
b) Computer Training Institute and
c) Recreational Training Institute;
have been exempted service tax w.e.f. 1st July, 2003 vide Notf.no.9/2003 Service Tax. Therefore, vocational coaching and training services provided by typing and shorthand institutes, T.V./Vechile repairs training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer training centers, hobby classes, institutes teaching martial arts, painting, dancing etc. would not be chargeable to Service tax. This exemption notification no. 9/203 ST is effective only up to 29th February 2004.
Q.1.2) Whether service tax is leviable on postal/correspondence coaching?
Ans:- Service Tax is leviable on any coaching or training provided by an institution on commercial basis. Therefore, the coaching provided by postal means would also be covered under the service tax.
Q1.3.) Whether individuals going to houses to impart tuition/coaching would be chargeable to service tax?
Ans:- Service tax is on institutions/establishments. Only those service providers are covered under service tax who have some establishment for providing commercial coaching or training.
Thus, individuals providing services at the premises of a service receiver would not be covered under service tax. However, if coaching or training center provides commercial coaching by sending individuals to the premises of service receivers, such services would be chargeable to service tax.
Q.1.4) Whether commercial coaching imparted to students of standard 1 to 9 taxable?
Ans: The coaching imparted to students of standard 1 to 9 is taxable under the category of commercial coaching training services.
Q.1.5) Whether commercial coaching provided by institute to the students of degree exams held by universities are chargeable to service tax?
Ans:- Yes. The commercial coaching given to the students to prepare them to prepare for university degree exam is liable for service tax.
2. MAINTENANCE AND REPAIR SERVICE:-
Q.2.1) In case of maintenance contract entered prior to March, 2003 for one year on receipt of the service charges for the whole year, it appears illogical to demand collect service tax on the services rendered prior to 14.05.2003 as the client has already paid the amount. Who will pay the service tax and how?
Ans:- There are cases where maintenance contracts are entered into for a period of more than one year. Vide Notification no.11/2003 Service Tax dt.20.06.2003, for maintenance contracts entered into prior to 1st July 2003, exemption has been provided to that part of the value of service for which bill/invoices have been raised and the amount has actually been received prior to the 1st July, 2003. For such contracts, all subsequent payments or payments made against invoice raised subsequent to the 1st July,. 2003 will be chargeable to service tax.
Q.2.2) Whether service tax is applicable on maintenance and repair services provided by persons other than authorised service centers of companies?
Ans:- “Maintenance or repair” means any service provided by :-
(i) any person under a maintenance contract or agreement ; or
(ii) a manufacturer or any person authorised by him in relation to maintenance or repair or servicing of any goods or equipment, excluding motor vechile. Therefore, service tax is applicable on maintenance and repair services provided by all such persons.
Q.2.3) If there is a total sub-contract of the service, whether sub-contractor is supposed to take out a registration and discharge the tax liability?
Ans: The sub-contractor need not take a registration under service tax. In all such cases, service tax is to be paid by main service provider.
Q.2.4) Whether maintenance and repair provided without any contract is taxable?
Ans:- The maintenance or repair service undertaken under a maintenance contract or agreement is only chargeable to Service tax.
Q.2.5) Whether Annual Maintenance contracts (AMC) for maintenance of roads are excluded from service tax?
Ans:- As roads are neither goods nor equipment, the AMC for roads would not be covered under service tax.
Q.2.6) Whether service tax on maintenance and repair would be charged in cases where during the guarantee period, the services are provided to the buyer of the goods while the payments for the same are received from the supplier of the goods?
Ans:- Irrespective of the fact that the receiver of the service is different from the person making payments for such services, the service tax is leviable on the service provided towards maintenance and repair. Therefore, for the services provided during the warranty period by the dealer or any other authorised person. Service Tax would also be leviable on any amount received by such dealer or such other auhorized person from manufacturer of such goods.
Q.2.7) Maintenance or repair services rendered under contracts entered into prior to 01.07.2003 are exempted from service tax if the bill are raised, and payment also made, prior to 01.07.2003. Whether service tax would still be chargeable in cases where through the bills are raised or payment made, after 01.07.2003 but services were rendered prior to 01.07.2003?
Ans:- It is a cardinal principle of taxation that no tax can be levied or collected except by authority of law. Thus, if the levy of service tax on a particular service comes into force on given date, that service will not be taxable if rendered before that date. The levy of Service Tax on “Maintenance or Repair Service” has come into force on 01.07.2003. Accordingly, any maintenance or repair service rendered prior to 01.07.2003 will not be taxable, irrespective of when the bills are raised or payment made. This will apply to other services as well which were rendered prior to the imposition of service tax on them.
3. BANKING AND FINANCIAL SERVICE :-
Q.3.1) Whether Finance Companies providing banking and Financial services and having proprietary/partnership status are liable to service tax?
Ans:- The Banking and Financial services provided by a banking company or a financial institution including a non banking financial company or any other body corporate is chargeable to service tax. The term body corporate means a private limited public limited company or a government company. Such companies should be either a banking company or a financial institution or non banking financial company to come under the tax net. In other words individuals proprietorship or partnership firms will not come under the tax net.
Q.3.2.) Whether buying and selling of foreign exchange by the authorised dealers and money changers are under service tax net?
Ans:- Only the service of “Foreign Exchange Broking” when provided by the foreign exchange brokers, authorized dealers and money changers has been brought under tax net.
4. ARCHITECT/INTERIOR DECORATOR SERVICE:-
Q.4.1.)Whether Vaastu/Feng Shui Consultants come under the category of Interior Decorators?
Ans:- Interior Decorator means any person engaged whether directly or indirectly, in the business providing by way of advice, consultancy, technical assistance or in any other manner services related to planning, design, or be antification of spaces, whether man made or other wise. Since Vaastu/Feng Shui Consultants are offering services by way of advice relating planning and designing of spaces, they come under the category of Interior Decorators.
5. SOUND RECORDING SERVICES:-
Q.5.1) Whether lending/hiring of Video/Sound Recording equipment come under service tax?
Ans:- The lending/hiring of Video/Sound Recording equipment is in the nature of sub-contracts and because the sub-contractors are not providing the services to the customer directly, they are not required to pay the service tax.
6. ADVERTISING AGENCIES:-
Q.6.1) Can Cinema theatres be treated as advertisement agencies as they project advertisement?
Ans:- The Cinema theatres cannot be treated as advertisement agencies as they project advertisements only on behest of advertising agencies. Further it has already been clarified that the amount paid by advertising agency for space and time in getting the advertisement published in print media( i.e. newspapers, periodicals etc.) or the electronic media (Doordarshan, Private, T.V.Channels, AIR, Cinema Theatres etc.) will not be includible in the value of taxable service for the purpose of levy service tax etc.
7. CARGO HANDLING SERVICE:-
Q.7.1) Whether the services in the form of supply of provisions called “ship stores” provided by Ship chandlers to the vessels are taxable?
Ans:- The services rendered by Ship Chandlers are services rendered in relation to the vessel under authorization from port authorities and hence come within the ambit of port services and liable to service tax.
Q.7.2) Whether storage of empty containers attracts levy of service tax ?
Ans:- The handling/storage and warehousing of empty containers would be covered within the scope of storage and warehousing services and liable for service tax.
Q.7.3) Whether handling/storage of empty containers within a port area would attract service tax ?
Ans:- The handling/storage of empty containers within a port area would be covered within the scope of port services, as empty containers would come under the definition of goods under Section 65(41) of the Finance Act, 1994. The earlier clarification regarding not to consider empty containers as cargo in the context of Cargo Handling services has got no relevance vis-à-vis services.
8. MANDAP KEEPER :-
Q.8.1) Whether the services provided by a Mandap keeper from a religious place are liable for service tax?
Ans:- The services provided by a Mandap Keeper from the precincts of a religious place are exempted from payment of service tax.
9. BUSINESS AUXILIARY SERVICES :-
Q.9.1) Whether services provided by call centers are taxable?
Ans:- Business auxiliary services provided by call centers, i.e. Commercial Centers which provide assistance, help or information’s, through telephone, on behalf of another person are exempted from service tax.
Q.9.2) Whether services provided by medical transcription centers are taxable?
Ans:- Business auxiliary services provided by medical transcription centers i.e. commercial concerns which transcribes medical history, treatment, medical observations and like, are exempted from payment of service tax.
10. FRANCHISE SERVICE :-
Q.10.1) What is the taxable service under Franchise Service?
Ans:- Franchise Service is a service provided by franchisor to a franchisee under a specific type of agreement know as franchise agreement. This agreement includes the franchise being obliged to follow the concept of business operation, managerial expertise, market techniques etc. of franchisor and is under an obligation not to engage in selling, producing or providing similar goods or services, identified with any other person. The franchisee is required to pay to the franchisor, directly or indirectly, a fee which is chargeable to service tax.
Q.10.2) If the franchisor is not normally resident of India, who has to pay service tax?
Ans:- As per service tax rules in all such cases the service receiver in India would be liable to pay service tax on behalf of the service provider.
11. COMMISSIONING AND INSTALLATION SERVICE:-
Q.11.1) Whether commissioning or installation services provided by an individual would be taxable?
Ans: Exemption from payment of service tax has been provided for commissioning or installation services provided by a commissioning or installation agency other than commercial concern. Accordingly, the commissioning or installation services provided by an individual will be exempt from service tax.
12. GENERAL :-
Q.12.1) Whether the services provided by a Commissioner Agent are taxable?
Ans”- A Commissioner Agent is a person who causes sale or purchase of goods on behalf of another person for a consideration which is based on quantum of such sale or purchase. Business auxiliary services provided by a Commission Agent are exempted from payment of service tax.
Q12.2) Whether cost of material is also included in the value of taxable service?
Ans:- The cost of goods and materials sold by the service provider to the recipient is excluded from the value of taxable service. This exemption would be available only in cases where the sale of such goods is evidenced and the sale value is quantified and shown separately in the invoice.
Q.12.3) Whether the rental charged by the Telephone service providers in their bills is taxable?
Ans:- The rental charges are included in computing the value of taxable services provided by Telephone service providers. Thus, service tax applies to call charges, including rentals.
13. EXPORT OF SERVICES:-
Q.13.1) Whether export of services are exempted from service tax? if so, what would constitute exports? whether secondary service providers supplying service to primary service providers are exempted from service tax if the primary service is exported?
Ans:- The service tax is leviable only on the taxable services supplied within India except Jammu and Kashmir. Thus all the taxable services exported outside India are not leviable to service tax and therefore; exempt. Since tax is a destination based consumption tax and, therefore, if the service provided are consumed abroad, it is covered under export and therefore, not leviable to service tax. Some of the examples are that if a Management Consultant or a Consulting Engineer provides the consultancy service to a foreign company situated outside India, it will constitute direct export. Similarly, if service provider in India deputes his consultant abroad or provides the service to foreign customer abroad by opening a branch office or any other establishment in that country, same would also constitute exports. However., where a foreign company comes to India and takes the services of manpower recruitment agency in India for recruitment of personnel, the service tax will be leviable as it does not amount to export. Similarly, foreign tourist coming to India and enjoying taxable services (even though making payment in foreign currency) are taxable and are not exempt as it does not amount to export.
The secondary services, which are consumed or merged, with the primary output services, which are eventually exported outside India, will be exempt.
REGISTRATION MADE EASY :
The assessees should register with the Superintendent of Central Excise of the respective Jurisdictional Commissionerates’ Service Tax Cell The following documents (Xerox copies) are also to be submitted along with ST-1 Application which can be downloaded from www.cbec.gov.in.
I. I. In the case of companies registered under the Indian Companies Act, 1956
(either public or private limited)
1) Memorandum and Articles of Association.
2) 2) List of Directors with contact addresses along with telephone/telex/fax
Numbers.
3) 3) Extracts of the Board’s Resolution authorizing any of the directors/employees of the company to sign, deal and comply with the provisions of the Service Tax Rules.
II. In the case of Partnership Firm.
1) 1) Partnership Deed.
2) 2) Power of Attorney authorizing any of the partner/employees of the Firm to sign,
deal and comply with all the matters relating to Service Tax as required under
the provisions of Service Tax Rules.
3) 3) In the absence of Power of Attorney, ST1 Application and other documents
relating to Service Tax should be signed by all the partners.
4) 4) Name of the partners with contact addresses along with telephone / telex / fax /
Email- id.
III. In the case of Proprietorship Firm.
ST1 application and any other documents relating to Service Tax should be signed by the Proprietary or any other person duly authorized by him to sign, deal and comply with the provisions of the Service Tax Rules by executing a Power of Attorney in favour of the said person
No separate books of accounts are to be maintained. Private records will be adequate.
Service Tax Code Number
All Service Providers must get a PAN Number from the Income Tax Department and there after apply for a PAN based Service Tax Code Number. The application should be filed with the respective jurisdictional Superintendent of Central Excise (Service Tax Cell).
HOW TO PAY SERVICE TAX AND FILE RETURN ?
The rate of Service Tax is 8% with effect from 14/05/2003. The assessee can deposit the Service Tax in the Nominated Authorized Banks (or its branches) of the respective Commissionerates (See Annexure B1 to B5).
Remittance of Service Tax shall be made by Cash or Cheque in favour of (“Nominated Bank of the Respective Commissionerate in Head A/c. Service Tax-0044”).
· · Tax can be paid through T.R.6 Challan (yellow colour – Annexure-C) in authorised banks by the 25th of the following month in case of companies.
· · Individual Service Providers/Partnership firms/Proprietary firms can pay tax on quarterly basis by 25th January, 25th April, 25th July & 25th October.
· · Half Yearly ST3 Returns are to be filed by 25th April for half year ending March and 25th October for half year ending September.
· · Service providers intending to avail input service credit need to file return under Rule 5 of Service Tax Credit Rules, 2002 along with ST-3 Return.
WHAT IS “E-FILING” ?
The E-Filing is an optional facility for the electronic filing of Service Tax Returns (ST-3) by the assessee from his office, residence or any other place of choice through the Internet by using a computer. All 58 category of Service providers can opt for E Filing . Full details can be seen in Board’s Circular no 71/1/2004-ST dated 2/1/04 at
http://www.servicetax.gov.in/servicetax/st-cirmainpg.htm
The assesses may approach their jurisdictional Superintendents for submitting their application for permission to file the ST-3 Returns electronically.
IMPORTANT STATUTORY PROVISIONS
1. 1. Section 68 – Payment of Service Tax :-
(1) (1) Every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed.
(2) (2) Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of the chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.
Rule 6 of Service Tax Rules :-
Payment of Service Tax.
(1) (1) The Service Tax on the value of taxable services received during any calendar month shall be paid to the credit of the Central Government by the 25th of the month immediately following the said calendar month.
Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax on the value of taxable services received during any quarter shall be paid to the credit of the Central Govt. by the 25th of the month, immediately following the said quarter.
(2) (2) The assessee shall deposit the service tax liable to be paid by him in the bank designated by the Central Board of Excise and Customs for this purpose in Form TR6 or in the manner prescribed by the CBEC. [Please refer to the list of nominated banks].
2. 2. Section 69 – Registration :-
Every person liable to pay the Service Tax under this chapter or the rules made there under shall, within such time in such manner and in such form as may be prescribed, make an application for registration to the Superintendent of Central Excise.
Rule 4 of Service Tax Rules :-
Registration.
(1) (1) Every person liable for paying the service tax shall make an application to the concerned Superintendent of Central Excise, in Form ST-1 for registration within a period of thirty days from the date on which the service tax under Section 66 of the Finance Act, 1994 (32 of 1994) is levied:
Provided that where a person commences the business of providing a taxable service after such service has been levied, he shall make an application for registration within a period of thirty days from the date of such commencement.
Rule 5 of Service Tax Rules :-
Records.
(1) (1) The records (including computerized data) as maintained by an assessee in accordance with the various laws in force from time to time shall be acceptable.
(2) (2) Every assessee shall furnish to the Superintendent of Central Excise, at the time of filing the Return for the first time, a list of all accounts maintained by the assessee in relation to service tax including memoranda received from his branch offices.
3. 3. Section 70 – Furnishing of Returns :-
Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a Return in such form and in such manner and at such frequency as my be prescribed. If no service has been provided during a half year and no Service Tax is payable, the assessee shall file a “NIL” return within the prescribed time limit.
CONSEQUENCES OF NON-COMPLIANCE
1. 1. Section – 75 :
Interest on delayed payment of Service Tax : Any person who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at the rate of, as applicable from time to time as per Rules, for the period by which such crediting of the tax or any part thereof is delayed.
2. 2. Section – 76 :
Penalty for failure to pay Service Tax: Any person who fails to pay such tax shall pay in addition to paying such tax, an interest on that tax in accordance with the provisions of Section 75. He is also liable to pay a penalty, which shall not be less than one hundred rupees but may extend to two hundred rupees for every day during which such failure continues. However, the penalty under this clause shall not exceed the amount of Service Tax that he failed to pay.
3. 3. Section – 77 :
Penalty for failure to furnish prescribed Returns: If a person fails to furnish in due time, the Returns which he is required to furnish under Section 70 of the Rules made there under, he shall be liable to a penalty which may extend to any amount not exceeding one thousand rupees.
4. 4. Section – 78 :
If the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, in the course of any proceedings under this chapter is satisfied that any person has, with intent to evade Service Tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay a penalty in addition to the Service Tax and interest, a sum not less than, but shall not exceed twice, the Service Tax evaded by way of Suppression or concealment of value of taxable service.
