SERVICE TAX by g. natarajan, advocate swamy associates

BASIC FEATURES  Levy on Service Provider & exceptions.  Levy on Realisation - But Point of Taxation Rules from Provision of service / Issue of Invoice / Receipt of payment. Continuous supply of service. Applicable rate on change of rate.  Levy on Gross amount.

VALUATION  Section 67 – Gross Amount. - Reimbursement of Expenses. - Abatements. - Notification 12/ Consideration in kind. - Services provided free. - Transactions between associated enterprises.

PROCEDURES  Registration – Centralised registration.  Payment – Due dates.  Return – ST 3.  Self Assessment / Self adjustment.  Issue of Invoice.

CERTAIN IMPORTANT SERVICES Goods Transport Agency.  Reverse Charge.  Exemptions & Abatement.  No threshold exemption.  Cenvat Credit implications.  Lakshminarayana Mining Co Vs CCE 2009 (16) STR 691 Tri.

CERTAIN IMPORTANT SERVICES Construction related services.  Site Formation Service.  Commercial or Industrial Construction service.  Construction of Residential Complex Service.  Works Contract Service.

CERTAIN IMPORTANT SERVICES Business Auxiliary service. “business auxiliary service” means any service in relation to, — (i)promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii)promotion or marketing of service provided by the client; or (iii)any customer care service provided on behalf of the client; or (iv)procurement of goods or services, which are inputs for the client; or Explanation. — For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, “inputs” means all goods or services intended for use by the client; (v)production or processing of goods for, or on behalf of, the client; (vi)provision of service on behalf of the client; or (vii)a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods.

CERTAIN IMPORTANT SERVICES Professional services.  CAs / ICWAs / CSs / Advocates.  Consulting engineers.  Management Consultants.

CERTAIN IMPORTANT SERVICES Some more…  Clearing and Forwarding.  Customs House Agents.  Information Technology Services.  Hospitals.  Erection, Commissioning & Installation.  Repairs and Maintenance.  Renting of immovable property.  Supply of tangible goods.  And what not?

EXPORT AND IMPORT OF SERVICES Export of Service Rules.  3 Categories of Services.  No ST on export of services.  Rebate.  Cenvat Credit / Refund. Import of Services  Section 66 A – Indian National Ship Owners Association 2009 (13) STR 235 Bom.

REFUND FOR EXPORTS / SEZ Services consumed for Export.  Notification 41/2007.  Notification 17 & 18/2009.  Rule 5 of CCR, Services to SEZ Developers / Units.  Notification 4/2004.  Notification 9/2009 & 15/2009.  Notification 17/2011.

PENAL PROVISIONS  Penalty under Sec per day / 1 % p.m  Penalty under Sec. 77. Rs.10,000.  Penalty under Sec. 78  Delayed filing of return – upto Rs.20,000.  Waiver under Sec. 80.  Prosecution introduced.  Recovery measures.

SituationPosition in records Penalty prescribed Relief available No fraud, etc.Disclosed.1 % p.m. or Rs.100 per day, upto 50 % of tax u/s 76 No penalty if paid before SCN – u/s 73 (3). Section 80 waiver. Fraud, etc.Disclosed.50 % of Tax u/s 78 1 % p.m. upto 25 % - if paid before notice. 25 % if paid within 30 days of order. Waiver u/s 80 Fraud, etc.Not DisclosedEqual to tax u/s 78 No relief.

APPELLATE REMEDIES  Adjudication and Appeals.  Pre deposit.  No settlement commission.

Thank you