CA Madhukar N Hiregange
CA Rajesh Kumar T R
CA Sudhir VS
2
PREFACE
Service tax is a subject which has been posing quite a few probles to assessees since its
introduction in the !ear 1""# through $hapter % of &inance 'ct 1""#( )ver *s(131+000 $rores
has been collected last !ear on this count( ,he service tax law li-e other tax laws prevalent in the
countr! is not siple+ not equitable+ not certain and tax adinistration not fair( )ver the !ears
there have been nuber of instances where assessees have had to face litigations with the
departent at various levels ainl! due to lac- of clarit! in the subject atter( .t has been
observed that though the ,ribunals and $ourt provide the clarit!+ the deands fro the revenue
for the past periods are raised( /ow with the Negative List slated to augent revenues to at least
*s( 1+00+000 crores+ the earlier understanding of the provisions have substantiall! changed( ,he
professional advisor would also face difficulties while advising the clients in this area which is in
a developing stage(
,hough an attept has been ade to reove confusion b! appropriate clarifications
1education guide2 where ever applicable+ the assessee3s woes and the advisors probles are far
fro over( )ne of the ain reasons for this has been the fact that the subject has not !et
developed to the fullest extent and we continue to see changes ever! !ear b! wa! of aendents+
exeptions+ clarifications being given even after 1(4(2012( ,he coprehensive approach to cover
the taxes has not been correspondingl! found sealess cenvat credit with ost ajor restriction
still reaining( .nvariabl! it is seen that the changes have been priaril! been aied at
increasing the revenue to the governent even if it eans aring the tax adinistrators undul!(
.t is not uncoon to find entrepreneurs 5 business advisors5 chartered accountants new to
service tax who are doubtful5 unclear about the legal provisions pertaining to the sae( ,his brief
online boo- is aied at such $hartered 'ccountants in eplo!ent as well as practice 5 assessees
who are new to service tax practice and are interested in understanding the basic concepts of the
subject so that the! can ta-e steps to ensure effective copliance with the law( ,he attesting
auditor a! also li-e to have a handil! eas! to refer boo- for ensuring copliance under laws he
certifies when he signs off the financials for corporate( 6eeping this fact in ind and as well as
the constraints as to space+ this boo- deals with concepts of service tax to guide the assessee5
professional rather than an in7depth discussion of the legal provisions+ especiall! the taxable
services individuall!(
,his boo- has attained its present for partl! due to the efforts of the partners of 8iregange
9 'ssociates+ $hartered 'ccountants nael! 7 $' :adhu-ar / 8iregange+ $' *ajesh 6uar
3
,*+ $' Sudhir % S and also the efforts of qualified staff who have contributed especiall! $'
*oopa /a!a-(( ;e ac-nowledge their efforts(
,he boo- contains an overview of service tax initiall! which would provide the reader with a
bird3s e!e view of service tax( ,he reader is advised to go through the sae before proceeding
onto the subsequent chapters( ,his boo- also contains soe of the iportant procedures which
would be useful to the assessee in copl!ing with the legal provisions of service tax(
,he authors have tried their best to a-e this online boo- as coplete as possible but where
the readers have an! doubt regarding the subject atter are advised to refer a ore
coprehensive publication regarding the sae or see- expert opinion(
,he chapters in this boo- have been arranged in such a wa! as to give the reader a fairl! good
idea as to the provisions of law( ,he authors would also welcoe valuable suggestions fro the
readers+ which would help us in ensuring a better offering next tie around( &or an! coents or
feedbac- please write to hiregange<gail(co+ rajesh<hiregange(co or
sudhir<hiregange(co &or !our queries on the subject !ou a! also host !our queries on
pdicai(org under Service ,ax segent(
&inall!+ we wish the reader all the best in their career5 practice(
,ea 8iregange
02(4(2013
=angalore
#
Tabe !" C!ntents
#VERV$E% #F SERV$CE TA&(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10
$onstitutional validit! and concepts((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10
>ev! and collection((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((12
$oncept of $lassification(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((13
*egistration((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#
$oncept of consideration and valuation((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#
?a!ent of service tax(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1@
?a!ent of .nterest((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1A
$B/%', $redit schee((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((14
Bxport of Services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((14
&iling of returns(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10
'ssessent((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"
?rovisions as to recover!(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"
?rovisions pertaining to penalt!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((20
$ollecting aounts representing service tax(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((21
?rovisions pertaining to 'ppeals(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((21
SERV$CE TA& ' LEV(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((23
>ev! and charge of service tax((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((23
;hat is ServiceC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((23
$lassification of Service((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2@
)ECLARE) SERV$CE((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((24
1( *enting of .ovable ?ropert!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((20
2( $onstruction of $oplex(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2"
3( ,eporar! transfer or peritting the use or enjo!ent of an! intellectual propert!
right((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((31
#( Developent etc of ., software((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((32
@( /on $opete &ee((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((33
A( ,ransfer of goods b! wa! of hiring+ leasing+ licensing or in an! such anner without
transfer of right to use such goods(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((3#
4( Deliver! of goods on hire7purchase or an! s!ste of pa!ent b! installents(((((((3@
0( Service portion in execution of ;or-s $ontracts((((((((((((((((((((((((((((((((((((((((((((((((((((((3A
"( Suppl! of &ood or other articles of 8uan $onsuption((((((((((((((((((((((((((((((((((((((((30
NE*AT$VE L$ST((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((#2
1( Services provided b! Eovernent or >ocal authorit!F((((((((((((((((((((((((((((((((((((((((((((((#2
2( Services provided b! *eserve =an- of .ndia(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((##
3( Services b! a &oreign Diploatic :ission >ocated in .ndia((((((((((((((((((((((((((((((((((((##
#( Services relating to agriculture((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((##
@( ,rading of Eoods(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((#A
A( ?rocesses aounting to :anufacture or ?roduction of Eoods(((((((((((((((((((((((((((((((((#4
4( Selling of Space or ,ie Slots for 'dvertiseents other than 'dvertiseents
=roadcast b! *adio or ,elevision((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((#0
0( 'ccess to a *oad or a =ridge on ?a!ent of ,oll $harges(((((((((((((((((((((((((((((((((((((((@1
"( =etting+ Eabling or >otter!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((@1
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10( Bntr! to Bntertainent Bvents and access to 'useent &acilities(((((((((((((((((((((((@2
11(,ransission or Distribution of Blectricit!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((@3
12( Specified services relating to Bducation((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((@#
13( Services b! wa! of *enting of residential dwelling for use as residence((((((((((((((((@A
1#( &inancial Sector(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((@4
1@( Service relating to ,ransportation of ?assengers(((((((((((((((((((((((((((((((((((((((((((((((((((((@0
1A( Service relating to ,ransportation of Eoods((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((@0
14( &uneral+ =urial+ $reatoriu or :ortuar! services including transportation of the
deceased(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((@"
=rea- of $envat $hain(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((A0
CLASS$F$CAT$#N #F SERV$CE((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((A1
*elevance of the concept of classification(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((A1
?ossible raifications where the assessee gets the classification wrong((((((((((((((((((((((A#
?ointers for practice(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((A@
E&EMPT$#NS $NCL+)$N* ME*A E&EMPT$#N(((((((((((((((((((((((((((((((((((((((((((((((((A4
:ega Bxeption /otification(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((A4
Sall Service ?rovider Bxeption((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((04
'bateents(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((("0
?ointers for practice((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((("2
)ther exeptions((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((("3
PLACE #F PR#V$S$#N #F SERV$CE R+LES, -./-(((((((((((((((((((((((((((((((((((((((((((((("@
*ule 1#F )rder of application of rules((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((("A
*ule 13F ?owers to notif! description of services or circustances for certain purposes
((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((("4
*ule 12F ?lace of ?rovision of services provided on board a conve!ance(((((((((((((((((((("4
*ule 10F ?lace of ?rovision of goods transportation services((((((((((((((((((((((((((((((((((((((("0
*ule "F ?lace of ?rovision of Specified services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((("0
*ule 0F ?lace of ?rovision of services where provider and receiver are located in
taxable territor!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((101
*ule 47 ?art perforance of a service at different locations(((((((((((((((((((((((((((((((((((((((102
*ule AF ?lace of ?rovision of Services relating to events((((((((((((((((((((((((((((((((((((((((((((102
*ule @F ?lace of provision of services relating to iovable propert!((((((((((((((((((((((103
*ule #F ?lace of provision of perforance based services((((((((((((((((((((((((((((((((((((((((((10#
*ule 3F Eeneral *esiduar! rule((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10@
$onclusionF((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10@
REVERSE CHAR*E 0 1#$NT CHAR*E MECHAN$SM(((((((((((((((((((((((((((((((((((((10A
.ntroduction((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10A
/o $harging section w(e(f(1(4(12 on reverse charge(((((((((((((((((((((((((((((((((((((((((((((((((((10A
;hat is reverse chargeC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10A
;hat is Joint $harge :echanisC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((104
;hat is covered under *everse $hargeC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((104
;hat is covered under Joint $hargeC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10"
)ther relevant aspects((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((110
.portant point to be considered(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((111
$onclusion(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((112
CENVAT CRE)$TS AN) PA(MENTS((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((113
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.ntroduction((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((113
$oncept of .nput((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((11@
$oncept of )utput service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((11A
$oncept of $apital goods(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((114
$oncept of .nput Service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((110
Bxepted Service eans(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((121
Duties5taxes which can be considered for set off or availing credits(((((((((((((((((((((((((((122
UtiliGation of the credits((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((122
;hen inputs5capital goods are reoved outside the preises((((((((((((((((((((((((((((((((((((123
;hen inputs5capital goods are written off full!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((12#
*estriction in case of capital goods(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((12#
$envat $redits *efund for exporter of service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((12A
*ule A *eversal of $envat $redit(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((124
Docuentation wor- to be done((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((130
$oncept of input service distributor((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((132
?a!ent of service tax(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((133
*ecover! of cenvat credit wrongl! ta-en or erroneousl! refunded(((((((((((((((((((((((((((((13#
$onfiscation and penalt! in case of wrong availent of $envat $redits((((((((((((((((((((13#
?ointers for ?ractice(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((13@
VAL+AT$#N +N)ER SERV$CE TA&(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((134
;hat is the ain basis for valuationC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((134
$an the $entral Bxcise )fficer question the valuationC((((((((((((((((((((((((((((((((((((((((((((((130
;hether the gross aount charged for the service would include charges reibursed
b! the service receiverC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((13"
're there an! other specific inclusions and exclusions with regard to aount charged
for specific servicesC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#1
;here during the course of providing service+ there is transfer of propert! in goods+
what would be the valueC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#2
%alue of service portion in the execution of wor-s contract(((((((((((((((((((((((((((((((((((((((1#2
Deterination of value of the service in relation to one! changing(((((((((((((((((((((((((1##
?ointers for practice(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#@
$MP#RT AN) E&P#RT #F SERV$CES(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#4
.port of Services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#4
?ointers for practice(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#4
)EMAN), APPEALS, REC#VER( AN) PENALT$ES((((((((((((((((((((((((((((((((((((((((((1#"
Deand 9 'djudicationF(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1#"
'ppeals((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1@#
?enalties(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1@"
REF+N)S AN) RE2ATES((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1A2
.ntroductionF((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1A2
*efund under Section 11= of $entral Bxcise 'ct+ 1"##F(((((((((((((((((((((((((((((((((((((((((((((1A2
*efund of $envat $redit under *ule @ of $$* 200#((((((((((((((((((((((((((((((((((((((((((((((((((1A3
?rocedure for filing the refund clai(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1A@
?rocedure for refund of credits u5r @ of $$* 200# prior to the 01(0#(2012(((((((((((((((1AA
*efund Under /otification /o #1520127S, dated 2"(0A(2012 w(e(f 1(4(2012((((((((((((1A0
?rocedure for claiing *ebate((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1A0
4
8ow does the schee of rebate wor-C((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((14@
*ebate of the service tax on taxable services exported(((((((((((((((((((((((((((((((((((((((((((((((14@
*ebate of the service tax on input services or dut! on inputs(((((((((((((((((((((((((((((((((((((144
PR#CE)+RES %$TH RE*AR) T# RE*$STRAT$#N(((((((((((((((((((((((((((((((((((((((((100
;hen does the service provider require registration under Service ,axC(((((((((((((((((((100
;hat is the procedure for registrationC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((100
8ow is centraliGed registration differentC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((102
8ow to a-e aendents with regard to changes in particularsC(((((((((((((((((((((((((((((102
Service ,ax *egistration /uber((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((103
?reise code((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((103
PR#CE)+RE %$TH RE*AR) T# $NV#$C$N*(((((((((((((((((((((((((((((((((((((((((((((((((((10#
8ow to raise a proper invoiceC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10#
REC#R) KEEP$N*(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10A
PA(MENT #F SERV$CE TA&((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10"
Deterination of ?oint of ,axation(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((10"
8ow to pa! service taxC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"2
SERV$CE TA& RET+RNS(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"#
8ow to file the service tax returnC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"#
;hat is the procedure to file the returns onlineC(((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"@
SERV$CE TA& A+)$TS 2( PR#FESS$#NALS((((((((((((((((((((((((((((((((((((((((((((((((((((((1"4
;hat is required of the auditorC((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((1"4
?ointers for practice(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((201
FRE3+ENT ERR#RS C#MM$TTE) $N SERV$CE TA&(((((((((((((((((((((((((((((((((((((204
#THER M$SCELLANE#+S ASPECTS $N SERV$CE TA&(((((((((((((((((((((((((((((((((((20"
.nterest and penalt! calculations((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((20"
?rovisions as to penalt!(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((210
Searching of preises b! authoriGed officers((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((211
)ther recover! provisions((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((211
>iabilit! under 'ct to be &irst $harge(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((212
)ffence and penalties(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((212
'pplication of the provisions of the $entral Bxcise 'ct 1"##((((((((((((((((((((((((((((((((((((212
S#ME #F THE $MP#RTANT C#MM#N SERV$CES(((((((((((((((((((((((((((((((((((((((((((21#
*enting of .ovable ?ropert! Services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((21#
:anageent+ :aintenance or *epair Services(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((21A
.nforation ,echnolog! Software Services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((214
Eoods ,ransport 'genc! Services(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((21"
;or-s contract service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((220
Suppl! of tangible goods for use service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((22@
$onstruction of coplexes((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((22"
=usiness 'uxiliar! Service((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((23#
Support services of business or coerce((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((23A
Sale of goods((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((23"
.nterior decorator(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2#0
*enting of cabs((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2#1
,our operator3s service((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2#2
$oercial training or coaching((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2##
0
:anageent or business consultant3s services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2#0
$oposite services((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2#"
8ealth Service((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2#"
>egal $onsultanc! service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2@1
=rand ?rootion service(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2@2
2$2L$#*RAPH(4REFERENCES4 ACKN#%LE)*EMENTS(((((((((((((((((((((((((((((2@#
APPEN)$&(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((2@@
"
#VERV$E% #F SERV$CE TA&
,ax on services has been in vogue in .ndia since 1""# when it was introduced for the first tie(
;hen it was introduced initiall!+ there were three services which were liable but over the !ears
various other services have been added to ta-e it to 11" in 2011( ,his !ear with the negative list
the nuber of services could be guesstiated to be in excess of 300H
)ne of the ain reasons for the services to be taxed is that the anufacturing sector can be taxed
onl! to a certain extent if we are to ensure the copetitiveness of our industr!+ since ours is no
longer a closed econo!I all activities are to bear the burden( Services presentl! foring ore
than @4 J of the ED? are expected to reach 40J this decade+ which should also bear the burden
of tax( ,his tax would be subsued into the Eoods and Service ,ax which a!be in place in the
next few !ears(
,he lev! of service tax was initiall! under the residuar! powers conferred to the Union b! entr!
"4 of >ist . to the Seventh Schedule to the $onstitution of .ndia( >ater entr! "2$ was introduced
specificall! to cover K,axes on Services3+ though not put into effect till date( Unli-el! with ES,
in the horiGon(
Constitutional validity and concepts
Whether tax on services is constitutionally valid?
.n a nuber of cases+ the constitutional validit! of service tax has been questioned and the
decisions of the 8igh $ourts5 Supree $ourt have been in favour of revenue( .n Tamil Nadu
Kalyana Mandapam Assn Vs UOILL200#M L1A4M B>, 3M S $++ the lev! of service tax on andap
-eepers and outdoor caterers was upheld b! the Supree $ourt as a tax on services and not a tax
on sale of goods or hire purchase activities( ,he lev! of service tax on professional services of
$hartered 'ccountant+ $ost 'ccountant and 'rchitect was also upheld b! the Supree $ourt in
'll .ndia &ederation of ,ax ?ractitioners %s U). L2004 L04M S,* A2@7S$M(
.n GDA Security Private Ltd. Vs. UOIL200AL02MS,*@#2M it was held b! the :adras 8igh $ourt
that the tax on profession was levied in order to allow professionals to carr! on a particular
profession+ trade or calling or eplo!ent in a particular state( ,he aspect of providing a service
was held to be different and independent of the aspect of profession and the lev! of service tax on
securit! agenc! was upheld(
,his has been the case for the chartered accountants+ architects and advertisers also( ,he question
of constitutionalit! would favour the revenue( 's on date+ the validit! of service tax lev! on rental
10
of iovable propert! is an issue to be decided b! the Supree $ourt though the Delhi 8igh
$ourt has aditted a writ petition in 8oe Solution *etail .ndia >td %s U). L200"7,.)>71"A7
DB>78$7S,M challenging the lev! of service tax on pure renting of iovable propert! without
there being a service associated with the renting(
,he Supree $ourt recentl! upheld the validit! of service tax on financial leasing services
including equipent leasing and hire purchase in 'ssociation of >easing 9 &inancial Service
$opan! L20107,.)>7047S$M and observed that service tax would be pa!able as there is a
rendition of service in financial transactions(
.n addition to the above+ the other relevant decisions are discussed below where the courts have
upheld the validit!F
i( 'ddition 'dvertising %s U). 1""0 L"0M B>, 1#F Service tax on advertising service is
constitutional and not violative of article 1# and 1"L1M of $onstitution of .ndia(
ii( .ndian .nstitute of 'rchitects %s U). 2002 L13"M B>, 2#@F Service tax is a tax levied on
services and it is not a tax on professionals( ?arliaent is copetent under entr! "4 to
lev! service tax on architects(
iii( Secretar!+ &ederation of =us )perators 2001 L13#M B>, A10F ,ax on service is distinct
fro tax on profession+ trade or calling and not falls under entr! A0 of list ..( Different
aspects are liable for tax(
iv( >% San-eshwar 200A L#M S,* 2@4F ,our operator not to be tered as transferor of right
to use vehicles as per article 3AAL2"'M of the $onstitution of .ndia( >ev! of service tax
neither tax on passenger nor goods(
v( .nfotech Software Dealers 'ssociation L2010 L020M S,* 020" :adMF wherein an
iportant decision in the context of taxation of software has been delivered( ;hile
holding that software Lpac-aged or custoiGedM is goods+ the $ourt has also upheld the
validit! of lev! of service tax on ., software services(
What is the concept of service as understood here?
'ssessees should note that in order to attract the lev! under service tax law+ there should first of
all be a service finding a ention in sec A@L10@M( ,he concept of NserviceO though has not been
defined for this purpose and one would have to refer the eanings given b! dictionar! to
understand the sae or even the word as understood coerciall! can also be considered( ,his
view has been followed in =ajaj 'uto >td %s $$B ?une 11""4 L"#M B>, @#@ L,riM2(
Under the positive list based taxation+ the ter service was not defined( Under negative list based
taxation+ wef 1(4(2012+ there is a specific definition of ter service(
11
,he concept has been explained in the chapter on lev!(
What would be the position under law, where service involves goods?
Service tax is a tax on service and not a tax on sale of goods( ,he various decisions given b! the
$ourts on the constitutional validit! of service tax have also clarified his aspect( .t has
accordingl! been held that service tax and %', are utuall! exclusive and the definition of
service confirs this( ,here are notifications issued under service tax providing deduction 5
abateent in respect of the transfer of propert! in goods ade during the provision of services
and this deduction5abateent would be fro the gross value charged for the service( ,he
applicabilit! of these notifications would depend on the nature of the services involved and the
activities perfored( =efore opting for the benefit of these notifications+ the assessee should
ideall! perfor a cost7benefit anal!sis as there are associated conditions to be et to clai such
deduction(
Governing provisions
,he provisions pertaining to service tax are given in $hapter % and %' of &inance 'ct 1""# as
aended fro tie to tie( ,he $entral Eovernent has also been epowered to a-e rules to
carr! out the provisions of this $hapter+ through section "# of this chapter( ,his coes along with
the power to grant exeptions fro Service ,ax u5s "3( ,he Eovernent has consequentl!
notified various sets of rules+ the provisions of which have been explained as we proceed with
this boo-( ,he rules which a! be noted are as follows
Service ,ax *ules 1""#I
$envat $redit *ules 200#I
Bxport of Service *ules 200@I
Service ,ax L*egistration of Special $ategor! of ?ersonsM *ules 200@I
Service ,ax LDeterination of %alueM *ules 200AI
?oint of ,axation *ules 2011
?lace of ?rovision of Services *ules
,axation of Services L?rovided fro outside .ndia and received in .ndiaM *ules
200AI;or-s $ontract L$oposition Schee for ?a!ent of Service ,axM *ules 2004I
Service ,ax L'dvance *ulingsM *ules 2003I
Service ,ax L?ublication of /aesM *ules 2000I
Service ,ax L?rovisional attachent of propert!M *ules 2000
12
Levy and collection under earlier service tax law[upto !"!#$#%
,helev! of service tax extends to whole of .ndia except that it does not extend to a service
provider providing taxable services fro the state of Jau and 6ashir b! virtue of section A#
of $hapter % of &inance 'ct( Under negative list based taxation+ the service tax lev! is applicable
on the services provided in taxable territor! of .ndia(
Under positive list based taxation+ the question of taxing a service would arise where the service
that is provided b! the service provider happens to be covered under the an! of the sub7clauses of
section A@L10@M ( )nce the relevant clause is identified+ the concept of Nservice providerO and
Nservice receiverO would also have to be satisfied in order to tax the concerned service( .n ost of
the categories+ the Nservice providerO and the Nservice receiverO can be any pers!n(
.n other words+ under erstwhile service tax law+ the lev! of service tax was on the provision of
specified taxable service at the rate of 12J wef 1(#(2012110J wef 20(2(200"2( &urther to
understand the lev! and collection of the service tax upto 1(4(2012+ understanding the eaning
and scope of the ter taxable service would be iportant(
;here the criteria discussed above are satisfied+ the tax would be levied on the service provider
who would be liable to collect the service tax aount fro the service receiver and reit it to the
governent in the anner prescribed( 8owever in certain cases the statute requires the service
receiver to pa! the service tax to the governent( ,he charge of service tax would be at the rates
set out in section AA which was increased fro 10J to 12J wef 1(#(2012( ,he education and
secondar! higher education cess would be pa!able on this aount at 3J and the total service tax
including cess is 12(3AJ1fro 1(#(2012 to 30(A(20122(
Since the lev! of service tax is on the provision of service+ the services provided before the date
on which such services were brought under the tax net+ would not be subjected to service tax(
*eaders here a! note that even if the bills for the services provided are raised b! the service
provider after the date on which the service becae taxable+ there would be no liabilit! as the
services had been provided during the period when the service was not taxable at all( ,his has
been confired b! the 'hedabad 8igh $ourt in Schott Elass .ndia L?M >td %s $oissioner
$entral Bxcise and $ustos %adodara .. L200"7,.)>70278$7'8:7S,M
Concept of Classification under earlier service tax law [upto !"!#$#%
,he classification of the service is defined to ean identification of the appropriate sub7clause
under sec A@L10@M( ,he service provider should ensure that the service 5 activit! is classified
properl! as this would enable hi to ascertain his liabilit! properl!( $orrect classification is
13
critical as the exeptions under service tax barring the general exeptions are based on specified
categories and if the classification is not proper+ the service provider a! either end up pa!ing
ore than what is required or even face a liabilit!(
.t is possible that the services provided a! fall under ore than one categor!( Siilarl! the
service provider a! be providing nuerous individual services or cobined services( &or the
purposes of classification+ the categor! which gives the ost specific description of the service
should be adopted( ;here coposite services Lcobination of different servicesM are provided+
the classification should be on the basis of the service which gives the their essential character(
;here the aforesaid two principles cannot be followed for classification+ the classification shall
be under the sub7clause which occurs first aong the sub7clauses which equall! erit
consideration as per section A@'( .n addition to this+ the non statutor! principles as to
consideration of trade parlance especiall! where certain NtersO are not defined under law would
also assue significance as indicated in "" General #Ne$ Del%i& Vs Gu'arat Perst!rp
(lectr!nics Ltd 200@ L10AMB>,@32
&egistration
Bver! person liable to pa! service tax is required to register b! a-ing an application to the
Superintendent of $entral Bxcise in ters of section A"( ,he service provider before registering
shall ensure that the basic exeption liit for registration available to all service provider has
been crossed( ,he present notified liit at present is *s( 10 la-hs+ specified b! notification A5200@
S, dated 01(03(0@ as aended fro tie to tie( ,his notification superseded b! notification
no(33520127S,( =randed service providers i(e( providing services under brand nae or trade nae
of others would not be eligible for the exeption( 'n illustration could be the coercial
coaching franchisees( 1 exaple tall! acadeies2( ,he exeption fro registration would not
be available for a person who is liable to pa! service tax as receiver of services( :oreover+ the
aggregate value of taxable services provided in the preceding financial !ear should not exceed *s(
10 la-hs in order to avail the benefit of exeption(
.n ters of *ule # of Service ,ax *ules 1""#+ an application in &or S, 1 would have to be filed
within thirt! da!s fro the date on which the taxable service is provided5tax is levied on such
service( Such for is now to be filed online through www(aces.)!v.in wherein the assessee would
have to first register hiself as a user and then fill the for S,71 Lthe procedure in this respect is
discussed in the chapter N?rocedures with regard to *egistrationOM,he service provider also has
1#
an option of going in for centraliGed registration where the accounting and5or billing activities are
centraliGed(
' change in the inforation or an! additional inforation sought to be given shall be intiated in
writing to the jurisdictional 'ssistant $oissioner of $entral Bxcise or Deput! $oissioner
of $entral Bxcise( ,here is a penalt! of *s 10+00057 for dela! in registration(
Concept of consideration and valuation
'fter ascertaining the taxabilit!+ the valuation of taxable services becoes iportant for the
reason that the service tax liabilit! is deterined based on the value of taxable service( ,he value
is arrived norall! on gross basis and is on the aounts charged for the taxable services
provided( ,he non7taxable services or non7service activities would not for part of gross value
for service tax coputation( 's per section A4+ where the consideration is wholl! in one!+ the
gross aount charged for the service would be liable( Bven reiburseents of expenses shall be
liable as per *ule @L1M of Service ,ax LDeterination of %alueM *ules 200A unless the sae is
incurred b! the service provider as a pure agent of the service receiver( ,he conditions to be
satisfied for this are explained in the chapter on valuation( ,he gross aount charged shall
include pa!ent b! cheque+ credit card+ deduction fro account and an! for of pa!ent b!
issue of credit notes or debit notes and boo- adjustent( )ne would have to refer the rules on
valuation to ascertain the value where the consideration is not wholl! or partl! in onetar! ters
or where the sae is not ascertainable(
'ay(ent of service tax
,he service provider providing taxable services shall be required to pa! service tax under section
A0L1M( 8owever+ the service provider does not have to pa! service tax until the value of service is
collected+ fro the service receiver towards the taxable services provided b! virtue of *ule A of
Service ,ax *ules 1""#(
8owever with the introduction of ?oint of Service *ules+ effective fro 01(0#(2011+ the above
said discussion would not be of uch of iportance+ since it requires pa!ent of service tax at
earliest of the following
a( Date on which service is provided or to be provided
b( Date of invoice
c( Date of pa!ent
8owever in case of iport of service under section AA' point of taxation shall be date on which
invoice was received or pa!ent is ade which ever was earlier(
1@
i( 'pplicabilit! of rate of service taxF ,he service tax rate shall be the rate
prevailing on the date on which the service is deeed to be provided as per the
?oint of ,axation *ules+ 2011( Barlier the rate prevailing at the tie of raising the
invoice was considered for charging service tax+ irrespective of date of
realiGation(
ii( 's per section A4'+ the rate of service tax is rate applicable when service
provided or agreed to be provided( .n Delhi $hartered 'ccountants Societ!
L*egdM vs U). and )rsL20137,.)>70178$7Del7S,M held that where services of
$hartered 'ccountants were actuall! rendered before 1(#(2012 and the invoices
also issued before that date+ but the pa!ent was received after that date+ the rate
of service tax would be 10J and not 12J(
iii( ?a!ent of Service ,axF ,he service tax has to be paid to the credit of $entral
Eovernent within due dates iediatel! the following onth5quarter in which
the services are deeed to be provided as per the ?oint of ,axation *ules+ 2011(
iv( 'djustent for non7provision of serviceF .n case of assessee who has issued an
invoice5 received pa!ent towards a service to be provided and has not provided
service Lin full or partM or where aount of invoice is renegotiated due to
deficient provision of service or an! ters of contract+ he is eligible to ta-e the
credit of excess S, paid b! hi if heF
i. *efunded the pa!ent along with the S, to the receiver of service or
ii( .ssued a credit note for the value of service not so provided to the person
to who he has issued invoice(
Bnhanceent of the adjustent liitF .n case where the assessee has paid to the credit of $entral
Eovernent an! aount in excess of the aount required to be paid towards service tax liabilit!+
can be adjusted in the subsequent period without an! onetar! liit(
?a!ent u5s A0L2M b! the service receiver under earlier service tax law
Eenerall! it is the service provider providing taxable services+ who is responsible for collection of
service tax fro his custoer5client(( =ut section A0L2M epowers the governent to notif! the
services with regard to which the service receiver would be held liable to pa! service tax to the
governent( ,he governent has consequentl! notified the following services in this regard
through notification 3A5200# S, dated 31(12(200# as aended fro tie to tie
Eoods ,ransport 'genc! service specified person pa!ing the freight
=usiness auxiliar! service of distribution of utual fund b! a utual fund distributor or
agent utual fund or asset anageent copan! receiving such service
1A
Sponsorship service provided to an! bod! corporate5fir in which case+ thebod!
corporate or fir receiving such sponsorship service would be liable
,axable services received b! an! person in .ndia fro abroad the recipient of such
service in .ndia(
.nsurance auxiliar! service b! an insurance agent person carr!ing the general insurance
business or life insurance business
.n the opinion of the authors+ where the service provider pa!s the service tax+ the service receiver
can still be called upon b! the departent to pa! service tax as a receiver of such services(
8owever+ if one were to go as per the clarification provided b! the departent through its aster
circular on procedural issues "45A52004 dated 23(00(04+ it had clarified that where service tax had
been paid b! the service provider the sae could be ta-en as credit( ,his would lend credibilit! to
the theor! that a transaction cannot be taxed twice which could be a possible defense(
'ay(ent of )nterest
Section4@ of $hapter % of &inance 'ct 1""# as aended fro tie to tie provides for pa!ent
of interest b! the assessee where there is short pa!ent or dela! in pa!ent of service tax( ,he
present notified rate is 10J p(a( siple interest and this should be paid along with the tax( ,he
interest shall be for the period of default( .nterest is andator! in nature as far as the service tax
is concerned( ,he calculation of interest under service tax law is different and considers the actual
dela! in ters of da!s i(e( the calculation is not siilar to the one followed under the .ncoe ,ax
law or the 67%', law(
C*+,-. Credit sche(e
,he service provider providing taxable services is entitled to avail cenvat credit of the service tax
paid on input services in addition to the excise dut! paid on inputs and5or capital goods provided
the! are used for providing such taxable service( ,his credit can be used b! the service provider
to set off the liabilit! on his services( ,his would reduce the outflow in cash on account of service
tax and ore iportantl! avoids cascading effect of taxes(
Bg .f the liabilit! is *s( 1000057 and the accuulated credits is *s( #@0057+ the service provider
can set off his liabilit! with the accuulated credit and is required to pa! the balance of onl! *s(
@@0057 in cash(
,he credit of service tax on input services Leg( ,elephone service+ anageent consultanc!+
professional services+ securit! service etcM would be available on accrual basis 8owever+ the
14
credit of excise dut! 1 additional dut! of custosL$%DM2 either on inputs or capital goods is
available on receipt i(e( the pa!ent to the vendor or the anufacturer is not required( ,he
service provider would however have to be careful where the service provider provides both
taxable and exepted services in which case the service provider is required to follow rule A of
$envat $redit *ules 200# for the purpose of availent(( *eversal 5 restriction on availent a!
have to be done in such cases(
*xport of /ervices upto !"!#$#
,he services has been structured b! brea-ing up the sae into three groups5sectors i.e. based on
the situation of iovable propert!+ based on the perforance of service and based on the
location of the recipient of service( &or each of the categor!+ the coon condition is the receipt
of consideration in $onvertible &oreign Bxchange( ?rior to 24(02(2010+ in addition to the said
condition+ there was one ore condition requiring the service provider to provide service fro
.ndia and service receiver to use the sae outside .ndia(
,he service provider who exports his service in accordance with the Bxport of Service *ules
200@ would not have to pa! service tax on such exports( 8e would also have the option of going
in for the rebate of service tax paid on taxable service exported or service tax paid on input
services or excise dut! paid on inputs used in providing such taxable services exported in
accordance with *ule @ of Bxport of Service *ules 200@ and the notifications specified
thereunder( 1/otification 11 0r 12 of 200@2 'nother option would be that of refund in accordance
with *ule @ of $envat $redit *ules 200#(
0iling of returns
,he service provider is required to subit half7!earl! returns in &or S,73 or &or S,73' Lin
case of provisional assessentM as the case a! be with relevant copies of &or E'* 4+ in
triplicate b! the 2@
th
da! of the onth following the end of the relevant half7!ear in ters of *ule
4 of Service ,ax *ules 1""#( &ro 01(0#(2010 e7filing of return is andator! for the service
providers who have paid central excise dut! or service tax of *s( 10 la-hs or ore in the
preceding financial !ear+ whether b! cash or debit in $envat credit account or both vide circular
/o( "1"50"520107$P dated 23(03(2010( &or S,73' is to be used where a deposit is to be ade
provisionall! Li(e( the assessee has opted for provisional assessentM( ,he returns are to be filed
for the half !ear ending 30
th
Septeber and for the half !ear ending on 31
st
:arch( ,his !ear the
tie for filing of the return has been extended to 1"
th
Januar! 2013 due to the need for different
inforation consequent to negative list(
10
;here the assessee a-es a ista-e in the return+ the revised return in &or S, 3 should be
subitted within ninet! da!s and not three onths fro the date of subission of the return
under *ule 4(
;here the filing of the return is dela!ed+ the service provider would have to pa! a su to the
credit of the central governent as follows under *ule 4$ of Service ,ax *ules 1""#
*s( @00 for a dela! of 1@ da!s fro the prescribed date
*s( 1000 where the dela! is between 1@ and 30 da!s fro the prescribed date
*s( 1000Q *s( 100 per da! of dela! where the dela! is be!ond 30 da!s fro the
prescribed date but not exceeding *s( 2000 in ters of Section 40(#N!$ t%e ma*imum
penalty is increased +r!m ,s -... t! -....&
*ule 4$ epowers the $entral Bxcise )fficer to reduce or waive the penalt! for dela!ed filing of
return+ where the gross aount of service tax pa!able is nil and there was sufficient cause for not
filing the return(
Section 41enables the =oard to notif! a schee for preparation and filing of service tax returns
through a class of persons -nown as Service ,ax *eturn ?reparer authoriGed for this purpose( ,he
assessee could thus utiliGe the services of S,*? where he has an! difficult! in filing the returns(
,he Eovernent has fraed the Service ,ax *eturn ?reparer Schee 200" notified through
/otification 45200" S, dated 03(02(0"+ a cop! of which can be obtained on the website
www(cbec(gov(in(
*ecentl! with an :)U with $=B$ and .$'.+ $hartered 'ccountant can register as a $ertified
&iling $enter and can offer the service of filing service tax and excise returns online through
'$BS website( 1visit icai(org2
-ssess(ent
,he assessee is required to assess the tax pa!able b! hi and pa! the sae on onthl! or
quarterl! basis as applicable( .n other words+ what is envisaged here is self7assessent( *ule AL#M
of Service ,ax *ules 1""# enables the service provider to opt for pa!ent on provisional basis
where there is a difficult! in ascertaining the aount to be paid( &or this+ the service provider
shall a-e an application to '$$B5D$$B( ,he assessent would be finaliGed at a later date( ,he
departental authorities can call for further inforation as the! a! require fro tie to tie(
,he provisions of $entral Bxcise *ules would appl! here in relation to such provisional
assessent with the exception as to requireent of furnishing of bond(
1"
.s best judgent assessent possible under service taxC
Section 42 authoriGes the $entral Bxcise )fficer to a-e such assessent after allowing the
assessee to represent his case+ where the assessee has failed to a-e service tax returns or assess
the tax properl!( ,hus where the assessees fail to assess tax properl! or fail to furnish return itself
the! could face the ris- of the departent calling for a best judgent assessent( 8owever these
assessents are expected to lead to substantial litigation(
'rovisions as to recovery
's per section 43 of $hapter % of &inance 'ct 1""# as aended+ where the service tax has not
been levied or paid or has been short7levied or short7paid or erroneousl! refunded+ the $entral
Bxcise )fficer handling service tax can serve a Show $ause /otice on the person chargeable with
service tax as to wh! he should not pa! the aount specified in the notice( ,he notice shall state
the aount involved(
,his can be done within one !ear fro the relevant date unless such short pa!ent5 non7
lev!5refund was b! reason of fraud or collusion or willful is7stateent or suppression of facts or
contravention of the provisions of $hapter % or rules ade there under with the intent to evade
pa!ent of service tax( .n such cases+ the tie liit would be five !ears(
,here is an option of copleting the proceedings b! pa!ent of the tax aount along with
interest u5s 4@ before issue of notice in cases pertaining to fraud+ collusion etc(+ b! pa!ing the said
tax and interest along with penalt! of 2@J of the service tax specified in the notice within 30
da!s fro the date of counication of notice( In t%e /inance 0ill -.11 t%e said 2ene+it $as
e*cluded $it% respect t! cl!sure !+ pr!ceedin)s a+ter payment !+ penalty under secti!n 34#1A&&
5!$ever revised 2ene+it %as 2een pr!p!sed 2y intr!ducin) secti!n 34#6A& 2y virtue !+ $%ic%
$%ere true and c!mplete rec!rds are availa2le in t%e speci+ied rec!rds and t%e assessee durin)
t%e c!urse !+ audit veri+icati!n !r investi)ati!n pays t%e ta* interest penalty. T%e e*tent !+
penalty in t%is re)ard is 17 P.M !+ t%e ta* am!unt +!r t%e durati!n !+ t%e de+ault upt! a
ma*imum !+ -87 !+ t%e ta* am!unt. It is imp!rtant t%at t%e am!unt !+ ta* is paid 2e+!re t%e issue
!+ n!tice and in+!rmati!n !+ t%e same is pr!vided t! t%e central e*cise !++icer !+ suc% payment in
$ritin).
It is +urt%er pr!vided t%at t%e central e*cise !++icer may determine t%e am!unt !+ service ta*
$%ic% is unpaid 2y t%e assessee and t%e central e*cise !++icer in t%is scenari! %as p!$ers t!
pr!ceed +!r rec!very 2y issuin) a s%!$ cause under secti!n 34#1&
20
9Speci+ied rec!rds: means rec!rds includin) c!mputeri;ed data as are re<uired t! 2e
maintained 2y t%e assessee in acc!rdance $it% any la$ +!r t%e time 2ein) in +!rced !r $%ere
t%ere is n! suc% re<uirement t%e inv!ices rec!rded 2y t%e assessee in t%e 2!!=s !+ acc!unts s%all
2e c!nsidered as speci+ied rec!rds.
'rovisions pertaining to penalty
Section 4A of the &inance 'ct provides for a penalt! in case of failure to pa! tax+ of an aount
equal to the higher of 7
1( ' su of not less than rupees one hundred for ever! da! during which the failure to pa!
tax in accordance with section A0 continues+ or
2( )ne percent of the tax for ever! onth+ starting with the first da! after the due date till
the date of actual pa!ent of service tax due(
,he total aount of penalt! cannot exceed @0J of the aount of service tax pa!able(
Section 44 deals with penalt! for a contravention where no specific penalt! is prescribed( ,he
penalt! in cases of fraud+ collusion+ willful isstateent+ suppression of facts or contravention of
an! provision with an intention to evade the pa!ent of service tax would be u5s 40( LSection 40
is being aended to provide that in a case where penalt! u5s 40 is iposed+ penalt! for failure to
pa! service tax u5s 4A shall not appl!M( &urther an explanation to section 43L3M is being added
whereb! if the aount of service tax and interest is paid b! the assessee before the issue of show
cause notice then no penalt! is leviable under an! of the provisions of this 'ct or the *ules ade
thereunder(
Collecting a(ounts representing service tax
'n! person collecting an! aount as representing service tax or in excess of the service tax
liable+ or collecting service tax on transaction not liable for service tax has to depositsuch
aounts with the $entral Eovernent as per section 43'( ,he provision for the interest on the
sae is governed b! section 43=(
'rovisions pertaining to -ppeals
Section 0@ of the &inance 'ct+ allows an assessee or revenue aggrieved b! an! decision or order
passed b! an adjudicating authorit! subordinate to the $oissioner of $entral Bxcise+ to appeal
to the $$B L'ppealsM within sixt! da!s wef 1(#(2013 1earlier it was three onths2 fro the date
of receipt of the decision of the authorit!(
21
*ule 0 of Service ,ax *ules 1""# requires the appeal to be ade on &or S,7# in duplicate( '
cop! of the order sought to be appealed against is also to be filed with the appeal(
Section 0A allows the assessee or revenue to a-e an appeal to the 'ppellate ,ribunal against the
order passed b! either the $$B or $$B L'ppealsM( ,he appeal is to be filed within three onths
of the date on which the order sought to be appealed against is received b! the assessee and as per
*ule " of Service ,ax *ules 1""#+ would be filed on &or S,7@ and would be in quadruplicate(
Bven orders passed either under section 43 dealing with recover! or a revision order of the $$B
u5s 0# or order adjudging penalt! u5s 03' a! be appealed against(
's far as appeals to 8igh $ourt and Supree $ourt are concerned the provisions of sections 3@E
and 3@> of the $entral Bxcise 'ct 1"## would appl!( ,he appeal to 8igh $ourt can be ade
against the order of the 'ppellate ,ribunal once the 8igh $ourt is satisfied that the case involves
a substantial question of law( ,he appeal shall be within 100 da!s fro the date on which the
order appealed against is received b! the assessee( ,he fee shall be rupees two hundred(
,he appeal against the order of the 8igh $ourt shall be with the Supree $ourt once the 8igh
$ourt certifies the case to be one that is fit for appeal to Supree $ourt( ,his a! be done on its
own otion or on an application b! the assessee once its judgent is delivered( ,he decision of
the Supree $ourt shall be final and binding on the parties concerned( ,he practice of the
revenue departent to continue to raise protective deands or litigate a atter uch after its
judicial confiration should be discouraged as it aounts to a harassent to the tax copliant
service providers5 receivers who contributes ore than 00J of the total collections of taxes
whether in direct or indirect taxes( .t would also ebrace the global best practice of trusting the
tax pa!er both in word and spirit reduces the cost of tax adinistration(
22
SERV$CE TA& ' LEV(
Levy and charge of service tax
Barlier+ Service tax was applicable to defined service providers+ providing defined taxable
services+ to defined service receivers+ in .ndia( ,he tax was liable on the gross aounts charged
for such service less the deductions and exeptions set out therein( /ow+ the Service ,ax law has
undergone a sea change with the ter Kservice3 b! itself being defined and all the activities which
satisf! the definition criterion fall under the service tax net ( ' list of 14 activities called the
negative list is provided which are copletel! outside the service tax net ( :ost of the earlier
exeption notifications have been scrapped and a ega exeption notification consisting of 3"
ites is given( ,hus one has to chec- the negative list+ then the exeption notification and if an!
activit! is not specified therein+ it is a taxable service( ,he lev! now is still on the provision of
service+ but for cr!stalliGation we have to chec- the ?oint of ,axation *ules+ 2011(
What is /ervice?
' new Section AA= has been introduced in this &inance 'ct and KService3 has been defined in
clause L##M of the new section A@=( ,he definition of service has be divided into three parts i(e(
Keans part3+ Kinclusive part3 and Kexclusion part3(
Means 5art !" the de"initi!n
RServiceR eans an! activit! carried out b! a person for another for consideration( ,he definition
of service has the following essential requireentsF
a( .t has to be an! activit!+
b( Such activit! has to be carried out b! a person+
c( Such person has to carr! out the sae for another person+
d( ,he activit! has to be for a consideration
$n6usive 5art !" the de"initi!n
.nclusive part of the definition has ipact of enlarging the scope of the definition( .t gives wider
eaning to words or phrases in the statute( ;hen it is used in words or phrases+ it ust be
construed as coprehending not onl! such things as the! signif! according to their nature and
ipact+ but also those things which interpretation clause declares the! shall include( ,he
definition of service also includes the declared service in the inclusive part( ,his is done to avoid
abiguit! in so far as the activities entioned under declared services which could lead to
continued litigation( 8owever the contradiction between the definition part and the inclusion part
as well as the possible variance with the $entres powers laid down under the $onstitution of
.ndia are li-el! to see disputes continuing(
S5e6i"i6 e76usi!ns "r!m the de"initi!n !" servi6e
,he definition of Kservice3 as provided in Section A@= L##M specificall! excludes certain activities
23
which would not be considered as service( ,hat is to sa! that these activities when
perfored5executed shall be out of scope of the service tax lev!(
LaM an activit! which constitutes erel!+
LiM a transfer of title in goods or iovable propert!+ b! wa! of sale+ gift or in an!
other annerI or
LiiM a transaction in one! or actionable claiI
LbM a provision of service b! an eplo!ee to the eplo!er in the course of or in relation to
his eplo!entI
LcM fees ta-en in an! $ourt or tribunal established under an! law for the tie being in force(
,here are three explanations inserted after the eans+ inclusive and exclusive libs of the
definition of service( ,he! are as followsF
Bxplanation 1 stipulates that the definition sha n!t a558 t!
L'M the functions perfored b! the :ebers of ?arliaent+ :ebers of State >egislative+
:ebers of ?ancha!ats+ :ebers of :unicipalities and :ebers of other local
authorities who receive an! consideration in perforing the functions of that office as
such eberI or
L=M the duties perfored b! an! person who holds an! post in pursuance of the provisions of
the $onstitution in that capacit!I or
L$M the duties perfored b! an! person as a $hairperson or a :eber or a Director in a bod!
established b! the $entral Eovernent or State Eovernents or local authorit! and who
is not deeed as an eplo!ee before the coenceent of this section(
Bxplanation 2 provides that
transaction in one! shall not include an! activit! relating to the use of one! or its
conversion b! cash or b! an! other ode+ fro one for+ currenc! or denoination to
another for+ currenc! or denoination for which a separate consideration is charged(
Bxplanation 3 is an exception to the part that there have to be 2 distinct persons for provision of
service(
LaM an unincorporated association or a bod! of persons+ as the case a! be+ and a eber
thereof shall be treated as distinct personsI
LbM an establishent of a person in the taxable territor! and an! of his other establishent in
a non7taxable territor! shall be treated as establishents of distinct persons(
Bxplanation # stipulates that
' person carr!ing on a business through a branch or agenc! or representational office in an!
territor! shall be treated as having an establishent in that territor!(
Classification of /ervice
Barlier+ the classification of the service provided should have been with reference to the specific
coverage within the 11" alternatives( .t was possible that the services provided b! one service
provider a! appear to fall under ore than one categor! of specified services( .t was possible
2#
that one service provider a!be providing nuerous individual services or cobined services(
8e was required to register under all of the(
;here the entr! was not clear or ore than one classification appeared to be correct+ then
reference was to be ade to Section A@' for the rules of interpretation(
,hus+ a lot of confusion prevailed here and also litigation(
/ow+ Section A@' has been replaced with Section AA&(
Section AA& has laid down the principles of classification of services(
$lause 1F Unless otherwise specified+ reference to a service Lherein referred to as ain
serviceM shall not include reference to a service which is used for providing ain service(
$lause 2F ;here a service is capable of differential treatent for an! purpose based on its
description+ the ost specific description shall be preferred over a ore general
description(
$lause 3F Subject to the provisions of sub7section L2M+ the taxabilit! of a bundled service
shall be deterined in the following anner+ nael!F
LaM if various eleents of such service are naturall! bundled in the ordinar! course
of business+ it shall be treated as provision of the single service which gives such
bundle its essential characterI
LbM if various eleents of such service are not naturall! bundled in the ordinar!
course of business+ it shall be treated as provision of the single service which
results in highest liabilit! of service tax(
Bxplanation(S &or the purposes of sub7section L3M+ the expression Rbundled serviceR
eans a bundle of provision of various services wherein an eleent of provision of one
service is cobined with an eleent or eleents of provision of an! other service or
servicesO(
E7em5ti!ns
Barlier+ there were an! notifications general exeptions as well as exeptions relating to
specific categor! of services( /ow all the exeptions have been cobined into a ega
notification /o( 2@52012( ,he exeption notification is to be exained carefull! as non7
following of the substantive conditions could lead to a denial of the benefit(
#ther Maj!r Change9
2@
,he &inance 'ct has introduced joint charge along with reverse charge echanis for dual
responsibilit! to pa! service tax( ,his is to ensure ore chaos along with enhancing the treasur!T
?lace of ?rovision *ules+ 2012 have been introduced replacing the erstwhile Bxport of Services
*ules+ 200@ and the ,axation of Services L?rovided fro )utside .ndia and *eceived in .ndiaM
,ules+ 200A( ,hese rules have been put in place for the purpose of the deterination of the place
of provision of services(
2A
)ECLARE) SERV$CE
Declared Services
Declared Services are defined under Section A@= L22M of the &inance 'ct+ 1""# to ean an!
activit! carried out b! a person for another person for consideration and declared as such under
Section AAB of the &inance 'ct+ 1""#( .t eans for a service to coe under the categor! of
declared services+ it has to satisf! two basic conditions conjunctivel!
it ust be an activit! b! one person to another for consideration
it ust be specifiedLi(e( declaredM under section AAB
Need "!r )e6ared Servi6e9
,he definition of service in the first instant is ver! wide to cover an! transaction done for a
consideration( 8owever+ there exist few activities which would overlap with the other levies of
state with a arginal difference+ thereb! questioning the constitutional validit! of the lev! under
service tax( .n soe cases there a! be a doubt whether that activit! could possibl! called a
service at all( ,o rest the doubt about the validit! of a transaction to be considered as service+ the
authorities have intended to declare such activities to be a service( ,o give an instance+ the first
declared service Nrenting of iovable propert! serviceO was challenged as to whether it was a
NserviceO as well as the copetence of the Union to lev! the tax on a propert!+ which is a subject
to state governance( Siilarl! ost of the declared services were challenged( &or all events and
purposes these transactions shall be deeed to be service(
The "!!:ing nine a6tivities have been s5e6i"ied in se6ti!n ;;E9
a. renting of iovable propert!I
b. construction of a coplex+ building+ civil structure or a part thereof+ including a coplex
or building intended for sale to a bu!er+ wholl! or partl!+ except where the entire
consideration is received after issuance of certificate of copletion b! a copetent
authorit!I
c. teporar! transfer or peritting the use or enjo!ent of an! intellectual propert! rightI
d. developent+ design+ prograing+ custoiGation+ adaptation+ up gradation+
enhanceent+ ipleentation of inforation technolog! softwareI
e. agreeing to the obligation to refrain fro an act+ or to tolerate an act or a situation+ or to
do an actI
f. transfer of goods b! wa! of hiring+ leasing+ licensing or an! such anner without transfer
of right to use such goodsI
24
g. activities in relation to deliver! of goods on hire purchase or an! s!ste of pa!ent b!
installentsI
h. service portion in execution of a wor-s contractI
i. service portion in an activit! wherein goods+ being food or an! other article of huan
consuption or an! drin- Lwhether or not intoxicatingM is supplied in an! anner as part
of the activit!(
Bach individual declared service is explained belowF7
! &enting of )((ovable 'roperty
*enting of .ovable propert! has been taxed under the earlier tax regie vide Section
A@ L10@M LGGGGM( *enting of iovable propert! has been brought into tax net vide
/otification /o( 23520047S, dated 01(0A(2004(
*enting eans facilit! allowing+ peritting or granting access+ entr!+ occupation+ use(
Such facilit! has to be in an iovable propert!+ either wholl! or partl!
Such facilit! a! be provided with or without the transfer of possession or control
,he sae specificall! includes letting+ leasing+ licensing or other siilar arrangeents in
respect(
*enting in negative listLS(AADM and BxeptionL2@520127S,M
Renting under Negative ist9
Services provided b! wa! of renting or leasing of following are covered b! the negative list
'gro :achiner!
%acant land with or without a structure of incidental to its use
E7em5ti!ns
*enting of precincts of a religious place eant for general public L/otification 2@520127
S,M
*enting of a hotel+ inn+ guest house+ club+ capsite or other coercial places eant for
residential or lodging purposes+ having declared tariff of a unit of accoodation below
rupees one thousand per da! or equivalent L/otification 2@520127S,M
Services b! wa! of vehicle par-ing to general public excluding leasing of space to an
entit! for providing such par-ing facilit!( L/otification 2@520127S,M( ,his has been
oitted b! &inance 'ct 2013 wef 1(#(2013(
,hus+ par-ing charges collected at cinea theatres+ alls etc+ is exepted fro service
tax as it falls under services b! wa! of otor vehicle par-ing to general public(
'fter aendent+ these would be liable to service tax(
C!vers
20
*enting for teporar! purpose li-e arriages or other social functions because it
includes renting without transfer of possession or control+
?eritting use of propert! for vending5dispensing achine
'llowing erection of tower
*enting for entertainent or sports
*enting of theatres b! owners to fil distributor
#! Construction of Co(plex
$onstruction of $oplex covers the following
$onstruction of a coplex+ building+ civil structure or part thereofI
$onstruction of coplex or building intended for sale to a bu!er either in part or full
before issue of copletion certificate b! copetent authorit!(
Meaning !" C!nstru6ti!n9
,he expression RconstructionR includes additions+ alterations+ replaceents or reodeling of an!
existing civil structure which has been defined b! wa! of explanation to the subject declared
service( Since+ the definition is defined in the inclusive anner+ the eaning as understood b!
trade assues iportance( K$onstruction3 eans K:a-e b! fitting parts togetherI buildI erect3
1)xford Bnglish Dictionar!2
Ta7abe A6tivit89
C!nstru6ti!n !" C!m5e7, 2uiding, Civi Stru6ture9
,he construction of a coplex which eans a group of buildings or construction of independent
building or construction of civil structure or part of the coplex+ building and civil structure is
liable to service tax( ,his covers all the activities of sub7contractors who provide the service to
the builder or developer or prooter pertaining to construction and also the contractor who is
engaged directl! b! the service receiver pertaining to the construction activit!(
$n6uding a 6!m5e7 !r buiding intended "!r sae t! bu8er, :h!8 !r 5art89
,his lib of the definition intends to cover those services LdeeedM provided b! the builder5
developer5prooter in relation to building or coplex which is for sale to bu!er wholl! or partl!(
,his is to bring the deeing fiction into pla! whereb! the builder5prooter5developer is liable for
service tax when an! aount is received fro the prospective bu!er Lprior to copletion
certificateM+ where earlier the! have claied that the services are not provided to bu!er and to
theselves consequentl! escaping service tax(
E76e5t :here the entire 6!nsiderati!n is re6eived a"ter issuan6e !" 6!m5eti!n 6erti"i6ate b8
the 6!m5etent auth!rit89
2"
,his lib of the definition assues iportance since it pla!s a significant role in deterining the
taxabilit! of the activit!( ,he entire activit! of the builder5developer5prooter shall be deeed to
be service onl! if an! aount has been received prior to issuance of copletion certificate b! a
copetent authorit!( .f the entire aount is received post issuance of copletion certificate+ the
activit! shall be a ere transfer of title in iovable propert! and thereb! not falling in the
definition of service(
C!m5etent auth!rit89 ,his has been defined b! wa! of Bxplanation to ean the Eovernent or
an! authorit! authoriGed to issue copletion certificate under an! law for the tie being in force
and in case of non requireent of such certificate fro such authorit!+ fro an! of the following+
nael!F
L'M architect registered with the $ouncil of 'rchitecture constituted under the 'rchitects
'ct+ 1"42I or
L=M $hartered engineer registered with the .nstitution of Bngineers L.ndiaMI or
L$M >icensed surve!or of the respective local bod! of the cit! or town or village or
developent or planning authorit!I
Reated entries given in N!ti"i6ati!n N! -<4-./-'ST dated -.=.;=-./- >dis6ussed ater?
0ood for thought
/= $" there are m!re than @ residentia units under the same 6!m5!und but :ith
se5arate 5an san6ti!n, is su6h 6!nstru6ti!n !" units iabeA
,he concept of ore than 12 residential units is no ore relevant( .f the construction is
pertaining to ore than 1 residential unit+ the entire construction wor- shall be taxable(
/= $" the 6!nstru6ti!n !" residentia Buarters is undertaken "!r the em5!8ees !" the
"a6t!r8, is there a iabiit8 under this entr8A
Ues+ there shall be liabilit! under the new schee because the ter Kpersonal use3 has
been deleted and the exeption for residential coplex pre7doinantl! for self7 use has
been extended onl! to governent or local authorit! or use of their eplo!ees(
-= %hether the buider 6!nstru6ting :ith his !:n materias is 6!veredA
Ues+ the builder providing service with his own aterials is covered( ,his would be
treated as wor-s contract(
C= $" C!mmer6ia 6!m5e7 is 6!nstru6ted :ith agreement t! se, :hether it :!ud be
ta7abeA
C!mments9 Despite the nature of agreeent entered b! the parties+ if there is an!
consideration received fro the bu!er prior to issuance of copletion certificate b!
copetent authorit!+ it shall be taxable in light of being declared as Service vide Section
30
AA B(
1! .e(porary transfer or per(itting the use or en2oy(ent of any intellectual property right
.?* covers the followingF
,here should be an intellectual propert! right
Such right is being teporaril! transferred to the service receiver or
.t is peritting the use or enjo!ent of such right
,he phrase .ntellectual propert! right has not been defined under the &inance 'ct( ,his has to be
understood as per noral parlance as per intellectual propert! rights includes the followingF
?atents
$op!rights
,radear-s
Designs
'n! other siilar right in an intangible propert!(
Ta7abe A6tivit89
,here shall be a charge of service tax when a person assigns or agrees to assign right to use of
intangible propert! to another person for consideration+ where the assignent is not of peranent
transfer(
Tem5!rar8 Trans"er9
,ransfer+ whether peranent or teporar! shall depend upon the tie period for which the right
in the propert! subsists( F!r e7am5e+ as per Section 2A of .ndian $op!right 'ct+ 1"@4+ the right
in the cineatographic fil shall be subsist for the period of A0 !ears fro the beginning of the
calendar !ear next following the !ear in which the fil is published( ,herefore+ if the transfer of
the propert! in the right is for period exceeding A0 !ears+ the intention can be safel! concluded to
be a peranent transfer and if it is for a period less than A0 !ears+ it shall be a teporar! transfer
and subjected to service tax(
E7em5ti!n
,eporar! transfer or peritting the use or enjo!ent of a cop!right covered under clause LaM or
LbM of sub7section L1M of section 13 of the .ndian $op!right 'ct+ 1"@4+ relating to original literar!+
draatic+ usical+ artistic wor-s is exept L/ot( 2@52012M( =! &inance 'ct 2013+ there is an
exeption to teporar! transfer or peritting the use or enjo!ent of a cop!right of
cineatograph fils for exhibition in a cinea hall or cinea theatreI
0ood for thought
1. Mr= M h!ds the $PR !" a 5r!du6t and the same is tem5!ra8 trans"erred t! Mr= S, i"
Mr= S a!:s Ms= M t! use the same, is it iabe "!r servi6e ta7A
31
,he taxable service required the service provided b! the holder of .?* and not the owner of
the .?*( 's long as :r( S holds the .?* at the tie of letting it for use b! :s( :+ he would be
liable for service tax(
-= %hether granting !" the !!m right is ta7abeA
>oo right is also an intangible propert! and hence allowing the sae to be used is also
taxable irrespective of it being recogniGed or not recogniGed under the law(
3! 4evelop(ent etc of ). software
.t covers the followingF
,he activit! perfored has to be onl! developent+ design+ prograing+ custoiGation+
adaptation+ upgradation+ enhanceent or ipleentation
Such activit! has to pertain to .nforation ,echnolog! Software(
,he phrase K.nforation ,echnolog! Software3 has been specificall! defined in the &inance 'ct
vide Section A@=L20M to ean an! representation of instructions+ data+ sound or iage+ including
source code and object code+ recorded in a achine readable for+ and capable of being
anipulated or providing interactivit! to a user+ b! eans of a coputer or an autoatic data
processing achine or an! other device or equipent(
0ood for thought
/= %!ud 5r!viding advi6e, 6!nsutan68 and assistan6e !n matters reating t! $n"!rmati!n
Te6hn!!g8 S!"t:are be 6hargeabe t! servi6e ta7A
,hese services a! not be covered under the declared list entr! relating to .nforation
,echnolog! Software( 8owever+ such activities when carried out b! a person for another for
consideration would fall within the definition of service and hence chargeable to service tax if
other requireents of taxabilit! are satisfied(
2. %hether the 6anned !r !"" the she" s!"t:are are 6!veredA
,he taxable service here is in relation to developent of the software for other person( .n the
case of canned software the developent is underta-en for oneself and after copletion the
sale is affected( .n such case there is no separate service receiver therefore the lev! fails(
8owever the sae is covered under the anufacture and are governed under central excise
provisions(
C= %hether re5airs and maintenan6e !" s!"t:are is 6!veredA
Bven though not specificall! covered b! the entr!+ it would be taxable since it is an activit!
done b! person to another person for a consideration(
D= %hether the s!"t:are i6enses are 6!veredA
32
.f the software wor-s on the license basis+ then it shall be transfer of right to use goods and
the sae is taxable under another declared service entr! nael! Ntransfer of goods b! wa! of
hiring+ leasing+ licensing or in an! such anner without transfer of right to use such goodsO
5! +on Co(pete 0ee
.t covers
'greeing to the obligation to refrain fro an act+
'greeing to tolerate an act or a situation
'greeing to do an act
-greeing to the obligation to refrain fro( an act6 ;here a person underta-es an obligation not
to do an act on the request of the other person+ it eans that the first person has agreed to refrain
fro doing that act( .t is iportant that the first person should underta-e the obligation in return
of the request or proise b! another(
&or exapleF
i. .n a erger and acquisition deal+ prooter of selling copan! agrees not to do siilar
business for an agreed period( $onsideration paid for such non copete fees would
attract service tax(
-greeing to tolerate an act or a situation6 ;here a person has to tolerate a particular situation or
act and consideration is received for such situation+ it would also be liable to service tax( &or
exaple+ a person gives personal guarantee to a ban- against loan advanced to a borrower(
Euarantor underta-es to honour outstanding dues(
-greeing to the obligation to do an act6 ;here a person underta-es an obligation to do an act in
return of provision of services+ consideration received for agreeing to the obligation would be
covered in declared service( &or exaple is given in ,*U letter that if ' agrees to construct 3
flats for = on land owned b! = and in return = agrees to provide one flat to ' without an!
onetar! consideration+ then the act of = for underta-ing the obligation to provide constructed
flat would be liable to service tax(
7! .ransfer of goods by way of hiring, leasing, licensing or in any such (anner without
transfer of right to use such goods
,his is covered under deeed sale as per 'rticle 3AAL2"'M of the $onstitution( ,he following are
the essentials to be satisfied for falling under the service categor!F
,here has to be goods Lwhether tangible or intangibleM
Such goods would be transferred fro one person to another
Such transfer is b! wa! of hiring or+ leasing or licensing or in an! such anner
33
Such transfer would be without transfer of right to use such goods
Situati!ns t! de6ide :hether the a6tivit8 6!mes under trans"er !" right t! use g!!ds !r n!t
,ransfer of goods b! wa! of hiring+ leasing+ licensing or an! such anner without
transfer of right to use such goods is declared service under section AA&(
' car is given on hire b! a person to a copan! along with a driver on pa!ent of
charges on per onth5 ileage basis *ight to use is not transferred as the car owner
retains the perissions and licenses relating to the cab( ,herefore possession and
effective control reains with the owner( ,he service is therefore covered in the declared
list entr!(
8iring of ban- loc-ers ,he transaction does not involve the right to use goods as
possession of the loc-ers is not transferred to the hirer even though the contents of the
loc-er would be in the possession of the hirer( LState =an- of .ndia and )thers vs State of
'ndhra ?radesh 1"00 L40M S,$ 021@M
8iring out of vehicles where it is the responsibilit! of the owner to abide b! all the laws
relating to otor vehicles /o transfer of right to use goods as effective control and
possession is not transferred L'llahabad 8igh $ourt judgeent in 'huja Eoods 'genc!
%s( State of U?M
8iring of audio visual equipent where ris- is of the owner 7 /o transfer of right to use
goods as effective control and possession is not transferred(
0ood for thought
1. $n 6ase the Ma6hiner8 is 5r!vided t! 6ust!mer a!ng :ith !5erat!r, :hether su6h
transa6ti!n is iabe "!r servi6e ta7A
>%en t%e mac%ine is !perated 2y t%e pers!n !+ service pr!vider t%e c!ntr!l and pr!cessi!n is
n!t trans+erred t%en t%e ri)%t t! use t! pr!perty lies $it% t%e service pr!vider and %ence suc%
transacti!n is n!t !ne !+ sale. T%e ta*a2le service includes supply !+ mac%inery and t%ere+!re
t%e same is ta*a2le.
-= %here the ma6hiner8 is 5r!vided a!ng :ith the !5erat!r :!ud it be iabeA
?es as t%e c!ntr!l and p!ssessi!n !+ t%e mac%inery is n!t trans+erred t! t%e cust!mer t%e
activity is a service and n!t a trans+er !+ )!!ds.
"! 4elivery of goods on hire8purchase or any syste( of pay(ent by install(ents
,his is covered under deeed sale as per 'rticle 3AAL2"'M of the $onstitution( Section 2 of the
8ire ?urchase 'ct+ 1"42 defines a Khire purchase agreeent3 as an agreeent under which goods
are let out on hire and under which the hirer has the option to purchase the in accordance with
the ters of the agreeent and included an agreeent under which
3#
i( ?ossession of goods is delivered b! the owner thereof to a person on condition that
such person pa!s the agreed aount in periodical installents+ and
ii( ,he propert! in the goods is to pass to such person on the pa!ent of the last of such
installents+ and
iii( Such person has a right to terinate the agreeent at an! tie before the propert! so
passesI
6e! ingredients of the deeed sale categor! of Kdeliver! of goods on hire7purchase or an! s!ste
of pa!ent b! installents3+ therefore are
,ransfer of control and possession Land not just of custod!M
,he hirer has the option or obligation to purchase the goods in accordance with the ters of the
agreeent(
0ood for thought
/= %hat is the di""eren6e bet:een a n!rma hiring agreement and a hire'5ur6hase
agreementA
.n a ere hiring agreeent the hirer has no option to purchase the goods hired and the ris-s
and rewards incidental to ownership of goods reain with the owner and are not transferred
to the hirer( .n a hire7purchase agreeent the hirer has an option or an obligation to purchase
goods(
-= $" deiver8 !" g!!ds !n hire 5ur6hase !r an8 s8stem !" 5a8ment !n instament is deemed
t! be sae !" g!!ds :hat are the a6tivities in reati!n t! su6h deiver8 :hi6h are 6!vered
in the de6ared servi6eA
.t has been held b! Supree court in the case of 'ssociation )f >easing 9 &inancial Service
$opanies Vs Union )f .ndia 12010 L20M S(,(*( #14 LS($(M2 that in equipent leasing5hire7
purchase agreeents there are two different and distinct transactions+ viG(+ the financing
transaction and the equipent leasing5hire7purchase transaction and that the financing
transaction+ consideration for which was represented b! wa! of interest or other charges li-e
lease anageent fee+ processing fee+ docuentation charges and adinistrative fees+ which
is chargeable to service tax( ,herefore+ such financial services that accopan! a hire7
purchase agreeent fall in the abit of this entr! of declared services(
9! /ervice portion in execution of Wor:s Contracts
,his is covered under deeed sale as per 'rticle 3AAL2"'M of the $onstitution( ' contract to be
covered under the definition of the wor-s contract under service tax+ the following conditions
would be the essential criteria
3@
,here would be a contract for provision of service
During the provision of such service+ there is involveent of transfer of propert! in
goods which are leviable to %', and
,he scope of the contract has to be essentiall! be for construction+ erection+
coissioning+ installation+ copletion+ fitting out+ repairs+ aintenance+ renovation+
alteration or an! other siilar activit! ofI
Such activit! has to be either on ovable or iovable propert!
Vauati!n in %!rks C!ntra6t Servi6e
=roadl!+ there are two ethods for valuation of service
iM %alue of service V Eross aount value of propert! in goods
iiM .f not LiM value of service shall be
&or execution of original wor-s VW #0J of total aount shall be value
&or aintenance or repair or reconditioning or restoration or servicing of an!
goods VW 40J of total aount shall be value
&or other wor-s contracts VW A0J of total aount shall be value
,he ;or-s $ontract $oposition schee has been scrapped(
.n the above cases+ $B/%', credit cannot be availed of excise dut! paid on goods+ the propert!
of which is transferred to custoer( ,hus+ $B/%', credit cannot be availed on excise dut! paid
on building aterial li-e ceent+ steel+ tiles+ fittings+ etc(
0ood for thought
/= %!ud ab!ur 6!ntra6ts in reati!n t! a buiding !r stru6ture treated as a :!rks
6!ntra6tA
/o( >abour $ontracts do not fall in the definition of wor-s contract( .t is necessar! that the
contractor brings in aterials used for the wor-s and there should be transfer of propert! in
goods involved in the execution of such contract which is leviable to tax as sale of goods(
?ure labour contracts are therefore not wor-s contracts and would be leviable to service tax
li-e an! other service and on full value(
-= %!ud 6!ntra6ts "!r ere6ti!n 6!mmissi!ning !r instaati!n !" 5ant, ma6hiner8,
eBui5ment !r stru6tures, :hether 5re"abri6ated !r !ther:ise be treated as a :!rks
6!ntra6tA
Such contracts would be treated as wor-s contracts if
,ransfer of propert! in goods is involved in such a contractI
;! /upply of 0ood or other articles of <u(an Consu(ption
,he following are the pre7requisites to fall under this entr!F
3A
,here is an activit!
'ctivit! involves an eleent of service
Such activit! is in relation to goods
,he goods being food or an! other article for huan consuption or
'n! drin- whether intoxicating or not and
,his is supplied in an! anner as a part of such activit!(
.t is to be noted that the activit! of suppl!ing food or drin- has the case a! be+ would also
necessaril! have the service eleent has a part and parcel of such activit!( ;here onl! goods are
sold during the activit! of selling of food and no service eleent is involved+ it would not be
covered b! the declared service( ,herefore activities where ere food is supplied but no service is
offered has a part of suppl!ing of food+ it would not be liable to service tax(
&or BxapleF ?ic- up or free hoe deliver! ade for which no separate charges are levied fro
the custoer(
Vauati!n
%aluation is broadl! classified in to two categor!I
#5ti!n /9 ,he value of service shall be deterined as per *ule 2$ of the Service ,ax
LDeterination of %alueM *ules+ 200A which provides as underF
S=
N!=
)es6ri5ti!n Per6entage !" t!ta am!unt
!n :hi6h servi6e ta7 eviabe
1( Service involved in the suppl! of food or an! other
article of huan consuption or an! drin- at a
restaurant
#0
2( Service involved in the suppl! of food or an! other
article of huan consuption or an! drin- as outdoor
catering service
A0
So where service provider is a restaurant+ the value for the purpose of charging of service tax
would be #0J of the gross aount charged( .n case of outdoor caterer+ chargeable value will be
A0J of the gross consideration(
Meanin) !+ !utd!!r caterer@ )utdoor caterer is not defined under the 'ct( 8owever+ as ordinaril!
understood+ it eans a person providing food and drin- outside the place of its regular business
for soe social or foral event(
#5ti!n -F
,he provider of taxable services other than covered above i(e( restaurant or outdoor caterer when
engaged in the suppl! of food or an! other article of huan consuption or an! drin- in a
34
?reise including
8otel
$onvention centre
$lub
?andal+ Shaiana or
'n! other place speciall! arranged for organiGing a function(
,hen he would charge service tax on 40J of the total aount received for the service provided
b! wa! of outdoor catering service(
.otal -(ount@ &or the purpose of )ption 1 and 2 N,otal 'ountO would include the followingF
%alue of aterial supplied including
%alue of free aterial and
%alue of free service
Bither under the sae contract or an! other contract
2ut :!ud n!t in6ude9
%alue added tax levied on the sale of food and drin-s(
0ood for thought
/= $n 6ase the 5a6e "!r the 6a"eteria is 5r!vided b8 an $T 5ark "ree !" 6!st= Em5!8ees !"
vari!us 6!m5anies situated in the said $T 5ark bu8s the "!!d "r!m the 6a"eteria,
:hether su6h servi6e is ta7abeA
$afeteria facilit! provided b! ., par- to eplo!ees of various copanies situated in the said
par- is in the nature of food joint facilit!( .t is covered b! the exeption notification 2@520127
S, subject to that there is no '$ facilit! accopanied b! license to serve liquor( ;ef
1(#(2013+ even if there is '$ facilit! in an! part of establishent+ it would be liable( ,he
exeption would be restricted to restaurant+ eating joint or ess without '$ facilit!(
-= %hether the 6!ntra6t "!r 6!!king in a "a6t!r8 !r !""i6e :!ud be 6!vered under this
servi6eA
,he contract for coo-ing in a factor! or office would generall! be not covered b! the declared
services as the service provider engaged in the coo-ing activities is not engaged in the sale of
food( 8owever+ if the activit! of coo-ing satisfies the definition of service+ it would be liable
to service tax though not under this declared service(
C= %hether AC restaurants :ith!ut iBu!r i6ense :!ud be iabe t! servi6e ta7A
Ues+ wef 1(#(2013 it would be liable to service tax( (
D= $n 6ase the AC "a6iit8 is 5r!vided b8 the restaurant !n8 in 6ase !" summer, then :!ud
the servi6e 5r!vided b8 restaurant in :inter attra6t servi6e ta7A
,he exeption is available onl! when restaurant does not have '$ during an! part of the
!ear( ,herefore service tax would be pa!able even for the service provided in the winter+
when '$ a! not be switched on(
30
<= %hether AC restaurant n!t having iBu!r i6ense a!:ing the 6!nsum5ti!n !" iBu!r at
the risk !" 6ust!mer :!ud be iabe "!r servi6e ta7A
;ef 1(#(2013 as long as the restaurant has '$ facilit! in an! part of establishent during an!
part of the !ear would be liable to service tax (
'ointers for practice
,he new law needs frequent reading of the bare provisions as well as articles on the sae
as it is not free of vagueness(
,he Bducation guide could also provide a degree of revenue view of the subject(
,he professional here should have to have a fair idea as to the provisions prevailing under
the %', law of the concerned state if he is reall! to add value to his client3s business(
,his would be so+ as the ore appropriate course of action is to be selected fro a given
set of alternatives( ,his would involve the stud! of deductions available for labour as per
the %', law+ coposition benefits+ deduction for aterials transferred under service tax+
conditions to be et in order to clai deductions etc(
,he professional would have to go through the agreeents the client has with his
custoers so that the essence of the sae could be understood( ,his is critical in order to
deterine the liabilit! or the absence of one under service tax(
.t a! also be iportant to exaine the taxation of the incoing services5 goods as well
as the custoers3 liabilit! for central excise or service tax(
3"
NE*AT$VE L$ST
2a6kgr!und
.n the earlier s!ste+ onl! the services specified in clause L10@M of section A@ of the &inance 'ct+
1""# were taxed under the charging section AA( .n the new s!ste+ all services+ other than the
services specified in the negative list+ provided or agreed to be provided in the taxable territor! b!
a person to another would be taxed under section AA=(
Negative ist9
;(e(f 01(04(2012 there is sea change in the wa! services are to be taxed( ,axation would be
based on what is popularl! -nown as N/egative >ist of ServicesO( ,his is a coprehensive
ethod of taxation norall! adopted b! advanced5 developed countries( ,his ethod does not
differentiate between the organiGed and unorganiGed sector and covering all the service providers(
Developing countries where the econo! has not developed5 population not literate avoid this
ethod of taxation to avoid the disputes due to large scale non copliance on account of
ignorance(
%e ana8se the negative ist !" servi6es as under9
/= Servi6es 5r!vided b8 *!vernment !r L!6a auth!rit89
:ost of the services provided b! the $entral or State Eovernent or >ocal authorities are in the
negative list except the followingF
aM Services provided b! the Departent of ?osts b! wa! of speed post+ express parcel post+
life insurance and agenc! services carried out on pa!ent of coission on non
governent businessI
bM Services in relation to a vessel or an aircraft inside or outside the precincts of a port or an
airportI
cM ,ransport of goods and5or passengersI
dM Support services+ other than those covered b! clauses LaM to LcM above+ to business entities(
,he service tax on support services is to be paid b! the service recipient business entit! under
reverse charge echanis(
%hat is meaning !" *!vernmentA
KEovernent3 has not been defined in the 'ct+ the definition of KEovernent3 as contained in the
Eeneral $lause 'ct+ 10"4 would be applicable as per which KEovernent3 includes both $entral
and State Eovernent( &urther as per the Eeneral $lause 'ct 10"4+ State includes Union
,erritor!( KEovernent3 would also include various departents and offices of the $entral or
#0
State Eovernent or the U(,( 'dinistrations which carr! out their functions in the nae and b!
order of the ?resident of .ndia or the Eovernor of a State(
%hat is meant b8 L!6a Auth!rit8A
>ocal authorit! is defined in A@= and eans the followingF7
' ?ancha!at as referred to in clause LdM of article 2#3 of the $onstitution
' :unicipalit! as referred to in clause LeM of article 2#3? of the $onstitution
' :unicipal $oittee and a District =oard+ legall! entitled to+ or entrusted b! the
Eovernent with+ the control or anageent of a unicipal or local fund
' $antonent =oard as defined in section 3 of the $antonents 'ct+ 200A
' regional council or a district council constituted under the Sixth Schedule to the
$onstitution
' developent board constituted under article 341 of the $onstitution+ or
' regional council constituted under article 341' of the $onstitution(
%hat is meant b8 Su55!rt Servi6esA
Support services have been defined in section A@= of the 'ct as Kinfrastructural+ operational+
adinistrative+ logistic ar-eting or an! other support of an! -ind coprising functions that
entities carr! out in ordinar! course of operations theselves but a! obtain as services b!
outsourcing fro others for an! reason whatsoever and would include advertiseent and
prootion+ construction or wor-s contract+ renting of ovable or iovable propert!+ securit!+
testing and anal!sis3( ,hus+ services which are provided b! Eovernent in ters of their
sovereign right to business entities are not support services e(g( grant of ining or licensing
rights(
)ssue
%hether subsid8 granted b8 *!vernment "!r setting u5 !" business is ta7abeA
Subsid! granted b! business is generall! in the nature of open offer to large public( 'n! person
fulfilling the conditions of the subsid! a! be granted the subsid!( ,here is no counter obligation
to the Eovernent b! the business receiving the subsid!( $opl!ing with the conditions of the
subsid! is erel! for the purpose of gaining own business advantage( ,here are no services
rendered to Eovernent which can be ade liable to tax(
%hether CFTR$ >Centra F!!d te6hn!!gi6a Resear6h $nstitute? undertaking testing and
ana8sis servi6es "!r 5reaun6h !" edibe items is 6!vered b8 su55!rt servi6esA
.t is the statutor! obligation of the $&,*. to carr! out the testing of edible ites before launch in
the ar-et( ,he activit! perfored b! $&,*. is not outsourced to the b! business entit! and is
not covered b! the first lib of the definition of the support services( 8owever+ testing and
anal!sis is specificall! covered b! the inclusive part of the definition and accordingl! is in the
nature of support service(
#1
-= Servi6es 5r!vided b8 Reserve 2ank !" $ndia
'll services provided b! the *eserve =an- of .ndia are in the negative list( Services provided to
the *eserve =an- of .ndia are not in the negative list and would be taxable unless otherwise
covered in an! other entr! in the negative list(
C= Servi6es b8 a F!reign )i5!mati6 Missi!n L!6ated in $ndia
'n! service that is provided b! a diploatic ission of an! countr! located in .ndia is in the
negative list( ,his entr! does not cover services+ if an!+ provided b! an! office or establishent of
an international organiGation(
D= Servi6es reating t! agri6uture
,he services relating to agriculture that are specified in the negative list are services relating to
agricultural operations directl! related to production of an! agricultural produce including
cultivation+ harvesting+ threshing+ plant protection or seed testingI Seed word is oitted b!
&inance 'ct 2013( /ow entr! extended to all -inds of testing in relation to agricultural
produce and not restricted to seed testing alone(
suppl! of far laborI
processes carried out at the agricultural far including tending+ pruning+ cutting+
harvesting+ dr!ing cleaning+ triing+ sun dr!ing+ fuigating+ curing+ sorting+ grading+
cooling or bul- pac-aging and such li-e operations which do not alter essential
characteristics of agricultural produce but a-es it onl! ar-etable for the priar!
ar-etI
renting of agro achiner! or vacant land with or without a structure incidental to its useI
loading+ unloading+ pac-ing+ storage and warehousing of agricultural produceI
agricultural extension servicesI
services provided b! an! 'gricultural ?roduce :ar-eting $oittee or =oard or services
provided b! coission agent for sale or purchase of agricultural produceI
&urther the activities li-e breeding of fish LpiscicultureM+ rearing of sil- wors LsericultureM+
cultivation of ornaental flowers LfloricultureM and horticulture+ forestr! is also included in the
definition of agriculture( ,he plantation crops li-e coffee+ tea are also covered in agricultural
produce(
%hat is the meaning !" Eagri6utureFA
K'griculture3 has been defined in the 'ct as cultivation of plants and rearing or breeding of
anials and other species of life fors for foods+ fibre+ fuel+ raw aterials or other siilar
products but does n!t include rearin) !+ %!rses(
%hat is agri6utura 5r!du6eA
#2
'gricultural produce eans an! produce of agriculture on which either no processing is done or
such processing is done as is usuall! done b! a cultivator or producer which does not alter its
essential characteristics but a-es it ar-etable for priar! ar-et( .t also includes specified
processes in the definition li-e tendin) prunin) )radin) s!rtin) etc( which a! be carried out at
the far or elsewhere as long as the! do not alter the essential characteristics(
&or exapleF ?otato chips or toato -etchup are anufactured through processes which alter the
essential characteristic of far produce Lpotatoes and toatoes in this caseM therefore+ it does not
qualif! as agricultural produce(
)ssue
%hether etting !" shed "!r st!rage !" agri6utura 5r!du6e is as! 6!veredA
Ues+ .n ters of the specified services relating to agriculture Kleasing3 of vacant land with or
without structure incidental to its use3 is covered in the negative list(
%hether agri6uture !5erati!ns 6arried !ut in rura area are !n8 6!vered under negative
istA
/o( ,here is no condition that the agriculture activities should be perfored in rural area onl!(
%hether a6tivities !" h!rti6uture, anima husbandr8 !r dair8ing et6 are 6!vered b8 the
agri6uture !5erati!nsA
Ues( ,hese activities are also in the nature of agriculture onl!( 'nial husbandr! and dair!ing are
specificall! used in the definition of agriculture(
%hether a6tivities !" "ishing are as! 6!vered under agri6uture as the a6tivities are n!t
6arried !ut !n the andA
Ues( ,here is no requireent that the activities should be perfored on land onl!(
<= Trading !" *!!ds
,ransfer of title of goods is one of the essential conditions for a transaction to coe under the
abit of trading of goods( 8owever+ the services supporting or ancillar! to the trading of goods
would not coe under the above ite of /egative >ist(
%hat is 6!veredA
&utures contracts would be covered as these are contracts which involve transfer of title
in goods on a future date at a pre7deterined price(
.n coodit! futures+ actual deliver! of goods does not norall! ta-e place and the
purchaser under a futures contract norall! offsets all obligations or closes out b! selling
an equal quantit! of goods of the sae description under another contract for deliver! on
the sae date( ,here are+ therefore+ two contracts of sale5purchase involved which would
fall in the categor! of trading of goods(
%hat is n!t 6!veredA
#3
'ctivities of a coission agent or a clearing and forwarding agent who sell goods on
behalf of another for a coission would not be included in trading of goods(
'uxiliar! services relating to future contracts or coodit! futures would not be covered
in the negative list entr! relating to trading of goods(
)ssue
%hether servi6e ta7 is a55i6abe :hen there is a right t! use the g!!ds given b8 & t! ( in
e76hange "!r a 6!nsiderati!nA
/o+ as it is a transfer of right to use goods( ,his is specificall! liable to %',( ,here is no service
involved in sae(
%hether the um5 sum singe 6!ntra6t "!r sae !" g!!ds "!!:ed b8 instaati!n is 6!vered in
negative istA
;hen it is a single contract+ a view is possible that the installation charges collected could be
treated as a part of the coposite contract+ the doinant nature of which is to a-e a sale of
goods( 8owever+ the entr! of Nservice portion of wor-s contractO in declared services would
cover such transactions(
%hether the transit sae is as! 6!nsidered as tradingA
Ues+ transit sale is also considered as trading in goods+ since the ephasis here is sale and
purchase and the deliver! or procession of goods( ,he sae done during the transit of goods
would also be trading(
*!!ds s!d !n Esae !n a55r!vaF basis are returned ba6k b8 the 6ust!mer= S!me usage
6harges are 6!e6ted "r!m the 6ust!mer "!r the 5eri!d !" use !" g!!ds= $s it 6!vered b8 the
trading !" g!!dsA
,rading of goods eans bu!ing or selling of goods( .t should result in transfer of propert! in
goods( ;hen goods sold are returned bac- b! the custoer+ propert! therein does not pass on to
the client( .t is not covered b! the definition of trading of goods and accordingl! usage charges
levied are liable to service tax(
;= Pr!6esses am!unting t! Manu"a6ture !r Pr!du6ti!n !" *!!ds
,he phrase Kprocesses aounting to anufacture or production of goods3 has been defined in
section A@= of the 'ct as a process on which duties of excise are leviable under section 3 of the
$entral Bxcise 'ct+ 1"## L1 of 1"##M or an! process aounting to anufacture of alcoholic
liquors for huan consuption+ opiu+ .ndian hep and other narcotic drugs and narcotics on
which duties of excise are leviable under an! State 'ct( ,he &inance 'ct 2013 extends scope of
##
this entr! to cover process aounting to anufacture or production under the :edicinal and
,oilet ?reparations LBxcise DutiesM 'ct+ 1"@@
,his entr!+ therefore+ covers anufacturing activit! carried out on contract or job wor- basis
provided duties of excise are leviable on such processes under the $entral Bxcise 'ct+ 1"## or
an! of the State 'cts(
)ssue
%hether 5r!6essing !" g!!ds resuting in manu"a6ture !" g!!ds that are e7em5ted !r ni
dut8 is 6!veredA
,he anufacture of excisable goods is covered in negative list irrespective of whether leviable to
a rate of dut! or exepted fro such dut! b! exeption notification( .t would also cover the
excisable goods+ which are at NnilO rate of dut!=
%hether the 5r!6ess undertaken b8 a j!b :!rker n!t am!unting t! manu"a6ture but used
b8 5rin6i5a in manu"a6turing !" g!!ds subje6t t! ENiF rate !" dut8 is 6!vered in negative
istA
Service tax would be levied on processes+ not aounting to anufacture or production of goods
carried out b! a person for another for consideration( =ut there is an exeption under notification
no(2@52012 S, dated 20(0A(2012 for the interediate production process as job wor-+ where
appropriate dut! is paid b! anufacturer( 8ere+ appropriate rate of dut! :!ud n!t include K/il3
rate of dut! or dut! wholl! exept( .t could be liable(
%hether the 6!verage in negative ist is avaiabe in 6ase :here the manu"a6tured e76isabe
g!!ds resuting "r!m 5r!6ess are returned t! an!ther 5r!6ess!r and n!t t! the 5rin6i5a
manu"a6turerA
,he returning of the goods to the principal anufacturer is constructive when the sae are sent to
another processor as per the direction of the principal( ,herefore+ the benefit would be available(
G= Seing !" S5a6e !r Time S!ts "!r Advertisements !ther than Advertisements 2r!ad6ast
b8 Radi! !r Teevisi!n
%hen is Sae !" s5a6e and time Ta7abeA
Ta7abe N!n'ta7abe
Sale of space or tie for advertiseent to be
broadcast on radio or television
Sale of space for advertiseent in print edia
Sale of tie slot b! a broadcasting Sale of space for advertiseent in bill boards+
#@
organiGation( public places+ buildings+ conve!ances+ cell
phones+ autoated teller achines+ internet
'erial advertising
)ssue
%hether sae !" s5a6e !r time s!d t! advertisement agen68 !n um5 sum basis :!ud be
6!vered b8 the negative ist entr8A
'n! sale of space or tie for advertiseent purpose is covered under the negative list entr!(
,here is no condition in the definition that the sale of space or tie should be directl! ade to the
advertiser( =ul- selling of space or tie to advertiseent agenc! for a specified period which in
turn sells it to different advertisers on pieceeal basis would also be covered b! the negative list
entr! and exepted fro service tax( 8owever+ it does not include broadcasting on ,% or radio(
An advertiser a55r!a6hes advertisement agen68 t! undertake advertisement a6tivities "!r
its 6!m5an8 "!r the entire 8ear "!r a 6!ntra6tua am!unt= S6!5e !" :!rk in6udes
advertisement 6!nsutan68, 6h!!sing !" di""erent advertising medium, 5re5arati!n !"
advertisement and dis5a8 !n mediums, 5ur6hase !" s5a6e !r time "!r dis5a8 !"
advertisement !n 5ubi6 5a6es C!ud this be 6!vered in negative ist entr8A
$oposite contract is given to advertiseent agenc! for handling entire advertiseent activit!
for the !ear on lup su basis( ,his would be a case of bundled services taxabilit! of which has
to be deterined in ters of the principles laid down in section AA& of the 'ct( 8ere the doinant
nature of the transaction needs to be deterined in order to chec- if it could be chargeable to
service tax( 8ere the following two services are bundled+ nael!+ taxable service of advertising
agenc! services in relation to design+ conceptualisation+ preparation of advertiseent and non
taxable service of displa! in public spaces( .n the opinion of the paper writer+ the doinant nature
would be the services which are being offered b! advertising agenc! related to creativit!
including designing+ planning+ preparation and displa! of the advertiseent would be onl! the
incidental activit!( ,herefore the contract would be liable to service tax(
%!ud servi6es 5r!vided b8 advertisement agen6ies reating t! 5re5arati!n !"
advertisements be 6!vered in the negative ist entr8 reating t! sae !" s5a6e "!r
advertisementsA
/o( Services provided b! advertiseent agencies relating to a-ing or preparation of
advertiseents would not be covered in this negative list entr! and would thus be taxable( ,his
would also not cover coissions received b! advertiseent agencies fro the broadcasting or
publishing copanies for facilitating business+ which a! also include soe portion for the
preparation of advertiseent(
#A
H!: :!ud the Servi6e Ta7 iabiit8 be determined :hen an advertisement agen68 raises
se5arate bi t!:ards its 6!mmissi!n and sae !" s5a6e 6hargesA
$harges received b! advertiseent agenc! towards its coission are not covered b! the
negative list entr!( $onsideration received towards sale of space or tie slots for advertiseents
other than advertiseents broadcast b! radio or television would not be liable to service tax if
contracted and aount invoiced separatel!(
%hether the sae !" s5a6e in a 5rivate 6ir6uati!n magaHine is ta7abeA
Sale of space or tie on an! ediu except broadcasting b! ,% or radio is covered b! the
negative list entr!( 'ccordingl!+ sale of space in private circulation agaGine is not liable to
service tax(
%hat :!ud be the ta7abiit8 !" s5a6e a!:ed in buses and 5ubi6 trans5!rt s8stem t! run
dis5a8 !" advertisementA
/ot liable to service tax as per discussion in previous question(
%hether advertisement in a m!vie is 6!vered under the entr8 Isae !" s5a6e !r time "!r
advertisementJA
'dvertiseent in a ovie a! not be said to be a sale of space or tie for advertiseent as it is
not a sale of space or tie for advertiseent on radio or television(
%hether 5ur6hase !" s!ts "r!m br!ad6aster and s!d t! advertising agen68 is iabe t!
servi6e ta7A
=roadcasting not covered under the negative list entr!( 'ccordingl!+ it would be liable to service
tax(
%hether advertisement servi6e rendered t! *!vernment de5artments is e7em5ted "r!m
servi6e ta7A
,here is no exeption on the advertiseent services provided to governent departent( .t is
liable to service tax(
%hether 6anvassing advertisements "!r 5ubishing !n a 6!mmissi!n basis is iabe t! servi6e
ta7A
$anvassing refers to selling or reselling of space( .t is not covered b! the negative list and is
liable to service tax(
%hether the agen68 6!mmissi!n 5aid b8 5rint media t! advertising agen68 is ta7abeA
Sale of space or tie in print edia is not liable to service tax( 8owever+ coission or discount
received b! the advertiseent agenc! is not in the nature of sale of space or tie( .t is liable to
service tax(
%hether 5rinting and 5ubishing !" 8e!: 5ages !r business dire6t!r8 is iabe t! servi6e
#4
ta7A
?rinting and publishing of !ellow pages and business director! is not in the nature of sale of
space or tie for advertiseent and hence are liable to service tax(
K= A66ess t! a R!ad !r a 2ridge !n Pa8ment !" T! Charges
,he negative list entr! covers access to a road or a bridge on pa!ent of toll charges( ,he access
to /ational highwa!s or state highwa!s+ which are also roads+ is hence covered in this entr!(
)ssue
%hether servi6es 5r!vided in reati!n t! 6!e6ting t! 6harges are iabe t! servi6e ta7A
;here a toll collecting agenc! is engaged for collecting the above entioned toll charges+ then
the collecting agenc! would be liable to pa! service tax on its charges(
@= 2etting, *ambing !r L!tter8
N=etting or gabling3 has been defined in section A@= of the 'ct as Kputting on sta-e soething
of value+ particularl! one!+ with consciousness of ris- and hope of gain on the outcoe of a
gae or a contest+ whose result a! be deterined b! chance or accident+ or on the li-elihood of
an!thing occurring or not occurring3( ,he State Eovernent lev! a betting tax on such activities(
0ood for thought
%hether 5a8ment "!r admissi!n t! h!rse ra6e as a s5e6tat!r is 6!vered under this entr8A
,his entr! see-s to cover the aount which is involved in the betting( ,herefore+ the aount
collected b! the $lub fro the viewer is not covered since it does not pertain to betting( 8owever+
the sae gets excluded fro the lev! of service tax net because this transaction is covered under
the entr! relating to Nadission to entertainent event or access to auseent facilit!O( Since+
horse race is a sporting event+ it gets excluded(
Su55!se EMr= &F bets an am!unt !" Rs=<...4' !n a h!rse in a ra6e event= The ra6e 6ub has
!n8 5aid betting ta7 t! the State *!vernment !n Rs= C...4' and Rs=/...4' is 6harged "!r the
entr8 int! the ra6e and baan6e trans"erred t! a 6!mm!n 5!! a66!unt "r!m :hi6h the 5riHe
am!unt is a:arded= %hether entire am!unt is 6!vered b8 this entr8A
,his entr! reads as Nservices b! wa! of betting+ gabling or lotter!O( :r( P with the
consciousness of ris- and hope has bet an aount of *s+ @00057 and therefore in the opinion of
the paper writer+ the entire aount is covered b! the subject entr! irrespective on what aount
the betting tax is paid to the state governent(
Mr= (, member !" the H!rse ra6ing Cub has s5!ns!red 6ertain am!unt "!r a 5arti6uar ra6e
in the 6ub= $s the am!unt 5aid b8 Mr= ( 6!vered under this entr8A
#0
/o+ the betting or gabling has been defined under the &inance 'ct( ,he aount paid b! the
eber is not with the Kconsciousness of ris- and hope of gain and the outcoe of gae3 which
is priar! requisite to be covered under this entr!( Since+ the aount sponsored b! :r( U does
not have this attribute it falls into the definition of service and hence service tax is applicable(
%hether an8 su55!rt servi6es rendered b8 the Cub and 6ertain am!unt 6!e6ted "r!m the
members :!ud be 6!vered b8 this entr8A
'n! aount received b! club for rendering support services does not have the attribute of
consciousness of ris- and hope of gain on the outcoe of gae and therefore + is liable to service
tax(
%hether au7iiar8 servi6es used t! 5r!vide betting4gambing servi6es are iabe t! servi6e
ta7A
'uxiliar! services that are used for organiGing or prooting betting or gabling events+ which
are not betting per se or a part thereof are not covered in the negative list( ,he! could be liable to
service tax(
/.= Entr8 t! Entertainment Events and a66ess t! Amusement Fa6iities
%hat isF Entertainment eventFA
Bntertainent event3 has been defined in section A@= of the 'ct Kas an event or a perforance
which is intended to provide recreation+ pastie+ fun or enjo!ent+ such as exhibition of
cineatographic fils+ circus+ concerts+ sporting events+ fairs+ pageants+ award functions+ dance
perforances+ usical perforances+ theatrical perforances including cultural progras+ draa+
ballets or an! such event or progra(
%hat is amusement "a6iit8A
K'useent facilit!3 has been defined in the 'ct as Ka facilit! where fun or recreation is provided
b! eans of rides+ gaing devices or bowling alle!s in auseent par-s+ auseent arcades+
water par-s+ thee par-s or such other place but does not include a place within such facilit!
where other services are provided3(
0ood for thought
& Ltd :ishes t! dis5a8 its 5r!du6ts in a musi6a event 6!ndu6ted b8 L Ltd= The 6!m5an8
has br!ught the admissi!n rights "!r the entr8 t! the event and dis5a8ed its 5r!du6ts= $s the
in6!me re6eived b8 L Ltd 6!vered under this entr8A
/o+ the entr! to the event is covered onl! when it is for fun+ recreation+ pastie or enjo!ent( .f
the person has an! other otive+ it would be liable to service tax( Since+ P >td( has ta-en
#"
adission rights for prooting its products+ this is in the nature of business and not covered
under this entr!(
Mr= H g!es t! an amusement 5ark b8 5a8ing the entr8 "ee !" Rs= <.4'= The 5ark has vari!us
amusement "a6iities "!r :hi6h se5arate "ee is 6harged= %hether the am!unt re6eived b8
5ark is 6hargeabe t! servi6e ta7A
Ues( ,he aount is not covered b! the entr!( ,he fee onl! gives adission to the par- but not the
access to the auseent facilit!( ,herefore+ the entr! fee of *s(@057 is liable to service tax(
Mr= A g!es t! an amusement 5ark b8 5a8ing the entr8 "ee !" Rs= <..4'= The 5ark has vari!us
amusement "a6iities "!r :hi6h Rs= C..4' is 6!e6ted at the entr8 itse"= %hether the entire
am!unt re6eived b8 5ark is 6hargeabe t! servi6e ta7A
Since *s( 30057 is giving an access to auseent facilit!+ it would be covered b! this entr!(
8owever+ the aount of *s( 20057 is collected onl! for adission to the par- and not for
accessing an! auseent facilit!( ,herefore+ *s(20057 would be liable(
L Ltd=, !:ns and manages a res!rt :herein the 5r!5ert8 has "a6iities "!r 6!nventi!n 6enter,
amusement "a6iities, a66!mm!dati!n servi6es and !thers= A "ami8 b!!ks the entire res!rt
"!r < da8s "!r 6!ndu6ting marriage= The "ami8 has unimited a66ess t! amusement "a6iities
and as! uses the 6!nventi!n 6enter and a66!mm!dati!n servi6es= %hether the entire
am!unt re6eived b8 L Ltd= is iabeA
Ues liable as the aount received b! X >td( is not for the access to auseent facilities(
,herefore+ b! appl!ing the principles of classification as provided under Section AA&+ the said
aount would not be covered under this entr! since the essential character of service is to hire
convention centre(
//=Transmissi!n !r )istributi!n !" Ee6tri6it8
'n Kelectricit! transission or distribution utilit!3 has also been defined in section A@= of the act
to eans the followingF
the $entral Blectricit! 'uthorit!
a State Blectricit! =oard
the $entral ,ransission Utilit! L$,UM
a State ,ransission Utilit! LS,UM notified under the Blectricit! 'ct+ 2003 L3A of 2003M
a distribution or transission licensee licensed under the said 'ct
an! other entit! entrusted with such function b! the $entral or State Eovernent
0ood for thought
%hether the Egenerati!nF !" ee6tri6it8 "!r a 6!nsiderati!n is 6hargeabe t! servi6e ta7A
Blectricit! is specified NgoodsO in the &irst Schedule of $entral Bxcise ,ariff 'ct+ 1"0@( .t has
been held in the case of $:SL.M )perations 9 :aintenance $o( ?( >td( v( $$B+ ?ondicherr! 7
@0
2004 L4M S(,(*( 3A" L,ri(7$hennaiM that generation of electricit! aounts to process of
anufacture( ,herefore+ would not be liable to service tax(
%hether the 6harges 6!e6ted b8 a deve!5er "!r distributi!n !" ee6tri6it8 :ithin a
residentia 6!m5e7 are 6!vered in this entr8A
$harges collected b! a developer of a housing societ! for distribution of electricit! within a
residential coplex are not covered in the /egative >ist( ,he! would be liable to service tax
/-= S5e6i"ied servi6es reating t! Edu6ati!n
,he following services relating to education are specified in the negative list
pre7school education and education up to higher secondar! school or equivalent
education as a part of a prescribed curriculu for obtaining a qualification recogniGed b!
an! law for the tie being in forceI
education as a part of an approved vocational education course
%hat are the 6!urses :hi6h :!ud Buai"8 as an a55r!ved v!6ati!na edu6ati!n 6!ursesA
'pproved vocational education courses have been specified in section A@= of the 'ct( ,hese are
a course run b! an industrial training institute or an industrial training centre affiliated to
the /ational $ouncil for %ocational ,raining or State $ouncil for %ocational ,raining
1inserted b! &inance 'ct 20132+ offering courses in designated trades as notified under the
'pprentices 'ct+ 1"A1L@2 of 1"A1M
a :odular Bplo!able S-ill $ourse+ approved b! the /ational $ouncil of %ocational
,raining+ run b! a person registered with the Directorate Eeneral of Bplo!ent and
,raining+ :inistr! of >abour and Bplo!ent+ Eovernent of .ndiaI
1 a course run b! an institute affiliated to the /ational S-ill Developent $orporation set
up b! the Eovernent of .ndia2( 1,his is oitted b! &inance 'ct 20132
0ood for thought
%hether servi6es 5r!vided b8 internati!na s6h!!s are as! 6!veredA
Ues( Services provided b! international schools are not liable as the! are equivalent to the 12
th
standard(
Are servi6es 5r!vided b8 :a8 !" edu6ati!n as a 5art !" a 5res6ribed 6urri6uum "!r
!btaining a Buai"i6ati!n re6!gniHed b8 a "!reign a: 6!vered in the negative ist entr8A
/o( ,o be covered in the negative list+ a course should be recogniGed b! an .ndian law(
%hether servi6es 5r!vided b8 2!arding s6h!!s are 6!vered in this entr8A
=oarding schools provide service of education coupled with other services li-e providing
dwelling units for residence and food( ,his a! be a case of bundled services if the charges for
education and lodging and boarding are inseparable( ,heir taxabilit! would be deterined in
ters of the principles laid down in section AA& of the 'ct( Such services in the case of boarding
schools are bundled in the ordinar! course of business( ,herefore+ the bundle of services would
@1
be treated as consisting entirel! of education service( =ut the other doinant service of providing
residential dwelling is also covered in a separate entr! of the negative list( ,herefore+ entire
bundle is a negative list service(
Are 5rivate tuiti!ns 6!vered in the entr8 reating t! edu6ati!nA
,here is an abiguit! as the tuition covers parts of the curriculu and is an education( 8owever
Bducation guide issued b! $=B$ in this regard provides that private tutors can avail the benefit
of threshold exeption( ,hus+ this could lead to disputes(
$" a 6!urse in a 6!ege eads t! dua Buai"i6ati!n !n8 !ne !" :hi6h is re6!gniHed b8 a:
:!ud the servi6e 5r!vided b8 the 6!ege b8 :a8 !" su6h edu6ati!n be 6!vered in this entr8A
?rovision of dual qualifications is in the nature two separate services as the curriculu and fees
for each of such qualifications are prescribed separatel!( Service in respect of each qualification
would+ therefore+ be assessed separatel!( .f an artificial bundle of service is created b! clubbing
two courses together+ onl! one of which leads to a qualification recogniGed b! law+ then b!
application of the rule of deterination of taxabilit! of a service which is not bundled in the
ordinar! course of business contained in section AA& of the 'ct+ it is liable to be treated as a
course which attracts the highest liabilit! of service tax(
Are servi6es !" 6!ndu6ting admissi!n tests "!r 6!eges e7em5tA
Ues+ in case the educational institutions are providing qualification recogniGed b! law for the tie
being in force(
%hether 5r!viding v!6ati!na training in the "ied !" bi!te6hn!!g8 thr!ugh 6!m5uter is
6!vered under this entr8A
,he entr! provides exeption for an approved vocational training ( ,he approved vocational
education course is defined( .f the service is covered under the approved list the sae would not
be taxable+ otherwise it is subjected to service tax(
%hether the vaue 5ertaining t! buiding "ee, 6a5itati!n "ee and !thers 6!e6ted at the time
!" admissi!n int! the instituti!n is 6!vered under this entr8A
/o+ the services provided b! an educational institution in relation to adission are exept where
the educational services provided b! the institution are also exept( ,herefore+ all the fees
entioned above would be excluded onl! if the educational services provided b! the institution
are also in the negative list(
/C= Servi6es b8 :a8 !" Renting !" residentia d:eing "!r use as residen6e
K*enting3 has been defined in section A@= as KKallowing+ peritting or granting access+ entr!+
occupation+ usage or an! such facilit!+ wholl! or partl!+ in an iovable propert!+ with or
@2
without the transfer of possession or control of the said iovable propert! and includes letting+
leasing+ licensing or other siilar arrangeents in respect of iovable propert!3(
Sna5 sh!t !n ta7abiit84 n!n'ta7abiit8 !" Renting Transa6ti!ns9
$" Then
' residential house ta-en on rent is used onl!
or predoinantl! for coercial or non7
residential use(
,he renting transaction is not covered in this
negative list entr!(
' house is given on rent and the sae is used
as a hotel or a lodge
,he renting transaction is not covered in this
negative list entr! because the person ta-ing it
on rent is using it for a coercial purpose(
*oos in a hotel or a lodge are let out whether
or not for teporar! sta!
,he renting transaction is not covered in this
negative list entr! because a hotel or a lodge is
not a residential dwelling(
Eovernent departent allots houses to its
eplo!ees and charges a license fee
Such service would be covered in the negative
list entr! relating to services provided b!
Eovernent and hence non7 taxable(
&urnished flats given on rent for teporar! sta! ,hese are in the nature of lodges or guest
houses and hence not treatable as a residential
dwelling
0ood for thought
%!ud renting !" a residentia d:eing 5art8 used as a residen6e and 5art8 "!r n!n
residentia 5ur5!se ike an !""i6e be 6!vered under this entr8A
*enting of a residential dwelling which is for use partl! as a residence and partl! for non
residential purpose li-e an )ffice would be a case of bundled services( ,axabilit! of such bundled
services has to be deterined in ters of the principles laid down in section AA& of the 'ct( ,he
taxabilit! would be based on the predoinant service(
/D= Finan6ia Se6t!r
,he services of loans+ advances or deposits are in the list in so far as the consideration is
represented b! wa! of interest or discount( 'n! charges or aounts collected over and above the
interest or discount aounts would represent taxable consideration( Soe exaplesF
&ixed deposits or saving deposits or an! other such deposits in a ban- for which return is
received b! wa! of interest(
?roviding a loan or over draft facilit! for a credit liit facilit! in consideration for
pa!ent of interest(
:ortgages or loans with a collateral securit! to the extent that the consideration for
advancing such loans or advances are represented b! wa! of interest(
@3
$orporate deposits to the extent that the consideration for advancing such loans or
advances are represented b! wa! of interest or discount(
,he .nvoice discounting is covered onl! to the extent consideration it is represented b! wa! of
discount( 'n! charges or aounts collected over and above the interest or discount aounts
would represent taxable consideration( Services provided b! ban-s or authoriGed dealers of
foreign exchange b! wa! of sale of foreign exchange to general public are not covered in
/egative >ist(
/<= Servi6e reating t! Trans5!rtati!n !" Passengers
,he following services relating to transportation of passengers, with or without accopanied
belongings+ have been specified in the negative list( Services b!F
a stage carriageI
railwa!s in a class other than LiM first classI or LiiM an '$ coachI
etro+ onorail or trawa!I
inland waterwa!sI
public transport+ other than predoinantl! for touris purpose+ in a vessel between
places located in .ndia I and
etered cabs+ radio taxis or auto ric-shaws(
,he various other equivalent odes of transport not specified herein could be cause of dispute as
the above list is not coplete within each segent(
0ood for thought
Are servi6es b8 :a8 !" giving !n hire !" m!t!r vehi6es t! state trans5!rt undertakings
6!vered in this negative ist entr8A
Services b! wa! of giving on hire of otor vehicles to state transport underta-ings are not
covered in the negative list( 8owever such services provided b! wa! of hire of otor vehicle
eant to carr! ore than 12 passengers to a State transport underta-ing is exept(
%!ud servi6es b8 6!ntra6t 6arriages :hi6h get 5ermissi!n !r tem5!rar8 5ermits t! 58 as
stage 6arriages be ta7abeA
Specific exeption is available to services of transport passengers b! a contract carriage for
transportation of passengers+ excluding touris+ conducted tours+ charter or hire(
/;= Servi6e reating t! Trans5!rtati!n !" *!!ds
,he following services provided in relation to transportation of goods are specified in the
negative listF7
b! road except the services of LiM a goods transportation agenc!I or LiiM a courier agenc!
b! aircraft or vessel fro a place outside .ndia upto the custos station of clearance in
.ndiaI or
@#
=! inland waterwa!s( L( Services provided as agents for inland waterwa!s are not covered in
the negative list(M
0ood for thought
Are *TA servi6es e76udedA
'll services provided b! goods transport agenc! are excluded fro the negative list( 8owever+
there are separate exeptions available to the services provided b! the goods transport agenc!(
,hese are services b! wa! of transportation of
LaM agricultural produceI
LbM goods+ where gross aount charged for the transportation of
goods on a consignent transported in a single carriage does not
exceed one thousand five hundred rupeesI
LcM goods+ where gross aount charged for transportation of all
such goods for a single consignee does not exceed rupees seven
hundred fift!I
LdM foodstuff including flours+ tea+ coffee+ jagger!+ sugar+ il- products+
salt and edible oil+ excluding alcoholic beveragesI
LeM cheical fertiliGer and oilca-esI
LfM newspaper or agaGines registered with the *egistrar of
/ewspapersI
LgM relief aterials eant for victis of natural or an7ade disasters+
calaities+ accidents or ishapI or
LhM defence or ilitar! equipentsIOI (
,he provisions relating to reverse charge+ i(e( service tax is liable to be paid b! the consigner or
consignee in specified cases+ are applicable even after the introduction of negative list(
%hether a kinds !" trans5!rtati!n !" g!!ds are 6!vered in negative istA
Nature !" servi6e reating t! trans5!rtati!n !" g!!ds C!vered in the negative istA
=! railwa!s /o
=! air within the countr! or abroad /o
=! a vessel in the coastal waters /o
=! a vessel on a national waterwa! Ues
Services provided b! a E,' /o
%hether trans5!rtati!n servi6e 5r!vided b8 the tru6k !:ner and tru6k !5erat!r t! end user
dire6t8 is iabe t! servi6e ta7A
Service provided b! truc- owner directl! to end user is covered b! the negative list entr! and is
not liable to service tax(
@@
/G= Funera, 2uria, Cremat!rium !r M!rtuar8 servi6es in6uding trans5!rtati!n !" the
de6eased
,his entr! exepts services in relation to creation etc( of dead(
2reak !" Cenvat Chain
.t is iportant to note that there is no corresponding exclusion fro service tax lev! to the
auxiliar! services or to the service providers who are rendering services to such service providers
who are rendering services covered in negative list( ,his leads to a brea- in tax chain( .t adds to
cascading effect+ which was the ver! thing that was sought to be avoided(
'n option could be given to such input service providers who are rendering services to negative
list service providers to go for a cenvat credits refund w(r(t( the services provided b! the to
recipients whose services are covered in negative list(
@A
CLASS$F$CAT$#N #F SERV$CE
)ntroduction
,his chapter gives the echanis+ anner and approach for classification of services( Eenerall!
under an! tax laws+ classification erits iportance for the purpose of identif!ing the rate of
dut!5tax( Under the service tax provisions+ the classification is essential to identif! the taxabilit!
itself( $lassification of service under service tax essentiall! would deterine the taxabilit! and
specific exeptions5abateents available if an!( .t would also deterine the effective date of
service(
$lassification of the service involved under service tax is perhaps the single ost iportant step
in ensuring legal copliance( $lassification of services poses certain challenges unli-e
classification of goods as services are intangible( ?rofessionals handling service tax atters often
face probles here as the service sector involves specialists who specialiGe in certain select fields
Ltechnocrats+ scientists+ engineersM and who are not attuned to the requireents under service tax
and the possible raifications of non7copliance( Soeties+ the service provider a! even be
uneducated Lfor instance if he is a goods transport agenc!+ sub contractors in the construction
industr!+ pandal or shaiana contractorM( %er! often when it coes to classif!ing a service+
difficulties are faced in understanding the exact nature of services being provided b! the service
providers as the explanations given can onl! be understood b! another technicall! qualified
individual rather than a professional who is well versed onl! in atters pertaining to taxation(
,he understanding of the trade is critical in this regard(
Reevan6e !" the 6!n6e5t !" 6assi"i6ati!n
'n assessee under $entral Bxcise would -now the iportance of classification and the influence
it would have on his liabilit!( Siilarl! the iportance of classification under service tax is not to
be underestiated as it is iportant to deterine the specific exeptions5abateents available if
an!( .t would also deterine the effective date of service(
,here have been nuerous instances where assessees differ with the departental authorities on
the issue of classification of services the! provide(
,he legal axi which states 9N!t%in) is t! 2e read int! a de+initi!n and n!t%in) s%!uld 2e
!mitted t! 2e read.: has to be -ept in ind while deterining
the classification of services( &or the purpose of classification+ one would have to follow the
provisions as laid down in Section AA&( ,he sae has been discussed belowF7
@4
S6!5e !" Sub Se6ti!n >/? t! Se6ti!n ;;F9
,he sub section L1M of section AA& provides that an! input service required to provide
ain service will not be covered in ain service( ,his eans input service will be
considered as a separate service( ,his position was also prevalent prior to 1st Jul!+ 2012(
,he sub section reads as followsF
=nless otherwise specified, reference to a service >herein referred to as (ain
service? shall not include reference to a service which is used for providing
(ain service!
,he sub section L1M of the section AA& deals with interpretation of specified description of
services( ,his is ephasiGing that the classification of the ain contract cannot be used
for the sub7contract or an! other service provided for rendering the ain service( ,his
eans+ if a service Lain serviceM is specificall! excluded or exepted b! wa! of
/egative >ist or Bxeption notification then an! service used for providing the ain
service is precluded fro the sae benefit(
&or exaple+ Kprovision of access to an! road or bridge on pa!ent of toll3 is in /egative
>ist( 8owever+ service provided for collection of toll or securit! of cash would not fall
under negative list ?aras #(0(2 and "(1(1 of $=B$3s ,axation of ServicesF 'n Bducation
Euide3 published on 20(0A(2012(
.f construction of a Eovernent building is exept Lain serviceM+ architect or labour
supplier providing service to builder5 contractor for such contract will not be able to avail
that exeption+ even if used to provide Kain service3(
8owever+ if a contractor outsources the wor- of construction to a sub7contractor+ the
service provided b! the sub7contractor is exept( ,his is because of a specific exeption
given under /otification /o( 2@520127S, dated 20(0A(2012 effective fro 01(04(2012
which provides that if the ain ;or-s contract is exept+ sub7contractor providing wor-s
contract service to ain contractor will be exept fro service tax( ,his exeption is
onl! when the sub7contractor provides wor-s contract service and not in other cases(
S6!5e !" Sub Se6ti!n >-? T! Se6ti!n ;;F9
Section AA&L2M reads as follows7
@0
Where a service is capable of differential treat(ent for any purpose based on
its description, the (ost specific description shall be preferred over a (ore
general description
,his sub section iplies that if a particular service is classifiable under ore than one
categor! then the categor! of service which specificall! covers such service will be
preferred than the general service( ,he sae can be understood with the exaples( &or
exaple+ a hotel rents out a conference roo for an official conference where lunch is
also served( .t can be classified as Kandap -eeper3 or Kconvention service3( =etween
these two entries+ Kconvention service3 is ore specific as it covers onl! conventions
which are li-e official function( K:andap -eeper3 is general description as it includes
official+ social as well as business functions( 8ence+ such service will be a Kconvention
service3( $=B$ circular /o( @1513520027S, dated 04(01(2003(
,he sae principle was applied in $oal 8andlers ? >td( v( $$B L2004M A S,, @13
L$BS,',M+ where it was held that $9& 'gent is specific description copared to
Kbusiness auxiliar! services3(
.t is also otherwise a general rule of interpretation that a specific heading should be
preferred over general heading( ,here are an! Supree $ourt cases supporting the
sae+ li-e $$B v( &rito >a! .ndia L200"M 2#2 B>, 3 LS$M+ and 8industan ?oles
$orporation v( $$B L200AM 1"A B>, #00 LS$M+ etc(
S6!5e !" Sub Se6ti!n >C? T! Se6ti!n ;;F9
.t is pertinent to understand what =undled Services is before proceeding to sub section
L3M of section AA&( ,he eaning of E2unded Servi6esF has been given in Bxplanation to
section AA&L3M of the &inance 'ct+ 1""#( .t eans a bundle of provision of various
services wherein an eleent of provision one service is cobined with an eleent or
eleents of provision of an! other service or services( =asicall! it is a coposite service
consisting of two or ore services( &or exaple+ an airline provides ovie or catering on
board( Bach service involves differential treatent as the anner of deterination of
value of two services for the purpose of charging service tax is different(
8owever+ if the service provider clubs two or ore services to provide a single service to
a service recipient and such single service is alread! present in the statute as a separate
@"
entr! in /egative >ist+ or exeptions or Declared services+ then the sae will be
accordingl! classified instead of following the principle of =undled services( ,wo rules
have been prescribed for deterining the taxabilit! of such bundled services in sub7
section L3M of section AA& of the 'ct( ,hese rules+ which are explained below+ are subject
to the provisions of the rule contained in sub section L2M of section AA&+ viG a specific
description will be preferred over a general description as explained above( ,he sub7
section L3M of section AA& reads as followsF
/ub2ect to the provisions of sub8section >#?, the taxability of a bundled service
shall be deter(ined in the following (anner, na(ely6@@ >a? if various ele(ents
of such service are naturally bundled in the ordinary course of business, it shall
be treated as provision of the single service which gives such bundle its
essential characterA >b? if various ele(ents of such service are not naturally
bundled in the ordinary course of business, it shall be treated as provision of
the single service which results in highest liability of service tax!
Se6ti!n ;;F>C?>a? explains that if services are naturall! bundled in the ordinar! course of
business then it should be classified as per the categor! of service which gives it the
essential character( &or exaple+ a hotel provides a #7D537/ pac-age with the facilit! of
brea-fast( ,his is a natural bundling of services in the ordinar! course of business( ,he
service of hotel accoodation gives the bundle the essential character and would+
therefore+ be treated as service of providing hotel accoodation(
.t is provided in section AA&L3MLbM of the 'ct that when various services are not naturall!
bundled in the ordinar! course of business+ then the service shall be the one attracting
highest service tax liabilit!( ,he following has been given in the Bducation Euide issued
b! $=B$ on 20th June+ 2012(
&or exaple+ preises are rented which are partl! for residential purposes and partl! for
anufacturing activit!( ,hus+ it is not service bundled in ordinar! course of business( .n
such case+ though residential use is not taxable+ coercial use is taxable( 8ence+ the
entire bundle will be treated as renting of coercial propert!(
GG>/?>b? Faiure t! kee5, maintain !r retain b!!ks !" a66!unts and !ther
d!6uments
Penat8 ma8 e7tend u5t! Rs=/.,...4'
GG>/?>6? Faiure t! "urnish in"!rmati!n, 5r!du6e d!6uments !r a55ear be"!re
the Centra E76ise #""i6er= Penat8 :i be highest !" the "!!:ing9
Am!unt u5 t! Rs=/.,...4'
Rs=-..4' 5er da8 "!r ea6h da8 !" de"aut
GG>/?>d? Fais t! 5a8 ta7 ee6tr!ni6a8, thr!ugh internet banking
Penat8 ma8 e7tend u5t! Rs=/.,...4'
GG>/?>e? $ssuan6e an inv!i6e :ith in6!rre6t !r in6!m5ete detais !r "ais t!
a66!unt an inv!i6e in the b!!ks !" a66!unts
Penat8 ma8 e7tend u5t! Rs=/.,...4'
G/>-? C!ntraventi!n !" an8 5r!visi!ns !" this 6ha5ter !r an8 rues made
thereunder
Penat8 ma8 e7tend u5t! Rs=/.,...4'
Se6ti!n GK N Penat8 "!r Su55ressing et6=,
;here an! service tax has not been levied or paid or has been short levied or short paid or
erroneousl! refunded+ b! reason of fraud or collusion or willful is7stateent or suppression of
facts or contravention of an! of the provisions of this chapter or of the rules ade thereunder with
the intention to evade pa!ent of service tax( ?enalt! will be as underF
?enalt! will be 100J of the aount of service tax not levied or paid or short levied or
short paid or erroneousl! refunded(
,he above said penalt! will be reduced to @0J+ if the assessee has recorded the true and
coplete details of the transaction(
1@"
,he above said penalt! will be reduced to 2@J if the tax dues are paid within a period of
30 da!s L"0da!s in case of Sall Scale Sector 'ssessee1value of taxable services not
exceed *S A0 >a-hs for an! of !ears covered b! notice or during preceding financial
!earM together with interest and reduced penalt! for the date of counication of
concerned order(
Section 40'F
;here a copan! coits following contraventions7
a( Bvasion of tax or
b( .ssues invoice without providing taxable service or
c( 'vails and utiliGes credits of taxes or duties without actual receipt of taxable service or
excisable goods or
d( &ails to pa! aount collected as service tax to credit of $entral Eovernent within A
onths of date when it becoes due
,hen director+ anager+ secretar! or other officer who at the tie of such contravention was in
charge and responsible to copan! was -nowingl! concerned with contravention liable to penalt!
extending upto *s 1 >a-hs(
Section 4" penalt! for failure to copl! with notice #mitted
Se6ti!n K. N Penat8 n!t t! be im5!sed in 6ertain 6ases
Se6ti!n Penat8 n!t t! be im5!sed i"O=
00L1M ?enalt! under Section 4A+ 44 or first proviso to sub7section L1M of Section 40 are
leviable if the assessee proves that there was reasonable cause for the default
00L2M ?enalt! u5s 4A+44 and 40 shall not be levied if the service tax pa!able as on A
th
da! of :arch 2012 in relation to renting of iovable propert! along with
interest is paid in full within six onths fro the 20(0@(2012 i(e(+ b! 20(11(2012
Penat8 "!r ate "iing !" returns >i=e=, ST'C? 5res6ribed under Rue G !" Servi6e Ta7 Rues9
;here an assessee subits the returns after the date prescribed for subission of such return+ the
assessee is liable to pa! the penalt! under *ule 4$+ for the period of dela!
?eriod of dela! 'ount of ?enalt!
1@ da!s fro the date
prescribed or due date
*s(@0057
1A0
=e!ond 1@ da!s but not
later than 30 da!s for the
due date
*s(100057
=e!ond 30 da!s fro the
due date
*s(100057 ?lus *s(10057 for ever! da! fro the 31
st
da! till the date
of furnishing the return but axiu of *s(20+00057 as prescribed in
Section 40(
Penat8 "!r "aiure !" "iing N$L returns
Bven if there is no business during the period+ the assessees have to file K/.>3 return as long as
registration certificate is valid(
&iling of return b! the assessee within the prescribed tie liit is copulsor!I even it a! be a
nil return+ penal action a! be attracted on the such failure(
's per the proviso to *ule 4$ if there is a sufficient reason for not filing the returns and if the
service tax pa!able is nil+ the $entral Bxcise )fficer a! reduce or waive the penalt!(
Penat8 under Cenvat Credit Rues, -..D
's per *ule 1@ of the $$*+ 200#+ penalt! is leviable as given below in the tableF
*ule under $$* Default and penalt! for such default
1@L1M .f assessee avails or utiliGe cenvat credit in respect of input or capital
goods or input services+ wrongl! or in contravention of an! of the
provisions then penalt! will be leviable for the sae( 8igher of the
following will be iposed as penalt!(
/ot exceeding the dut! or service tax on such goods or
services or
*s(2+00057 whichever is higher
1@L3M .n case+ where the cenvat credit in respect of input or capital goods or
input services has been availed or utiliGed wrongl! b! reason of
fraud+ collusion or an! willful isstateent or suppression of facts or
contravention of an! of the provisions with intent to evade pa!ent
of service tax( ,hen an assessee shall be liable to pa! penalt! in ters
of provisions of Section 40 of the &inance 'ct
1@' Eeneral ?enalt!F contravention of provisions of $$* 200# for which
no penalt! has been provided in an! rule then penalt! a! extend to
*s(@00057
1A1
THE V#L+NTAR( C#MPL$ANCE ENC#+RA*EMENT SCHEME9
aM ,he &inance 'ct was enacted on 10th :a!+ 2013( Soe of the ajor changes brought
about in &inance 'ct+ including the KService ,ax %oluntar! $opliance Bncourageent
Schee3 would be effective fro the date the ?residential 'ssent is given(
bM 's a easure of increasing the governent revenue and reducing the litigation+ the
Eovernent has introduced a one7tie schee called K%oluntar! $opliance
Bncourageent Schee3 under which+ a defaulter a! pa! his taxes which he has
failed to pa! without an! interest or penalt!(
cM 's per Sec "@L1MLbM of the &inance =ill+ 2013+ Kdeclarant3 eans an! person who a-es
a declaration under sub7section L1M of Sec "4 of the &inance =ill+ 2013( ,he Sec "4L1M
provides that subject to the provisions of the schee+ a person a! a-e declaration to
the designated authorit! on or before the 31st da! of Deceber+ 2013 in such forat
and is such anner as a! be prescribed(
dM 's per the provision of the schee+ it is understood that a person on who no notice or
order of deterination of taxes have been issued or ade before 01(03(2013+ can appl!
for relief under the provisions of this schee( .t is also pertinent to note that a person
who has disclosed his liabilit! in the service tax return+ but have failed to pa! the taxes+
shall not have an option to avail the benefit under this schee(
eM ,he persons a-ing application under the this schee+ and on who inquir! or
investigation has been initiated for non7pa!ent or short pa!ent of service tax+ the
application of such persons under this schee+ a!be liable for rejection b! the
designated authorit! for reasons to be recorded in writing( &or the purposes of this
clause+ in ter investigation or inquir! eans a search+ issuance of suons+ requiring
production of boo-s+ docuents or an! other evidences+ or if an audit has been initiated
and such inquir!+ investigation and audit is pending as on 01(03(2013( ,he schee
details are in annexure 2( /otification no(10520137S, provides details in this regard(
1A2
fM ,he assesses who wishes to pa! taxes for past period 1upto Deceber 122 and not
registered can get registered now and opt for this schee( .t has been provided in
%$BS that+ beside interest and penalt!+ iunit! would also be available fro an!
other proceeding under the &inance 'ct+ 1""# and *ules ade thereunder(
Features !" VCES9
1( ,he schee has been introduced to incentivise the defaulting persons to voluntaril!
declare tax dues for the period )ctober 1 2004 to Deceber 31 2011(
2( ,he declaration cannot be filed in relation to following service tax dues7
a( Dues in relation to which a notice or order of tax deterination has been
passed before 1
st
:arch 2013 under Section 42 + Section 43 or section 43' of
the $hapter % of finance 'ct(
b( Dues in relation to periods for which declarant has furnished returns and
disclosed true liabilit! but has not actuall! paid the disclosed aount of tax or
an! part thereof(
c( Dues in relation to an! issue in respect of which a notice or order of
deterination has been issued for an! prior period(
3( &urther in following instances the designated authorit! shall for reasons to be recorded in
writing reject the declaration in relation to an! tax dueF
a( ;here an enquir! or investigation has been initiated in relation to such dues b! wa! of
search of preises+ issuance of suons or accounts+ docuents and other evidence has
been requisitioned in relation to such enquir! or investigation or
b( ;here an audit has been initiated
and such enquir!+ investigation or audit is pending as on 1
st
:arch 2013(
#( Upon receipt of the declaration filed b! declarant it is incubent upon the designated
authorit! to ac-nowledge the declaration within 4 wor-ing da!s fro date of receipt of
declaration(
@( Upon such ac-nowledgeent+ the declarant is required to pa! the tax dues on a staggered
basis with atleast @0J of dues being paid before 31
st
Deceber 2013 and reaining in
201#(
A( ,he declaration would be conclusive after issuance of ac-nowledgeent and once
concluded atter would not be reopened in an! proceeding under $hapter % before an!
authorit! or court relating to period covered b! such declaration(
4( ;here however $oissioner has reasons to believe that the declaration ade b!
declarant is substantiall! false he a! for reasons to be recorded in writing+ issue a notice
1A3
to the declarant and such proceedings would be deeed to be a notice issued under
Section 43 or Section 43' of the 'ct(
Me6hani6s "!r !5ting "!r sameM
d( Bver! person who intends to a-e a declaration under this schee is required
to obtain registration if not alread! registered(
e( 'n eligible person intending to opt for the Schee is required to voluntaril!
a-e a declaration before designated authorit! before 31
st
Deceber 2013 in
&or %$BS 1(
f( ,he declarant shall pa! the aount as declared in schee in 2 installents7
i( /ot less than @0J of tax dues b! 31
st
Deceber 2013 and
ii( *eaining tax dues b! June 30
th
201#(
g( .f declarant fails to pa! the second instalent the sae shall be paid b!
Deceber 31
st
201# along with interest calculated fro 1
st
Jul! 201#(
h( ,he tax dues declared under this schee cannot be discharged b! utilising
$envat credits(
REF+N)S AN) RE2ATES
$ntr!du6ti!n9
Siilar to an! other tax statutes even under Service tax law there is refund echanis( ;e
should also note that there are certain provisions under $entral Bxcise which are ade applicable
for Service tax also( )ne of such provision is Section 11= of the $entral Bxcise dealing with
refunds( ,he sae section will appl! with regard to the refunds under Service ,ax( Bxcept for the
cases where the self adjustent of tax is allowed+ if an! aount paid in excess b! the assessee to
the departent+ assessee needs to opt for a-ing an application for refund( ,he below entioned
provisions of $entral Bxcise has ade applicable for service tax in case of refund and sae is
prescribed under Section 03 of the &inance 'ct(
1( Section 11= $lai for refund of excise dut!
2( Section 11== .nterest on dela!ed refund be!ond 3 onths
Re"und under Se6ti!n //2 !" Centra E76ise A6t, /@DD9
=rief explanation of Section 11= is as followsI
1A#
1( ,he person claiing the refund of an! dut! of excise a! a-e an application to '$$B
or D$$B before the Bxpir! of one !ear fro the relevant date in the prescribed anner(
8owever liitation period of one !ear shall not appl! where an! dut! has been paid
under protest(
2( ,he application for refund should be ade in &or * Lin triplicateM(
3( ,he liitation period of one !ear is to be calculated fro the date of pa!ent of service
tax(
#( ,he application should be accopanied b! such docuentar! or other evidence Bnsure
that
a( Erounds on which refund is claied(
b( Docuents in support of refund clai should be enclosed( ,he docuents
should establish that the aount of dut! claied as refund has been paid b!
hi and the incidence of dut! has not been passed on b! hi to an! other
person(
c( 'ount of service tax relating to which such refund is claied was either
collected fro hi or has been paid b! hi(
d( Details of the anner in which the aount of dut! originall! paid ust be
given(
@( ,he 'ssistant $oissioner+ on being satisfied that due is refundable+ shall grant refund
onl! in the following casesF
*ebate of dut! paid on excisable goods exported out of india or on
excisable aterials used in anufacture of goods which are exported out
of india(
*efund of balance aount in ?>' of applicant3s account current
aintained with coissioner of $entral Bxcise L?>'M(
*efund of credit of dut! paid on excisable goods used as inputs in
accordance with rules and act(
,he dut! of Bxcise paid b! the anufacturer if he had not passed on
incidence of such dut! to an! other person(
,he dut! of Bxcise paid b! the bu!er if he had not passed on incidence
of such dut! to an! other person(
,he dut! of excise borne b! an! other such class of applicants as $entral
Eovernent a! b! notification in the official EaGette(
1A@
A( .n other cases+ the '$ shall a-e an order that the whole or an! part of the dut! is
refundable including service tax collected and not reitted and the aount so deterined
shall be credited to the Nconsuer welfare fundO established under Section 12$(
4( /o *efund shall be granted contrar! to that contained in an! judgent+ decree+order or
direction of appellate tribunal(
Re"und !" Cenvat Credit under Rue < !" CCR -..D=
,he refund *ule @ is siplified b! vide /otification /o 10520127$B dated 14(03(2012
read with /otification /o 24520127$B dated 10(0A(2012 wherein the duties or taxes paid
on an! goods or services that qualif! as inputs or input services will be entitled to be
refunded in the ratio of the export turnover to total turnover subject to procedure+
safeguards+ conditions and liitations as a! be specified b! notification in the official
gaGetteF
*efund aount V LBxport ,urnover of goods Q Bxport turnover of servicesM P /et $envat $redit
,otal ,urnover
*efund of cenvat credit under rule @ shall be subjected to the conditions and procedures laid
down in /otification /o 24520127$BF
LaM Bver! anufacturer or provider of output service shall subit not ore than one refund
clai on quarterl!( 8owever+ where a person exporting goods and services
siultaneousl!+ a! subit two refund clais one in respect of goods exported and other
in respect of the export of services ever! quarter(
LbM &or the purpose of this notification quarter eans a period of three consecutive onths
with the first quarter beginning fro 1
st
'pril of ever! !ear+ second quarter fro 1
st
Jul!+
third quarter fro 1
st
)ctober and fourth quarter fro 1
st
Januar! of ever! !ear(
LcM .n respect of goods exported7
the value of goods cleared for export during the quarter shall be the su total of
all the goods cleared b! the exporter for exports during the quarter as per the
onthl! or quarterl! return filed b! the claiant(
,otal value of goods cleared during the quarter shall be the su total of value of
all goods cleared b! the claiant during the quarter as per the onthl! or
quarterl! return filed b! the claiant(
1AA
>d? $n res5e6t !" Servi6es e75!rted'
&or the purpose of coputation of total turnover+ the value of export services
shall be deterined in accordance with clause LDM of sub7rule L1M of rule @ of the
said rules(
&or the value of all services other than export during the quarter+ the tie of
provision of services shall be deterined as per the provisions of the ?oint of
,axation *ules+ 2011(
LeM the aount of refund claied shall not be ore than the aount l!ing in balance at the
end of quarter for which refund clai is being ade or at the tie of filing of the refund
clai+ whichever is less(
LfM the aount that is claied as refund under rule @ of the said rules shall be debited b! the
claiant fro his $B/%', credit account at the tie of a-ing the clai(
LgM .n case the aount of refund sanctioned is less than the aount of refund claied+ then
the claiant a! ta-e bac- the credit of the difference between the aount claied and
aount sanctioned(
Pr!6edure "!r "iing the re"und 6aim
aM ,he anufacturer or provider of output service+ as the case a! be+ shall subit an
application in &or ' to the 'ssistant $oissioner of $entral Bxcise or Deput!
$oissioner of $entral Bxcise+ as the case a! be+ in whose jurisdiction+7
iM ,he factor! fro which the final products are exported is situated(
iiM ,he registered preises of the provider of service fro which output services
are exported is situated(
bM ,he application in the &or ' along with the docuents specified therein and enclosures
relating to the quarter for which refund is being claied shall be filed b! the claiant+
before the expir! of the period specified in section 11= of the $entral Bxcise 'ct+ 1"## L1
of 1"##M(
cM 'pplication shall be certified5signed b!
LiM ,he individual or the proprietor in the case of proprietar! fir or -arta in case of
8indu Undivided &ail! as the case a! beI
LiiM 'n! partner in case of a partnership firI
LiiiM ' person authoriGed b! the =oard of Directors in case of a liited copan!I
LivM .n other cases+ a person authoriGed to sign the refund application b! the entit!(
1A4
dM ,he applicant shall file the refund clai along with the copies of ban- realiGation
certificate in respect of the services exported(
eM ,he refund clai shall be accopanied b! a certificate in &or '7.+ dul! signed b! the
auditor Lstatutor! or an! otherM certif!ing the correctness of refund claied in respect of
export of services(
fM ,he 'ssistant $oissioner or Deput! $oissioner to who the application for
refund is ade a! call for an! docuent in case he has reason to believe that
inforation provided in the refund clai is incorrect or insufficient and further enquir!
needs to be caused before the sanction of refund clai(
gM 't the tie of sanctioning the refund clai the 'ssistant $oissioner or Deput!
$oissioner shall satisf! hiself or herself in respect of the correctness of the clai
and the fact that goods cleared for export or services provided have actuall! been
exported and allow the clai of exporter of goods or services in full or part as the case
a! be(
?rovided further no refund of credit will be allowed if the anufacturer or service provider avails
drawbac- allowed under the $ustos and $entral Bxcise Duties and Service tax Drawbac- *ules
1""@ or clais rebate of dut! under the $entral Bxcise *ules+ 2002+ in respect of such dut! or
clais rebate of service tax under the Service ,ax *ules 1""# in respect of such tax(
T%e ne$ sc%eme $.e.+. 1
st
April -.1- d!es n!t re<uire t%e c!rrelati!n 2et$een e*p!rts
and input services used in suc% e*p!rts.
Pr!6edure "!r re"und !" 6redits u4r < !" CCR -..D 5ri!r t! the ./=.D=-./-
,he clais are to be ade once in a quarter in the calendar !ear Lunless the assessee is an
100J B)U or exports in preceding quarter exceeded @0J of total value+ when it can be
ade onthl!M
,he service provider shall subit an application in &or ' to the jurisdictional
'$$B5D$$B within the tie specified u5s 11= of $B' 1"##
,he clai shall be accopanied b! a cop! of the invoice and a ban- certificate certif!ing
realiGation of export proceeds(
,he refund of unutiliGed input service credits would be as per the forula L,otal $envat
$redit on input services during the period P LBxport ,urnover5,otal ,urnoverMM
,he service provider shall ensure proper follow up with the authorities till granting of
refund(
1A0
/oteF 7 ,he assessees are also advised to subit copies of cenvat registers plus docuents on
which credits are ta-en as these a! practicall! be required( ,he proof as to pa!ent of aounts
to the service provider on these bills on which credits are ta-en+ would also have to be furnished
to facilitate quic-er refunds(
)ssues6 ;hether nexus of input services5inputs is required to be co7related with the export of
taxable serviceC
C!mments9 'endent was ade in budget 2010 requiring the service provider availing the
benefit under *ule @ of $envat $redit *ules+ 200# to establish the nexus between the input
service and output service( ,he aendent was ade in the notification and not in the rule+
which in our view is disputable( &urther the $BS,', in various decisions has observed that one
to one co7relation is not required(
>%et%er t%e time limit !+ !ne year is applica2le t! re+unds !+ service ta* paid in e*cessH
*eaders a! note that this has alread! been dealt with b! the ,ribunal5$ourts( ,he Delhi ,ribunal
in .ndian .spat ;or-s L?M >td %s $$B *aipur L200A L03M S,* 1A1 L,ri7DelMM had held that where
service tax was not pa!able+ the departent had no authorit! under law to collect the sae and
therefore the tie liit of one !ear for refund was not applicable( ,hus this question is a valid
one and the view can be ta-en b! assessees(
>%et%er re+und !+ accumulated credits p!ssi2leH
.n .dol textiles >td %s $$B ,hane L2004 L214M B>, 2"" L,ri7:uMM+ *ule @ of $envat $redit
*ules was held to be a beneficiar! piece of legislation and refund of accuulated credit held to be
available despite hoe consuption as it was a substantive right of the assessee( ,herefore
assessees having accuulated credits on account of exports Lgoods or taxable servicesM could go
in for the refund option
,he clai should norall! be accopanied b! full docuentar! proof regarding the pa!ent of
appropriate taxes on which the clai for refund is being filed( ,he refund can be denied where
an! of the required conditions are not satisfied( ,he refund would be granted once an order for the
sae is passed b! the concerned authorit!( ;here the order is against the assessee the sae
would have to be ta-en up on appeal with the $oissioner L'ppealsM(
;here the refund is not granted within three onths fro the date of application for the sae or
fro the date of the order passed b! $oissioner 'ppeals5'ppellate ,ribunal5$ourt+ interest
1A"
shall be pa!able as per section 11== of $entral Bxcise 'ct 1"## fro the first da! after the
expir! of three onth period and up to the date of refund at the rates notified which is currentl! at
AJ p(a under /otification A452003 $B L/,M dated 12(0"(2003
,he service tax provisions provide an option for the provider of taxable service who exports his
services in accordance with the Bxport of Service *ules 200@ to opt for refund of the cenvat
credits in respect of excise dut! paid on inputs and service tax paid on input services Lunder *ule
@ of $$* 200#M used for providing such taxable services which are exported( ,his would be
useful where the service provider is not in a position to utilise the said credits towards his liabilit!
on services provided within the countr!( 'part fro this there is also an option to go for rebates
Lthe procedure for which is explained in this chapterM( .n the !ear 2004+ the governent also
notified certain input services norall! received b! exporters of goods for the purpose of
exeption( .(e the exporters of goods now have the option of going in for refund of the service
tax paid on specified input services which the! use for exporting their goods( .n other words+ the
exeption fro service tax is not given to the service provider who provides services to such
exporters( ,he exporter would have to file a clai for refund of the service tax he has paid on his
input services once the goods have been exported( ,he procedures are explained below
Re"und +nder N!ti"i6ati!n N! D/4-./-'ST dated -@=.;=-./- :=e=" /=G=-./-
,he notification grants rebate of service tax paid on the taxable services which are received b! an
exporter of goods and used for export of goods( .n the said notification standard rates of claiing
rebate have been revised and the sae is given in the annexure
:eaning of ter NSpecified ServicesO in respect of which rebate can be claiedF
iM in the case of excisable goods+ taxable services that have been used be!ond the place of
reoval+ for the export of said goodsI
iiM in the case of goods other than LiM above+ taxable services used for the export of said
goodsI
=ut shall not include an! service entioned in sub7clauses L'M+L=M+L='M and L$M of
clause LlM of rule L2M of the $B/%', $redit *ules+ 200#I >re"er e76usi!n 5art !" the
in5ut servi6e de"initi!n?
?lace of reoval have the eaning assigned to it in section# of the $entral Bxcise 'ct+
1"##(
,he rebate shall not be claied b! a unit or developer of a Special Bconoic XoneI
,he goods that are exported can either be excisable or non excisable
140
,he refund can be claied either b! anufacturer exporter or erchant exporter(
,he exporter a! appl! to the jurisdictional '$5D$ of $entral Bxcise
,he application for for claiing refund of service tax paid on specified services is
provided in the notification itself(
/o $B/%', credit of service tax paid on the specified services used for export of said
goods has been ta-en under the $B/%', $redit *ules+ 200#I
Pr!6edure "!r 6aiming Rebate
/= F!r th!se e75!rters !" g!!ds :h! intend t! 6aim rebate !n the basis !" rates
s5e6i"ied in the S6hedue !" Rates
a? anufacturer7exporter+ who is registered as an assessee under the $entral Bxcise
'ct+ 1"## L1 of 1"##M or the rules ade thereunder shall register his central
excise registration nuber and ban- account nuber with the custosI
b? exporter who is not so registered under the provisions referred to in clause LaM+
shall register his service tax code nuber and ban- account nuber with the
custosI
6? Pr!6edure "!r !btaining ST 6!der N!9 service tax code nuber referred to in
clause LbM+ shall be obtained b! filing a declaration in &or '72 to the 'ssistant
$oissioner of $entral Bxcise or the Deput! $oissioner of $entral Bxcise+
as the case a! be+ having jurisdiction over the registered office or the head
office+ as the case a! be+ of such exporterI
d? the exporter shall a-e a declaration in the electronic shipping bill or bill of
export+ as the case a! be+ while presenting the sae to the proper officer of
custos+ to the effect that7
i? the rebate of service tax paid on the specified services is claied as a
percentage of the declared &ree )n =oardL&)=M value of the said goods+
on the basis of rate specified in the ScheduleI
ii? no further rebate shall be claied in respect of the specified services+
under procedure specified in paragraph 3 or in an! other anner+
including on the ground that the rebate obtained is less than the service
tax paid on the specified servicesI
iii? conditions of the notification have been fulfilledI
e? 'ount of rebate V &)= value of the goods of a class or description given in the
Schedule P Standard *ate of *ebate
141
"? ,he aount of rebate calculated shall deposit in the ban- account of the exporter
g? .t is specified that the shipping bill or bill of export used for claiing rebate on
Standard *ates will not be used for claiing *ebate on 'ctual basis(
h? where the rebate involved in a shipping bill or bill of export is less than rupees
fift!+ the sae shall not be allowedI
-= F!r th!se E75!rters !" *!!ds :h! intend t! 6aim Rebate !n the basis !" a6tua
5a8ment !" servi6e ta7 !n s5e6i"ied servi6es=
>a? rebate a! be claied on the service tax actuall! paid on an! specified service
on the basis of dul! certified docuentsI
>b? the person liable to pa! service tax under section A0 of the said 'ct on the taxable
service provided to the exporter for export of goods shall not be eligible to clai
rebate under this notificationI
>6? ,he anufacturer Bxporter+ who is a central excise assessee+ is required to file
rebate clai in prescribed &or71 having jurisdiction over his factor!(
>d? 'n exporter other than a anufacturer7exporter as entioned above is required to
file a declaration in &or '72 see-ing allotent of Service ,ax $ode before
filing a rebate clai( ,he &or '72 has to be filed to '$ or D$ of central excise
having jurisdiction over his registered office or head office(
>e? 'fter obtaining the Service ,ax $ode /o the rebate clai has to be filed in &or
'71(
>"? the clai for rebate of service tax paid on the specified services used for export
of goods shall be filed within one !ear fro the date of export of the said goods(
>g? where the total aount of rebate sought under a clai is upto 0(@0J of the total
&)= value of export goods and the exporter is registered with the Bxport
?rootion $ouncil sponsored b! :inistr! of $oerce or :inistr! of ,extiles+
&or '71 shall be subitted along with relevant invoice+ bill or challan+ or
an! other docuent for each specified service+ in original+ issued in the nae
of the exporter+ evidencing pa!ent for the specified service used for export of
the said goods and the service tax paid thereon+ certified in the anner specified
in sub7clauses L'M and L=MF
A= if the exporter is a proprietorship concern or partnership fir+ the
docuents enclosed with the clai shall be self7certified b! the exporter
and if the exporter is a liited copan!+ the docuents enclosed with
142
the clai shall be certified b! the person authorised b! the =oard of
DirectorsI
2= the docuents enclosed with the clai shall also contain a certificate
fro the exporter or the person authorised b! the =oard of Directors+ to
the effect that specified service to which the docuent pertains has been
received+ the service tax pa!able thereon has been paid and the specified
service has been used for export of the said goods under the shipping bill
nuberI
>h? where the total aount of rebate sought under a clai is ore than 0(@0J of the
total &)= value of the goods exported+ the procedure specified in clause LhM
above shall stand odified to the extent that the certification prescribed thereon+
in sub7 clauses L'M and L=M shall be ade b! the $hartered 'ccountant who
audits the annual accounts of the exporter for the purposes of the
$opanies 'ct+ 1"@A L1 of 1"@AM or the .ncoe ,ax 'ct+ 1"A1L#3 of 1"A1M+
as the case a! beI
>i? where the rebate involved in a clai is less than rupees five hundred+ the sae
shall not be allowedI
>j? the 'ssistant $oissioner of $entral Bxcise or the Deput! $oissioner of
$entral Bxcise+ as the case a! be+ shall+ after satisf!ing hiself+7
i? that the service tax rebate clai filed in &or '71 is coplete in ever!
respectI
ii? that dul! certified docuents have been subitted evidencing the
pa!ent of service tax on the specified servicesI
iii? that rebate has not been alread! received on the shipping bills or bills of
export on the basis of procedure prescribed in paragraph 2Iand
iv? that the rebate claied is aritheticall! accurate+ refund the service tax
paid on the specified service within a period of one onth fro the
receipt of said claiF
Pr!vided that where the 'ssistant $oissioner of $entral Bxcise or the Deput! $oissioner
of $entral Bxcise+ as the case a! be+ has reason to believe that the clai+ or the enclosed
docuents are not in order or that there is a reason to den! such rebate+ he a!+ after recording
the reasons in writing+ ta-e action+ in accordance with the provisions of the said 'ct and the rules
ade thereunderI
143
;here an! rebate of service tax paid on the specified services has been allowed to an exporter on
export of goods but the sale proceeds in respect of said goods are not received b! or on behalf of
the exporter+ in .ndia+ within the period allowed b! the *eserve =an- of .ndia under section 0 of
the &oreign Bxchange :anageent 'ct+ 1""" L#2 of 1"""M+ including an! extension of such
period+ such rebate shall be deeed never to have been allowed and a! be recovered under the
provisions of the said 'ct and the rules ade there underI
&efund under notification "B#$$;8/. dated $"!$"!#$$; supersession by +otification
+o 5#B#$ dated 1$!#!#$@ -vailable to exporters of goods in respect of specified
input services >prior to !"!#$#?
"!nditi!ns
,he specified services are indicated below in the note to this paragraph and readers a!
refer the concerned notifications indicated for the exact set of conditions to be fulfilled(
*eaders a! also note that the services have not been specified fro a single date and
have been introduced over a period of tie which has also been indicated below this
paragraph(
,he exeption claied b! the exporter shall be provided b! wa! of refund of service tax
paid on the specified services used for export of the said goodsI
,he exporter claiing the exeption should actuall! have paid the service tax on the
specified services+ to the service provider
Bxeption or refund of service tax paid on the specified services used for export of said
goods shall not be claied except under this notification(
;here the exporter hiself is liable to pa! service tax under section A0L2M of the 'ct on
the services which gets consued on the goods that are being exported+ the exporter is
exept fro pa!ing the service tax(
/oteF 7 ,he services covered for the purpose of this notification are as follows
1( Eeneral insurance service in relation to export goods Sec( A@L10@MLdM
2( ?ort services for export of said goods Sec( A@L10@MLGnM
3( ,echnical testing and anal!sis of said goods for export Sec( A@L10@MLGGhM
#( .nspection and certification of export goods Sec( A@L10@MLGGiM
@( )ther port services for export of goods Sec( A@L10@MLGGlM
A( ,ransport of goods b! road in a goods carriage fro .$D to port of export Sec( A@L10@M
LGGpM
14#
4( ,ransport of goods in containers b! rail fro .$D to port of export 7 Sec( A@L10@MLGGGpM
0( $leaning services in relation to containers used for export of goods Sec( A@L10@MLGGGdM
"( Storage and warehousing services for export goods Sec( A@L10@MLGGaM
10( $ourier service in relation to transportation of goods and docuents for export Sec(
A@L10@MLfM
11( $ustos house agent services in relation to export of goods Sec( A@L10@MLhM
12( =an-ing and other financial services li-e collection of export bills or export letters of
credit Sec( A@L10@MLGM
13( &oreign exchange bro-er3s service in relation to sale or purchase of foreign currenc!
Sec( A@L10@MLGG-M
1#( Suppl! of tangible goods for use without transfer of control or right as to possession+ in
relation to export goods Sec( A@L10@MLGGGGjM
1@( $learing and forwarding agent3s services in relation to export goods Sec( A@L10@MLjM
1A( ?a!ent of service tax paid on services coonl! -nown as terinal handling charges 7
classified under an! sub7clause of clause L10@M of section A@
*eaders are advised to go through the various notifications available on www(cbec(gov(in to stud!
the conditions to be followed in order to clai the refund(
'ttention of the readers is also drawn to $ircular 10A50"52000 S, dated 11(12(00 which requires
grating of adhoc refund of 00J of the claied figure within 1@ da!s of filing of clais on an
interi basis in case of specified assessees which include those exporters Lregistered under
$entral Bxcise or Service ,axM who have paid dut! of excise or service tax of *s( 1 crore or ore
during preceding financial !ear as well as 100J B)Us( 'ssessees are also advised to go through
$ircular 11250A50" S, dated 12(03(0" which clarifies certain specific issues pertaining to
docuentation and procedure(
'rocedure for Clai(ing the &efund under notification 3$B#$# /. dated #$!$7!#$# which
superseded the earlier notification "B#$ dated $!$1!#$! this notification exe(pts the
service tax on the services provided to /*C or /*C unitBdeveloper! .he exe(ption under the
said notification can be clai(ed in two ways6
LaM ;here the specified services received in SBX and used for the authoriGed operations are
wholl! consued within the SBX+ then the service provider need not charge5collect the
service tax on such services provided( ,his is called ab initio exeption( &or the purpose
of this notification wholl! consued is deterined as followsF
14@
iM in respect of services specified in rule # of the ?)? *ules+ the place where the
services are actuall! perfored is within the SBX(
iiM in respect of services specified in rule @ of the ?)? *ules+ the place where the
propert! is located or intended to be located is within the SBX
iiiM in respect of services other than those falling under clauses LiM and LiiM+ the
recipient does not own or carr! on an! business other than the operations in SBX
LbM $n 6ase :here servi6es are 5art8 6!nsumed in SEL, the ma7imum re"und sha be
determined as "!!:s9
*efund aount V Lexport turnover of goods Q services of SBXunit5developerM P
Service tax paid on services other than wholl! consued
services Lboth SBX 9 D,'M
,otal turnover for the period(
F!r the 5ur5!se !" ab!ve "!rmua9
L'M *efund aount eans the axiu refund that is adissible for the period
L=M NBxport turnover of goodsO eans the value of final products and interediate
products cleared during the relevant period and exportedI
L$M E75!rt Turn!ver !" servi6es 6an be 6a6uated in the "!!:ing manner
Bxport turnover of services V pa!ents received during the relevant period for
export services Q export services whose provision has been copleted for which
pa!ent had been received in advance in an! period prior to the relevant period
advances received for export services for which the provision of service has not
been copleted during the relevant periodI
LDM ,otal ,urnover eans the su total value of
iM all excisable goods cleared during the relevant period including
exepted goods+ dutiable goods and excisable goods exportedI
iiM export turnover of services deterined in ters of clause L$M and the
value of all other services+ during the relevant period
)ther conditions 9 procedure for refund claiF
aM ,he SBX unit5developer require to obtain a list of services that are liable to service tax as
are required for authoriGed operations approved b! the 'pproval $oittee of the
$oncerned SBX
14A
bM &or claiing ab initio exeption the SBX unit5developer is required to furnish a
declaration in &or '71 verified b! specified officer of SBX+ in addition to the list
specified above(
cM &or claiing refund the SBX unit5developer file a declaration with '$5D$ of $entral
Bxcise as the case a! be having jurisdiction over SBX or registered office as the case be
in the &or '72
dM ,he unit of SBX is not registered shall+ before claiing a refund under this notification+
file a declaration with '$5D$ of $entral Bxcise+ as the case a! be having jurisdiction
over the SBX or registered office or the head office of the SBX as the case a! be in
&or '73(
eM ,he '$5D$ after the verification allot a service tax code nuber to the SBX within 4
da!s fro the date of receipt of declaration in &or '73(
fM ,he refund shall be accopanied b! the following docuentsF
a cop! of the list of specified services as are required for the authoriGed operations in
the SBX+ as approved b! the 'pproval $oitteeI wherever applicable+ a cop! of the
declaration ade in &or '71
invoice or a bill or as the case a! be+ a challan+ issued in accordance with the
provisions of the said 'ct or rules ade thereunder+ in the nae of the unit of a SBX
or developer+ b! the registered service provider+ along with proof of pa!ent for such
specified services used for the authorised operations and service tax paid+ in original
a declaration b! SBX unit5developer claiing such exeption to the effect LiM the
specified services on which refund is claied have been used for authoriGed
operations in SBX+ LiiM proper account for the specified services received and used for
the authoriGed operations are aintained b! the SBX unit5developer and the sae
shall be reproduced to the officer sanctioning the refund on deand+ LiiiM accounts or
docuents furnished b! the SBX unit5developer as proof of pa!ent of service tax
claied as refund based on invoices or bill or as the case a! be challan issued b!
the registered service provider indicating the service tax paid on such specified
services are true and correct in all respects(
gM ,he '$5D$ shall after due verification of the refund clai and after obtaining
satisfaction as to the copleteness of the clai shall refund the service tax paid on
specified services(
144
H!: d!es the s6heme !" rebate :!rkA
,he rebate can be granted b! the central governent either on the service tax paid on taxable
service exported or service tax paid on input services and5or dut! paid on inputs used in providing
such taxable service( ,his rebate shall be subject to conditions and liitations specified in the
concerned notification dealing with the rebate(
Rebate !" the servi6e ta7 !n ta7abe servi6es e75!rted
/otification 115200@ S, dated 1"(0#(0@ as aended grants rebate of service tax and cess
Lincluding S8B cessM paid on all taxable services Loutput servicesM exported in ters of rule 3 of
Bxport of Services *ules 200@+ to an! countr! other than /epal and =hutan subject to conditions
specified below
,he taxable service has been exported in ters of rule 3 of the aforesaid rules
,he pa!ent for export of such taxable service has been received in .ndia in convertible
foreign exchange
,he service tax and cess of which rebate has been claied has been paid on the taxable
service exported
,he rebate of service tax and cess is not less than rupees five hundred
;here the service tax and cess Lincluding S8B cessM of which rebate has been claied has not
been paid or the taxable service has not been exported+ the rebate allowed shall be recoverable
with interest(
Pr!cedure +!r t%e same A
,he clai for rebate shall be filed with the jurisdictional 'ssistant $oissioner or
Deput! $oissioner of $entral Bxcise in &or 'S,* 1
,he application shall be accopanied b! a docuentar! evidence of receipt of pa!ent
against the taxable service exported and the pa!ent of service tax and cess on such
taxable service exported(
,here shall also be a declaration that the taxable service has been exported in ters of
rule 3 of Bxport of Services *ules 200@ along with the docuents evidencing the export
of such taxable service(
,he jurisdictional '$$B5D$$B if satisfied that the clai is in order+ shall sanction the
rebate either in whole or in part(
140
/oteF 7 ,he assessees are also advised to subit the details as to cenvat credits availed with the
pa!ents ade to the service provider+ to facilitate quic-er rebate( &or this+ a cenvat register
giving details of the credits availed plus details of the debits against the credits on export of
taxable service would have to be aintained( ,his should be bac-ed up with other docuentar!
evidence in the for of invoices for export+ bills for claiing credit+ proof of pa!ent to service
provider+ export realiGation+ etc(
;hether a certificate fro statutor! auditor would be required to be furnished for claiing rebate
of service tax under notification 115200@C
,he requireent of furnishing a certificate fro statutor! auditor would be required onl! in case
the refund clai is filed in ters of notification @5200A+ wherein the refund clai was for ore
than *s @ la-hs+ therefore rebate under notification 115200@ would not require certificate fro
$hartered 'ccountant(
;hether co7relation between input services and output tax required under notification 115200@C
/otification 115200@ onl! requires the following conditions to be fulfilled(
Service should have been exported
?a!ent should have been received in foreign currenc!
Service tax claied as rebate should have been paid(
$lai of rebate should be for ore than *s @0057
&ro the above it is clear that notification 115200@ does not require co7relation between input
services with output tax( &urther there are plethora of decisions have held that no stateent of co7
relation was required between input services and output tax(
Rebate !" the servi6e ta7 !n in5ut servi6es !r dut8 !n in5uts
/otification 125200@ S, dated 1"(0#(0@ grants rebate of the whole of dut! paid on excisable
inputs or whole of service tax and cess Lincluding S8B cessM paid on all taxable input services
used in providing taxable service exported in ters of rule 3 of Bxport of Services *ules 200@+ to
an! countr! other than /epal and =hutan subject to conditions specified below
,he taxable service has been exported in ters of rule 3 of Bxport of Service *ule 200@
,he pa!ent for export has been received in .ndia in convertible foreign exchange
,he dut!+ the rebate of which has been claied+ has been paid on the inputs
14"
,he service tax and cess+ the rebate of which has been claied+ have been paid on the
input services
,he total aount of rebate of dut!+ service tax and cess adissible is not less than rupees
five hundred
$envat credit should not have been availed on inputs and input services on which rebate
is claied
;here the dut! or the service tax+ rebate of which has been claied+ have not been paid or the
taxable service has not been exported or the cenvat credit has been availed on inputs and input
services on which rebate has been claied+ the rebate shall be recoverable with interest(
Pr!cedure +!r t%e same 7
,he provider of taxable shall+ 2e+!re t%e date !+ e*p!rt !+ ta*a2le service+ file a
declaration with the jurisdictional '$$B5D$$B describing the taxable services to be
exported(
,he declaration shall be accopanied b! 7
1( ' description+ quantit!+ value+ rate of dut! and the aount of dut! pa!able on the
inputs actuall! required to be used in providing taxable service to be exported(
2( .n case of input services+ the description+ value and the aount of service tax and
cess pa!able on input services actuall! required to be used in providing taxable
services to be exported shall also be given(
,he '$$B5D$$B shall verif! the correctness of the declaration and a! accept
the declaration on being satisfied as to the truth of its contents(
,he inputs shall be procured directl! fro a registered factor! or fro a
registered dealer accopanied b! valid invoices issued under $entral Bxcise
*ules 2002
,he input services shall be received along with an invoice+ bill or a challan as per
the provisions of Service ,ax *ules 1""#
,he clai for rebate of dut! paid on inputs or service tax and cess paid on input
services shall be filed with jurisdictional '$$B5D$$B in &or 'S,* 2
,he application has to be accopanied b! invoices issued under $entral Bxcise
*ules 2002 for procureent of inputs+ invoices for input services as per Service
,ax *ules 1""# + plus docuentar! proof for pa!ent of dut! on inputs and
service tax on input services
100
?roof of receipt of pa!ent against service exported in convertible foreign
exchange
' declaration shall also be filed stating the service has actuall! been exported in
ters of rule 3 of the Bxport of Service *ules 200@
?roof of such export of service
%here the 6aim is in !rder, the jurisdi6ti!na ACCE4)CCE sha san6ti!n the rebate either
in :h!e !r in 5art= %hether the time imit !" !ne 8ear a55ies in 6ase !" re"und 6aimA
.n case of Swagat S!nthetics >td+ the 8on 8$ of Euj+ had held that refund under notification
@5200A $B L/,M+ was refund of credit+ whereas section 11= was with respect to tie liit for
application of refund of dut!+ as dut! was different fro input5input service credit( ,herefore
applicabilit! of tie liit of one !ear was not applicable to refund clais under notification
125200@(
Whether ti(e li(it of one year was applicable fro( the date of raising invoice or date of
realiDation?
&or considering a service to be exported+ the consideration should be received in foreign
exchange+ if the consideration was not received in foreign currenc!I the service would not be
construed as exported( ,he service provider would be liable to pa! the taxes( ,herefore the
service could be construed as exported onl! fro the date of receipt of consideration+ and not
fro date of raising invoice( ,herefore in the opinion of the author the one !ear period should be
considered fro the date of receipt of consideration and not fro the date of raising service
invoice( 8owever with the introduction of ?oint of ,axation *ules 2011+ the sae needs to be
factored+ in order to deterine the applicabilit! of tie liit of one !ear(
Whether obtaining registration under a correct service a pre8reEuisite for clai(ing refund of
taxes?
*egistration under a correct service is not a pre7requisite for claiing refund of service tax( 's
refund notification nowhere specifies requireent as to obtaining registration( &urther registration
under service tax was onl! for assesees who were liable to pa! taxes+ Lsec A"M( .n case of export
of services there was no requireent to pa! taxes( &urther this view was also upheld in case of
,extech .nternational L?M >td(+ %s( $S, 2011 L21M S,* 20" L,riM+ it is held that registration cannot
be ade as a basis to reject the refund clai when the entire services were exported
101
PR#CE)+RES %$TH RE*AR) T# RE*$STRAT$#N
,he provisions under service tax with regard to registration not onl! require the assessee to
register hiself when he starts providing a taxable service+ but also to aend his certificate of
registration ever! tie there is a change in his business profile( 8e is also required to state at the
tie of registering as whether he wants to opt for centraliGed registration or not( ,his option can
be exercised even at a later date in which case+ he would have to get his *egistration $ertificate
aended( 'part fro a service provider+ even a service receiver who is liable to pa! service tax
u5s A0L2M of $hapter % of &inance 'ct 1""# would be required to register hiself under service
tax for the purpose of pa!ing service tax( ,he requireent as to registration would also extend to
an .nput Service Distributor who would want to distribute $envat credits on inputs+ input services
or capital goods to the unit providing taxable service or engaging in anufacturing of dutiable
final products( ,he procedures with regard to registration under service tax in each of the
scenarios would basicall! be the sae with ver! inor changes which would be evident on the
application for registration(
%hen d!es the servi6e 5r!vider reBuire registrati!n under Servi6e Ta7A
' service provider whose value of service exceeds *s " la-hs+ in the !ear of providing the service
or in an! subsequent !ear+ when the value of service cross *s " la-h for the first tie+ would
require registration + however such service provider can avail exeption if the value of service
does not exceed *s 10 >a-hs per annu(
%hat is the 5r!6edure "!r registrati!nA
1( ,he assessee shall a-e an application in for S, 1 to the Superintendent of $entral
Bxcise in duplicate( Such application can be filed online www(aces(gov(in( &or this the
following procedure shall be adhered to F
a( ,he user shall first log onto the site aces(gov(in and select NService ,axO option
on the left side of the screen
b( 8e shall then register hiself b! clic-ing on N/ew users to clic- here to register
with '$BSO option( )n clic-ing the sae he will be required to give certain
basic details and a e7ail id( ,he password for such registration will be sent to
this ail id(
102
c( )n subitting the for the password will be sent to the .D above and the user
shall login into '$BS with this password( Such a password is onl! to gain access
to '$BS and it does not ipl! that registration with the departent is done(
d( .n the case of an existing assessee+ he shall fill in the NDeclaration &or for
'$BSO Lin 'ppendix .M and subit it to the respective coissionerate( ,he
assessee will then receive a user .D and password at the ail .D specified in such
for to activate his registration nuber in '$BS( 'n existing assessee is /),
required to fill &or S,71 again in '$BS(
e( &or a new assessee who does not have a service tax registration certificate+ shall
register with '$BS with the .D and password that is sent as entioned in Kc3
above and select the option N*BEO and N&ill S,71O(
f( ,he for shall be filed online with all the required details and subitted online
itself(
g( ' print of the for subitted online shall be ta-en and along with this the
docuents as entioned in below shall be subitted to the departent at the
concerned $oissionerate within 1@ da!s(
2( ,he application shall be filed within 30 da!s fro the date of providing taxable service
and shall bear the address sought to be registered
3( ,he application should be filled up carefull! without errors and coluns and boxes which
are not applicable a! contain N/'O stated across the( 'll the taxable services
provided should be entioned on the application and there would not be separate
applications for each of such taxable services
#( ,he &or should be signed b! the director5partner5sole proprietor as the case a! be or
the authoriGed signator!(
@( ,he application shall be accopanied b! copies of the following docuents 7
Self certified cop! of ?'/+ Lwhere allotent is pending+ cop! of the application
for ?'/ a! be givenM
$op! of :)'5')' in case of $opanies
$op! of =oard *esolution in case of $opanies
$op! of >ease deed5*ental agreeent of the preises
' brief technical write up on the services provided
*egistration certificate of ?artnership fir
'ddress proof of the assessee
103
$op! of a valid ?ower of 'ttorne! where the owner5:D5:anaging ?artner does
not file the application
A( )nce filed+ the ac-nowledgeent for having filed the application is to be obtained on the
duplicate cop! for one3s own reference
4( .f the ?articulars stated in the &or are correct+ then the registration certificate would be
provided within a period of seven da!s( ;here not so provided+ the registration is deeed
to have been granted(
H!: is 6entraiHed registrati!n di""erentA
$entralised registration is opted for in a case where the accounting and billing operations of the
assessee are centraliGed in an adinistrative office which a! be a branch or 8ead )ffice despite
the services being provided fro ore than one location( ,he preises that is registered here is
the one where the centraliGed accounting and billing is done( ,his decision is at the option of the
tax pa!er and he can also opt to have ultiple registration which however a! not be advisable(
,he procedure would be the sae as explained above with a few exceptions 7
,he registration in case of centraliGed registration would be granted b! the $oissioner
of $entral Bxcise having jurisdiction over the centraliGed preises
,he registration foralit! at the departent3s end ta-es a little longer than the period
stated above and the concept of deeed registration need not appl! here
,he following docuents are required in addition to the docuents needed under the aforesaid
procedure 7
a( ?roof of address of each such preises or branches for which centralised registration is
sought
b( ?roof of address of branches+ new offices opened if an!
H!: t! make amendments :ith regard t! 6hanges in 5arti6uarsA
'endent would be required where there is an! change in the particulars furnished in the S, 1
at the tie of registration(
,he changes shall be intiated to the departent within 30 da!s of such change
,he fact that the S, 1 is being filed for an aendent+ should be clearl! highlighted on
the for
,he assessee shall subit a certified cop! of the *egistration $ertificate
10#
,he application a! also be accopanied b! a covering note explaining the
circustances that led to the change with copies of relevant docuents being given(
Such aendent can be done online as well which will then have to be subitted to the
departent with the required docuents(
Servi6e Ta7 Registrati!n Number
Service tax registration no is also called as Service ,ax code+ which is a fifteen digit ?'/ based
code+ wherein the first 10 digits are the sae as ?'/+ next 2 digits are S,+ and the last 3 digits are
the serial nubers indicating the nuber of registration(
Premise 6!de
.t is a nuber for eas! identification of location of registration of tax pa!er+ preises code is
given on the basis of $oissionerate+ division+ range(
10@
PR#CE)+RE %$TH RE*AR) T# $NV#$C$N*
,he invoicing procedure with regard to service tax is soething that is not assigned adequate
iportance b! certain service providers( 's far as possible where the records of the assessee are
full! coputeriGed+ invoices a! be generated fro the s!ste( :an! of the accounting
pac-ages available in the countr! support invoicing and the invoicing option under these
softwares are required to be opted( =ut in quite a few cases+ it has been found that though the
records of the assessees are coputeriGed+ the invoicing is anual raised or raised through
independent software pac-age+ which do not spea- to each other( 't ties+ the choice of invoicing
ethod 5 forats a!be at the behest of the custoers(
H!: t! raise a 5r!5er inv!i6eA
,he assessee can follow the below entioned guidelines for the purpose of ensuring a proper
invoicing ethodolog!( ,he invoicing requireent is governed b! *ule #' of Service ,ax *ules
1""#(
'( ,he invoice is to be issued within 30 da!s of copletion of taxable service or receipt of
aount whichever is earlier(
=( .n case of continuous suppl! of service+ invoice was to be issued within 30 da!s of the date
when each event specified in the contract which requires the service receiver to a-e an!
pa!ent is copleted (,he invoice 5 bill 5 challan should be signed b! such service provider
or a person authoriGed b! hi(
,he invoice shall be seriall! nubered and should contain the following
inforation
,he nae+ address and registration nuber of the service provider(
,he nae and address of the service receiver
Date of raising of invoice
Details of the custoer3s5client3s wor- order5purchase order
Description+ classification and value of taxable service provided(
,he aount of S, and Bducation cess5S8B $ess charged on such service
tax
=rea-up of the aount charged towards the service 5 goods(
10A
Details as to exeption being claied with reference to the concerned
notification
N!te@ A T%e assessee is advised t! indicate t%e values clearly $%ere %e claims deducti!n +!r value
!+ )!!ds !r materials trans+erred durin) t%e c!urse !+ pr!vidin) t%e service. II+ t%e service
pr!vider is +!ll!$in) t%e 2ene+it !+ n!ti+icati!n 1-B-..4 ST t%e material value is t! 2e indicated
clearly s! as t! av!id disputes $it% t%e departmentJIt%e deducti!n under t%is n!ti+icati!n is
availa2le upt! 4..C.-.1- !nlyJ. T%e service pr!vider is als! re<uired t! raise an inv!ice !n
receipt !+ advances t!$ards t%e ta*a2le services t! 2e pr!vided t%!u)% very +e$ assessees
practically +!ll!$ t%is re<uirement.
Illustrative +!rmat +!r t%e service inv!ice is )iven 2el!$ E
Ta7 $nv!i6e4$nv!i6e +4r DA !" Servi6e Ta7 Rues /@@D
L/ae and address of the service providerM
S, *egistration nuber
.nvoice /uber
Date
L/ae and address of the service receiverM ?) *ef
Date
Particulars Am!unt in ,s
Descripti!n !+ service pr!vided
Gr!ss am!unt
(*empti!n 2ein) claimed #details&
Am!unt t! 2e su2'ected t! service ta*
Service ta* at 1-7
(ducati!n cess
Sec!ndary and 5i)%er (ducati!n cess
T!tal service ta*
#In $!rds&
T!tal VATBsales ta*
Ot%ers
T!tal 2ill am!unt
104
REC#R) KEEP$N*
*ecord -eeping under service tax is one of the ost critical factors fro the point of view of
copliance( ,he assessee should have a sound record7-eeping s!ste if he is to avoid a scenario
where he struggles at a later date to ensure copliance with the law( $onsidering the level and
scale of coputeriGation in .ndia+ it is shoc-ing to note that the assessees who struggle the ost
with record -eeping are those who have full! coputeriGed s!ste or even the B*? environent(
^uite often assessees end up using custoiGed software either developed in7house or sourced
fro abroad+ which do not full! cater to the reporting requireents under service tax(
Surprisingl! the entire indirect tax copliance would be outside the B*?+ which eans that none
of the chec-s and balances is within the s!ste(
'ssessees also struggle due to ignorance as to the provisions of law as well as to the reporting
requireents thereunder( Until and unless the assessee hiself is clear about the concepts of
service tax and the reporting requireents thereunder+ he would not be in a position to educate the
s!stes anal!sts and the prograers to a-e changes to the software in order to ensure better
reporting(
>%at are t%e rec!rds t! 2e =ept and $%et%er t%ere are any statut!ry rec!rds t! 2e maintainedH
,here is no statutor! record prescribed under service tax as far as record -eeping is concerned(
,he assessee should follow the basic guidelines laid down here
' proper record should be -ept of the aterials received and used for the purpose of
providing taxable services( ,he basic docuents for this would be the Eoods *eceived
/otes and the *aw aterials ledger in stores( ;here the service provider has both taxable
as well as exepted services+ separate aterial accounts a! be -ept and $envat credits
availed onl! on those aterials used for providing taxable services( ,his can be done b!
segregating the aterial receipts at the E*/ stage itself b! having separate series for
aterials eant for use in taxable services( ,his should be followed up with proper
ph!sical control over stoc-s( ;here stoc-s are transferred fro one location to another+ a
s!ste of having requisition slips can be followed in addition to stoc- transfer
notes5invoices which would indicate the intended usage of the stoc-s so transferred(
/ext would be the tas- of identif!ing the input services to be used for providing services(
,o the extent possible+ the services to be used for providing taxable services should be
100
identified so that full credits can be claied on the sae( ;here segregation is not
possible+ the sae would have to be flagged off for appl!ing the forula laid down in
*ule A of $$* 200#
's far as input services are concerned+ the! a! be assigned codes while accounting the
sae in the financial ledgers to identif! the in ters of the intended usage( 'nother
effective wa! of doing this is b! docuenting the reasons for procuring the service at the
tie of raising of the wor- order on vendors5service providers which would facilitate
proper trac-ing of such input services at subsequent stages(
?roper recording of $envat credits in respect of inputs and input services( ,he assessee
here can aintain a $envat credit register which would give in detail the aounts of
credits availed( ,he register can furnish the following details Bntr! serial nuber+
vendor nae+ ite description and description of input service+ basic value of
goods5services+ basic excise dut! or service tax+ cess on dut!5tax+ E*/ reference for
receipts+ pa!ent reference for having paid the service charges Q service tax to the input
service provider+ total credits available+ aount debited+ invoice5bill for such debit+
closing balance of credits( ,he assessee should also record the credit figures correctl! in
financial ledgers which can then facilitate a s!ste of reconciliation between the $envat
registers and the financial ledgers(
,he assessee should ta-e due care in ascertaining and discharging service tax on cash
basis+ as corporate assessee are bound to aintain boo-s of accounts on accrual basis+
therefore the corporate assessee should ensure in accounting and discharging service tax
on cash basis+ which could be a tedious tas-(
$are should be ta-en with regard to invoicing to ensure that proper brea-ups are given
for the values so that the correct aount liable to service tax a! be deterined( &or the
purpose of filing of the S, 3 returns+ detailed wor- sheets would have to be aintained
clearl! indicating the value of services billed+ the aounts received towards such services
billed+ the aount of %',5sales tax paid+ the value of aterials sold and the aounts
charged towards labour so that the correct aount of service tax pa!able a! be
ascertained(
.n case the assessee opts for claiing deduction towards value of aterial used in course
of providing wor-s contract service+ i(e( notification 2#520127S, + the assessee should
ensure+ proper supporting docuents are aintained supporting the deduction claied b!
the assessee+ else the benefit of the said notification could be denied( &urther the
deduction towards value of aterial would not be available on adhoc basis(
10"
,he assessee should also have a proper referencing s!ste through which the various
docuents are lin-ed( ,his lin-ing can be brought about through quoting the bill nubers
and the voucher references on the registers being aintained which would also ensure
that no bill or voucher has been left out(
,he list of records is to be declared within the end of the onth in which the first return
being filed(
1"0
PA(MENT #F SERV$CE TA&
Service tax is pa!able on the aount or value of taxable service received and not on the gross
aount billed( =ut even toda! there are quite a few service providers who pa! on the aount
billed i(e( following accrual basis( .n case+ an! advance is received for service to be provided then
the service provider shall pa! the service tax on the aount received( ;here the service is not
provided and the aounts are refunded to the service receiver+ such service tax paid can be
adjusted in the returns b! the service provider+ however &inance =ill 2011 has introduce point of
taxation *ules 2011+ and these rules would transfor fro cash basis of accounting to accrual
basis of accounting(
)eterminati!n !" P!int !" Ta7ati!n
?oint of taxation *ules+ 2011 cae in to effect fro 01(0#(2011(
'( ?oint of taxation shall be deterined as under L*ule 3M
,he point of taxation is the earliest of the following
i( Date of invoice
ii. Date of copletion of provision of service
iii( Date of pa!ent
Barlier the provision for continuos suppl! of service was provided in *ule A( ;ef
1(#(2012 this was inserted in proviso to *ule 3( 's per proviso+ the point of
taxation for continuos suppl! of service is as follows7
;here the provision of whole or part of the service is deterined periodicall! on
copletion of event which is as per contract entered+ which requires the receiver
of service to a-e pa!ent to service provider+ then the point of taxation would
be copletion of event(
,o su upF
Scenario ?oint of taxation
.nvoice issued within 30 da!s of
copletion of service
Date of invoice
Service copleted but invoice not
issued within 30 da!s
Date of copletion of service
'dvance received before copletion Date of receipt to extent of advance
1"1
received(
.nvoice issued before copletion of
service
Date of invoice
.n case of continuos suppl! of service $opletion of respective events as per
contract entered
b( Deterination of point of taxation in case of change in rate of tax L*ule #M
/otwithstanding an! thing contained in *ule 3+ point of taxation in case of
change of rate shall be deterined in the following anner(
;hen taxable service was provided before change of rate
i( ;here invoice for the sae is issued and pa!ent received after change of
rate ?oint of is date of pa!ent or date of issuing of invoice which ever is
earlier( )r
ii( ;here invoice is raised prior to change in tax rate+ but pa!ent is received
after change of rate ?oint of taxation is date of issuing of invoice( )r
iii( ;here pa!ent is also received before change in rate+ but invoice for the
sae has been issued after change of rate ?oint of taxation is date of
pa!ent(
Deterination of point of taxation after change in rate of tax
i( ;here the pa!ent for invoice is also ade after the change in tax rate+ but
invoice has been issued prior to change in rate point of taxation shall be
date of pa!ent( )r
N!te@ T%e aut%!r is !+ t%e !pini!n t%at t%e c!ncept !+ accrual !r cas% $%ic%
ever is 2ene+icial t! t%e revenue is 2ein) ad!pted %ere
ii( ;here the invoice has been issued and the pa!ent for the invoice was
received before change in tax rate point of taxation shall be date of receipt
of pa!ent or issue of invoice which ever is earlier( )r
iii( ;here the invoice has been raised after the change of rate + but pa!ent has
been received before the change of rate+ point of taxation shall be date of
rising the invoice
N!te@ T%e aut%!r is !+ t%e !pti!n t%at t%e c!ncept !+ accrual !r cas% $%ic%
ever is 2ene+icial t! t%e revenue is 2ein) ad!pted %ere
1"2
=( ?a!ent of taxes in case of new services L*ule @M
;here a service is being taxed for the first tie+ not being covered under *ule A
i( /o tax shall be pa!able to an extent of invoice being raised and pa!ent
being received before such service becae taxable
ii( /o tax shall be pa!able+ if pa!ent was received before such service becae
taxable and invoice was issued within 1# da!s as per *ule #' of Service ,ax
*ules 1""#(
$( Deterination of point of taxation in case of the following FL *ule 4M .n case of persons
liable to pa! service tax under reverse charge echanis E,'+ sponsorship+ and iport
of services as well as other services where the service tax liable to be paid b! the
recipient of service+ if the pa!ent has been ade before A onths fro the date of
pa!ent(
8owever if the pa!ent is not ade within A onths of date of invoice+ the general rule
as explained above would be applicable(
.n case of associated enterprises date of credit in the boo-s of accounts or a-ing
pa!ent whichever is earlier would be considered as point of taxation(
,he *ule A of Service ,ax *ules gives an option to individuals and partnership firs
whose aggregate value of taxable services provided fro one or ore preises is *s @0
>a-hs or less during the previous financial !ear to pa! tax on receipt basis upto *s @0
>a-hs(
D( Deterination of point of taxation in case of a cop! right L*ule 0M
.n case of ro!alties and pa!ents pertaining to cop!rights+ tradear-s+designs or
patents+ where whole aount of consideration for provision of service was not
ascertainable at the point of perforance of service and subsequentl! use of benefit of
these services results in pa!ent of consideration+ service shall be treated as having
been provided each tie when a pa!ent is received in respect of use of such benefit
or raising of invoice+ which ever was earlier
B( ,hese rules shall not be applicable for invoices issued prior to 1
st
'pril 2011(
1"3
's per old *ule 4 of ?oint of ,axation *ules applicable upto 31(3(2012+ the point of taxation for a
few specified service providers was receipt of consideration fro custoer( 8ence for !ear 20117
12 such specified service providers such as $hartered accountants were pa!ing service tax on
receipt basis( ,he service tax rate was increased fro 10 to 12J wef 1(#(2012(
Due to this there was a confusion in inds of such service providers whether to pa! service tax at
10J or 12J( ,here was a circular issued b! the $=B$ stating service tax to be paid at 12J(
,he 83nble 8igh $ourt in decision in Delhi $hartered 'ccountant Societ!L*egdM vs U).
L2013L2"M S,* #A1 LDelM quashed the circulars as contrar! to provisions of service tax and held
that service tax required to be paid <10J for above entioned situation as providing of service
is iportant(
/oteF ,hese provisions would result in widespread inequalit! and pain to the tax copliant
service provider( ,he sae is against the 'ccounting Standard of *evenue *ecognition 'S7"
and also would not be practicable for professional who are under the cash s!ste of accounting
for decades( Soe exceptions a! have to be put in place to itigate this hardship(
Service tax is to be paid on the gross value of taxable service+ and not on the net aount realiGed
fro the service receiver after deduction of tax at source L,DSM under the .ncoe ,ax 'ct 1"A1(
,he service tax deterined as per ?oint of ,axation *ules 2011+ shall be paid to the credit of
central governent b! @
th
of the subsequent onth LA
th
of the subsequent onth if pa!ent is
ade electronicall!M and the aount is to be paid b! 31
st
of :arch for the onth of :arch of the
financial !ear( &ro 01(0#(2010 e7pa!ent of service tax is andator! for those who had paid
central excise dut! or service tax of *s( 10 la-hs or ore in the preceding financial !ear+ whether
b! cash or debit in $envat credit account or both vide circular /o( "1"50"520107$P dated
23(03(2010(
.f the service provider happens to be individual or proprietar! fir or partnership fir the service
tax aount has to be paid b! @
th
of the subsequent onth+ following the quarter LA
th
of the onth
following the quarter if done electronicall!M and 31
st
of :arch for the quarter ending :arch of the
financial !ear(
's per *ule 2' the date of pa!ent is as follows7
,he earlier of following dates would be considered as date of pa!ent7
e( Date on which pa!ent is entered in boo-s of account(
f( Date on which pa!ent is credited to ban- account of person liable to pa! tax(
(
&urther the date of boo- entr! would not be considered and onl! date of credit into ban- account
would be considered if all the following conditions are satisfied(
1"#
a( =etween date of entr! and date of credit there is change in effective rate
of tax or when a service is taxed for the first tie and
b( ,he credit in the ban- account is after # wor-ing da!s fro date of rate
change or new lev!(
c( ,he pa!ent is ade b! wa! of an instruent which is credited to ban-
account(
H!: t! 5a8 servi6e ta7A
,he service provider shall hiself assess the tax pa!able for the onth or quarter as the
case a! be on the basis of ?oint of ,axation *ules 2011(
8e shall then ascertain the aount of credits left in balance at the end of the period stated
above for which pa!ent is being ade( 8e shall then reduce the credits balance to the
extent available or to the extent of his liabilit! whichever is lesser(
;here an! aount is reaining pa!able after the adjustent discussed above against the
credits+ the sae shall be reitted within the due dates explained above(
,he aount shall be paid into the designated ban- account using the for E'* 4 which
is filled up( ,he aounts are to be rounded off to the nearest rupee( Separate accounting
codes have been notified for service tax+ education cess+ secondar! and higher education
cess+ interest+ penalties etc(,he service provider reitting the tax shall segregate these
aounts and pa! the sae under the respective codes(
N!te@ A I+ e*cess payment is made t%en t%e am!unt paid in e*cess s%all 2e ad'usted in t%e
su2se<uent m!nt%$it%!ut any limit .
T%e service pr!vider !n %is +ailure t! pay t%e am!unt $it%in t%e n!ti+ied date s%all 2e lia2le t!
pay interest at t%e rate !+ 1D7 p.a.
I+ t%e service pr!vider is una2le t! <uanti+y t%e am!unt !+ service ta* paya2le t%en %e may
re<uest A"BD" !+ "entral (*cise t! all!$ t%e service pr!vider t! pay !n pr!visi!nal 2asis al!n)
$it% t%e reas!ns.
N!$ rule C#1A& all!$s t%e service pr!viders lia2le t! pay service ta* t! ma=e t%e payment in
advance and ad'ust t%e same +!r t%e lia2ility in su2se<uent peri!d. 5!$ever suc% payment in
advance %as t! 2e intimated t! t%e department $it%in 18 days +r!m t%e date !+ ma=in) suc%
payment and t%e details !+ suc% advance payment and ad'ustment t%ere!+ s%all 2e indicated in t%e
returns.
1"@
SERV$CE TA& RET+RNS
&iling of service tax returns has been one aspect in service tax copliance which has been posing
considerable probles for assessees( )ne of the ain reasons is that in past till 1(4(2011+ the
service tax had to be paid not on billing basis but on receipt of consideration fro custoers(
,hus all organiGations especiall! those where transaction are in thousands should have a good
accounting s!ste in order to enable the to lin- the bills with the aounts received( ,he
concept sounds siple but few organiGations reall! ipleent the sae in spirit( 's a result+ the!
face considerable probles in filing the service tax returns as one is expected to give details as to
the aounts received towards taxable services(
,he dela!s in filing entail fines and non filing an enquir! under best judgent(( )ther than that it
would be one of the criterions for pic-ing up the unit for audit under the ris- based selection
proposed for the service tax audit(
Bver! service provider liable to pa! service tax is required to subit half !earl! return in for
S,73 within 2@ da!s fro the end of half !ear+ i(e( 'pril to Septeber 2@
th
)ctober and for
)ctober to :arch 2@
th
'pril is the due date to file the returns(
Bven an input service distributor is required to file half !ear returns+ even if he was not liable to
pa! service tax(
.n case last date to file the return was a public holida! then the last da! to file the returns would
be the next wor-ing date(
H!: t! "ie the servi6e ta7 returnA
&or S, 3 or S, 3' as the case a! be has to be filed in triplicate to the Superintendent
of $entral Bxcise( &ro 01(0#(2010 e7filing of return is andator! for those who had
paid central excise dut! or service tax of *s( 10 la-hs or ore in the preceding financial
!ear+ whether b! cash or debit in $envat credit account or both vide circular /o(
"1"50"520107$P dated 23(03(2010( L*efer 'ppendix .. for case studies on filing of
&or S,73M
,he return has to be filed once in six onths and it contains the particulars of all the six
onths
,he value of taxable services should be coputed on the basis of gross aount received
or advance received for the services provided5to be provided
' nil return is required to be filed if there are no transactions
1"A
E'* 4 evidencing pa!ent has to be filed along with the return
.f an! aount representing interest or penalt! is paid+ then references of such pa!ent
along with the particulars are required to be ade(
,he S, 3 return is to be subitted within 2@
th
of the subsequent onth following the
quarter i(e( &or the half !ear 'pril to Septeber+ the due date is 2@
,h
of )ctober and 2@
th
of 'pril for the next half !ear(
.f the da! happens to be a public holida!+ then the return can be subitted on the next
wor-ing da! iediatel! following the holida!(
,he return a! be subitted electronicall! using e7filing facilit! in '$BS utilit!(
%hat is the 5r!6edure t! "ie the returns !nineA
,he assesses can electronicall! &ill S,73 b! choosing one of the two facilities being offeredF LaM
the! can file it online+ or
LbM download the off7line return utilities which can be filled7in off7line and uploaded to the
s!ste through the internet(
Ste5s "!r 5re5aring and "iing returns9'
LiM 'ssessee can download the )ffline return preparation utilit! available at
httpF55www(aces(gov(in LUnder DownloadM
LiiM &ill the return offline using this utilit!( ,he return preparation utilit! contains
preliinar! validations which are thrown up b! the utilit! fro tie to tie(
LiiiM 'ssessee then should log in using the User .D and password(
LivM Select N*B,O option fro the ain enu and further choose required activit!
such as e7filing5 aending5*evise return as the case a! be and upload the
return(
LvM *eturns uploaded through this procedure are validated b! the '$BS before
acceptance into the s!ste which a! ta-e up to one business da!( 'ssessee can
trac- the status of the return b! selecting the appropriate option in the *B, sub
enu( ,he status will appear as NuploadedO eaning under process b! '$BS+
N&iledO eaning successfull! accepted b! the s!ste or N*ejectedO eaning the
'$BS has rejected the return due to validation error( ,he rejected returns can be
resubitted after corrections(
1"4
LviM *eturns can also be prepared and filed on line b! selecting the K&ile *eturn3
option under *B, odule after logging into the '$BS(
LviiM 'll validations are thrown up during the preparation of the return in this ode
and the status of the return filed using the online ode is instantaneousl! shown
b! '$BS(
.t is recoended that assessees who are for the first tie filing returns through '$BS
shall do it through the offline utilit! so that the ista-es and the changes can be done
instantl!(
Can a revised return be filed?
Ues( *ule 4= of Service tax *ules 1""# allow an assessee to revise the return filed under *ule 4
to correct an! error+ oission or ista-e within "0 da!s fro the date of filing the return u5r 4(
Can the revised return be filed after the expiry of ;$ days fro( the date of filing the original
return?
,here is no provision for subission of revised return after the expir! of "0 da!s fro the date of
filing the original return+ however as per the authors view+ service provider shall intiate such
changes to departent via letter+ which should be dul! ac-nowledged+ and the said changes needs
to be factored in while preparing the subsequent returns( ,his would be required to ensure that
errors are not carried forward(
N!te@ A
An anne*ure is pr!vided t! t%e said +!rm #ST 4 return& pr!vidin) tips +!r +ilin) up t%e
particulars !+ t%e return. T%e list !+ tips +!r +illin) up t%e STA4 returns in ne$ +!rmat as
applica2le $e+ 1.3.-.1- is in appendice III.
T%e +!rm can 2e d!$nl!aded +r!m t%e departmental $e2site #www(cbec(gov(in&
ST 4A is used $%en t%e assessee !pts +!r pr!visi!nal assessment. T%e assessee s%all +!r
t%is purp!se ma=e a re<uest in $ritin) t! t%e A""(BD""( )ivin) reas!ns +!r payment !+
service ta* !n pr!visi!nal 2asis and t%e payment can 2e made !n t%e ta*a2le value as
speci+ied 2y A""(BD""( !n pr!visi!nal 2asis. T%e assessment $!uld 2e +inalised later
and t%e pr!visi!ns !+ "entral (*cise ,ules $it% re)ard t! pr!visi!nal assessment $!uld
apply %ere. 5!$ever e*ecuti!n !+ 2!nd $!uld n!t 2e re<uired %ere.
A sin)le return is su++icient even t%!u)% t%e service pr!vider is pr!vidin) m!re t%an !ne
ta*a2le service.
1"0
T%e ST 4 return can 2e +iled electr!nically.
1""
SERV$CE TA& A+)$TS 2( PR#FESS$#NALS
' service provider cannot ignore copliance with the legal provisions for the reason that if he
does so+ the non7copliance would invariable hit his business hard considering the copetitive
argins involved as well as the ipact of interest and penalt! becoing increasingl! harsh da!
b! da!(
.t has been the experience that ver! often assessees are not even aware of the fact that the! are not
copl!ing with the legal provisions till such tie when the! are called upon b! the departent to
furnish soe clarifications or their unit is ta-en up for an audit(
'ssessees in this regard should note that considering the uncertain nature of the law+ the frequent
aendents b! wa! of notification+ clarifications b! the ,ax *esearch Unit L,*UM+ $entral
=oard of Bxcise9 $ustos L$=B$M+ Director Eeneral Service ,ax LDES,M other than *egional
'dvisor! $oittee and $oissioners clarification the law would continue to be unclear(
:an! advocates of the Supree $ourt with decades of standing in the .ndirect taxes opine that
there is no suret! in this segent( ,herefore a echanis would have to be built in to ensure that
copliance is aintained at high levels all the ties( ,his would require a coprehensive
fraewor- to be put in place which would ensure proper training of eplo!ees as well as see-ing
professional opinion fro tie to tie on atters of doubt plus a review of the docuentation+
records pertaining to service tax b! either the internal audit tea of the concern or b! an
independent professional(
%hat is reBuired !" the audit!rA
'n auditor engaged for the assignent should understand the business+ the environent in which
the industr! wor-s the coon confusions prevalent in the industr! in addition to the -nowledge
of service tax law( ,he -nowledge about the latest auditing procedures and techniques to be
adopted would also axiiGe the benefits to the client( Use of the audit tools especiall! the
generaliGed audit software for large concerns would enhance the results( 's far as carr!ing out the
audit itself is concerned+ he can follow the guidelines given belowF
! -scertaining scope of the assign(ent
,he auditor should first understand the requireents of the anageent( ,he scope of the
assignent should be designed b! the auditor considering the requireent( ,his is to avoid a
scenario where the client perceives the audit effort in a different wa! fro the one it actuall! is(
200
,his is quite coon in the service sector as the concept of service tax audit is new to the as
well as the fact that clients are specialists in their respective fields with no uch of exposure to
subject of accounting or auditing( 't ties the client a! wish a pre7 audit or shifting of the
responsibilit! of copliance on the auditor(
&urther an! a tie assessees in the service sector ista-e auditing for outsourcing and expect
the auditor to engage in an outsourcing job rather than reporting to the anageent on
copliance related issues( ,he scope can be ascertained and confired b! preparing a
letter5scope docuent entailing the areas which would be covered and the aspects which would
not be ta-en up during the audit(
#! Fnowledge of the business and the activities perfor(ed
,his is one of the ost iportant aspects to be ta-en care of b! the auditor( ,he auditor should
first of all understand the assessee3s business+ the services he provides+ the activities that are
involved at various levels of the organisation in providing these services+ the custoer profile
whether sub contracted or not etc( before the start of his review5verification( &or this purpose+ he
a! interview the -e! anageent personnel in the organisation besides going through ajor
contracts and agreeents+ organisation chart+ anuals and publications of the organisation( 8e
should also a-e it a point to visit the preises fro where the services are provided+ to the
extent possible and interview the technicians 5 engineers who actuall! perfor the tas-s Lwhere
ever applicableM to get a first hand inforation of the nature of the processes involved in case of
services of a technical nature(
1! Gbtaining relevant infor(ation for a preli(inary review and ris: analysis
,he auditor should a-e it a point to understand the financial perforance of the entit! in the
recent past as well as the during the audit period+ apart fro anal!Ging the sae it would also
help in devising his procedures accordingl!( 8e5she should also a-e it a point to perfor a
quic- review of the concerned records li-e the service tax returns+ cenvat bills+ invoices and
agreeents with ajor clients35custoers so that the ris- arising fro non7copliance can be
assessed( ,he following aspects assue significance
*eview of the past audited financial stateents for understanding the past
financial perforance in ters of incoes+ expenses+ receipts and pa!ents apart
fro accounting policies and nature of investents
201
*eview of the ledgers for the period under audit to chec- the incoe and
expenditure pattern besides understanding the custoer profile and the pattern of
billing
*eview of the cenvat invoices+ agreeents with ajor custoers+ service bills
raised on custoers b! the assessee+ Bxcise invoices if an! raised b! the
assessee+ review of the fixed asset registers to for an idea as to record -eeping
and copliance with the law(
,he auditor should have a grip with the organiGational structure of the assessee
with the assignent of responsibilities with the associated internal controls( &or
this he would be required to use an .nternal $ontrol ^uestionnaire which would
docuent the areas where the controls are sought to be tested( 8e should also
specificall! address the issue as to the internal reporting fraewor- and :.S in
his questionnaire so that the functional lin-ages can be chec-ed( ;here ever
possible+ the auditor could ta-e copies of the organiGational chart and anuals
for his peranent audit file(
,he auditor would have to docuent his findings so that he can effectivel! ove on to the next
stage( &or this purpose+ he5she a! use an assessee profile which would consist of all relevant
inforation needed for a des- review( ,he assessee profile should be drawn up in such a wa! that
apart fro financial indicators+ even the non7financial indicators li-e existence of branches+
anner of providing services etc are also reflected( ,his could for part of the peranent audit
file to be used even in subsequent audits( LDraft 'sseessee ?rofile at the end of this chapterM
3! 4es: review of the infor(ation obtained and preli(inary (eeting
,he auditor+ on the basis of his5her findings at the previous stage+ should carr! out a des- review
of the inforation available with hi to arrive at proper conclusions as far as the possible ris-
levels involved+ are concerned( ,he des- review should ideall! indicate to the auditor the level of
chec-ing required and the areas he should concentrate upon in order to arrive at proper
conclusions at the end of the audit( )n the basis of the review he should docuent the ris- level
prevalent in the audit( .t is alwa!s preferable in this odern da! that the auditor spends at least
20J of his tie in planning the audit after getting the idea of the process and people involved in
the client3s organiGation to enhance his effectiveness(
)nce this has been done+ he should identif! the audit tea that would ta-e up the tas- and discuss
the preliinar! findings with the ebers of the tea to appraise the of the li-el! issues that
202
could crop up during the audit apart fro explaining the ipact the legal provisions would have
on the assessee3s business and his activities(
5! 4evising the audit progra( for carrying out co(pliance and substantive tests
,he audit plan should basicall! ai at perforing the audit with axiu efficienc! possible
under the circustances( ,his is possible onl! where the audit tea is able to address contentious
and core issues within a liited tie frae( ,he auditor should devise a proper audit plan onl!
after carr!ing out a des- review so that the sae would be ore effective than a progra which is
coon to all audits irrespective of the differences in services+ related activities and the ris-
levels involved( ,his would enable the auditor to concentrate on -e! areas which would be
relevant to arrive at proper conclusions at the end of the audit( ,he tie factor also needs to be
-ept in view especiall! when the audit is done with specific objective such as a pre7audit for
ensuring preparedness before departent audit( ,he audit chec- list should indicate the areas to
be covered and the individuals who are supposed to ta-e it up( LSee at end of $hapterM
7! 4ocu(entation and proper supervision of audit effort
,he auditor should ensure that the audit findings and the explanations given fro the assessee are
docuented properl! b! his audit tea( ' standardiGed pattern a! also be followed to facilitate
eas! reading of the observations. ,he tea should ideall! consist of individuals at various stages
of a learning curve( ,he tea can consist of three ebers with one of the ebers being a
senior with sufficient experience and two juniors( ,he responsibilit! of supervising the tea on a
dail! basis would be with the senior and the entire audit effort would have to be supervised at
regular intervals b! the qualified professional5partner( ,he audit findings should be discussed at
periodic intervals Lif not on dail! basisM with the executive designated fro the assessee3s side so
as to ensure assessee3s cooperation( ,his would also ensure that the audit is headed along the right
path with ever! li-el!7hood of achieving its intended objectives at the conclusion stage(
"! 0or(ulation of the draft report and discussions with the (anage(ent
)nce the audit has been copleted+ the draft report containing the draft of the observations
should be forulated and a cop! is sent to the anageent( ,his would then be followed up with
a discussion of the points in order to ascertain the future course of action to be ta-en+ which
should also be docuented( ,he report should a-e it clear as to whether the assessee has agreed
to his5her findings or disputed the sae( ,he auditor could coe up with valuable suggestions
203
here in order to secure effective copliance with the law and in order to avoid pit falls in future(
,his discussion is critical for the acceptance of the observation and its correction(
0( 0inaliDing the draft and ensuring audit follow up
)nce the draft has been prepared+ the points discussed with the anageent and future course of
action ascertained+ the final report is to be sent on a tiel! basis( ,he report shall contain all the
relevant details li-e the observations+ the repl! fro the assessee3s side+ the corrective action
ta-en up b! the assessee+ the course of action which is to be ta-en in the future( ,he auditor3s
responsibilit! does not end here and he would have to ensure proper follow up b! going through
the steps ta-en up b! the assessee for the purpose of ensuring copliance with the law(
P!inters "!r 5ra6ti6e
,he auditor should be well versed in the atters pertaining to service tax and to a certain
extent central excise and should have a clear understanding of the legal provisions and its
possible iplications on an assessee3s business depending upon the activities perfored(
8e should have the abilit! to get the required inforation fro the assessee in a wa! that
would enable hi to ascertain the legal ipact on the assessee3s business( ,his in fact
could be a big challenge as he would have to pose his queries in a wa! the assessee
understands the sae so that the right answers and explanations can be obtained fro
hi(
,he auditor should also be careful not to treat the audit li-e a fault finding exercise as it
would result in the client losing interest in the audit itself and thereb! negating the ver!
purpose of audit(
,hese audits could be said to be consultative exercise as differentiated fro a regular
internal audit( ,herefore it a!be a good idea for the auditor to appraise the client on the
latest aendents and ,ribunal judgents in regard to the issues of interest5 concerns(
Illustrative audit pr!)ram +!r Service Ta* Audit
Name !+ t%e auditee@ A
Address@ A
"!ntact pers!ns@ A
"!ntact num2ers@ A
(Amail@ A
Peri!d under audit@ A
,evie$ed 2y@ A
Area c!vered durin) audit "%ec=ed 2y N! !+ days ta=en
20#
1. Initial revie$s and visits
a& ,evie$ !+ t%e past audited +inancial statements
2& ,evie$ !+ t%e activities !+ t%e enterprise
Site visitsBdepartment visits i+ any
Intervie$in) +uncti!nal c%ie+sBm)nt pers!nnel
,evie$ !+ pr!cess c%artsBpu2licati!ns !+ t%e assessee
c& ,evie$ !+ t%e led)ers and trial 2alances +!r t%e
current peri!d
d& ,evie$ !+ t%e a)reements $it% t%e ma'!r
cust!mersBclients !+ t%e enterprise
e& ,evie$ !+ t%e cenvat 2ills and 2ills +!r pr!visi!ns !+
services
+& ,evie$ !+ t%e c!rresp!ndences $it% t%e aut%!rities
)& ,evie$ !+ t%e Service Ta* ,eturns t! scan +!r details
as t! classi+icati!n !+ services and payments
%& ,evie$ t%e met%!d!l!)y 2ein) ad!pted +!r ta*in)
t%e value t!$ards materials in case !+ $!r=s c!ntract
i& "%ec= +!r transacti!ns $it% ass!ciated enterprises
$%ic% may attract service ta* levy
'& "%ec= $%at is t%e place !+ pr!visi!n !+ services 2y
assessee in acc!rdance $it% t%e relevant rules and
$%et%er t%ere are payments in e*cess !r s%!rt+all in
payments madeH
-. ,evie$ !+ t%e lia2ilities !n acc!unt !+ service ta*
a& ,evie$ t%e e*penses acc!unts made in +!rei)n
currencies. I+ +!und t! e*ist A
"%ec= t%e nature !+ payments 2y )!in) t%r!u)%
a)reements
"%ec= $%et%er applica2le service ta* paid 2y cr!ss
veri+yin) $it% t%e returns
2& ,evie$ t%e inc!me acc!unts t! c%ec= t%e impact !n
service ta*. "%ec= t%e p!ssi2ility !+ t%e activities 2ein)
re)arded as ta*a2le services 2y ascertainin) t%e nature
!+ services +r!m a)reementsB!rders $it% cust!mers.
"%ec= t%e valuati!n met%!d!l!)yA$%et%er all c%ar)es
included +!r ta*H
c& "%ec= +!r +rei)%t e*penses. I+ t%ey e*ist
"r!ss veri+y $it% e*penses +iles +!r c!nsi)nment n!tes.
20@
"r!ss veri+y $it% t%e returns +!r details as t! payments
d& "r!ss veri+y t%e 2ills +!r services pr!vided $it% t%e
statementB$!r=in)s +!r +ilin) !+ service ta* returns.
"%ec= t%e accuracy as t! E
Value !+ service
Service ta* am!unts includin) cess
(*empti!ns 2ein) claimed
e& "r!ss veri+y t%e statementsBacc!unts +acilitatin)
+urnis%in) !+ returns $it% t%e t!tals as per returns in
terms !+ E
Value !+ ta*a2le services
(*empti!nsBa2atements
Service ta* am!unts $it% cess
+& "%ec= +!r traces !+ payment !+ sp!ns!rs%ip m!ney
and t%e purp!se +!r $%ic% it %as 2een paid
4. ,evie$ !+ "envat and p!ssi2le reversals
a& ,evie$ t%e +i*ed assets re)ister t! list !ut t%e assets
2ein) used +!r pr!vidin) ta*a2le services.
"%ec= $%et%er cenvat "redits %ave 2een claimed !n
n!nApr!ductive assets 2y cr!ss veri+yin) t%e purc%ase
details $it% t%at in t%e "envat re)ister
"%ec= t%e p%ysical l!cati!n !+ assets
"%ec= $%et%er assets sent !ut and i+ s! $%et%er a
rec!rd !+ t%e same is availa2le. >%et%er it is
returna2leH
2& "r!ss veri+y t%e cenvat inv!ices $it% t%e cenvat
re)ister. Veri+y details E
"envat am!unt
0asic values address!r addressee
ItemBservice descripti!n
"r!ss c%ec= t%e t!tals as per "envat re)ister $it% t%e
+i)ures as per returns
"%ec= $%et%er E
In case !+ input services $%et%er t%e credit %as 2een
availed c!nsiderin) P!int !+ Ta*ati!n ,ules
In case !+ inputs $%et%er inputs really receivedH
20A
"%ec= $%et%er t%e assessee %as !pted +!r centralised
re)istrati!n !r Input Service Distri2ut!r r!ute.
c& "%ec= $%et%er inputsBcapital )!!dsBt!!ls rem!ved
+!r '!2 $!r= and i+ s! $%et%er a re)ister %as 2een =ept
+!r t%e same and $%et%er t%e same are sent !n
returna2le 2asisH
>%et%er applica2le credits %ave 2een reversed $%ere
ever necessaryH
d& "%ec= $%et%er t%e assessee %as 2alance !+ credits
pertainin) t! e*p!rt !+ services $%ic% cann!t 2e
utili;ed. I+ s!
"%ec= $%et%er t%e assessee %as )!ne in +!r re2ate
re+und !+ t%e credits !r re2ate !+ service ta* paidH
e& "%ec= $%et%er t%e credits admissi2le %ave 2een
calculated c!rrectly $%ere ,ule C !+ "", -..6 applies
in respect !+ 2!t% ta*a2le an e*empted services 2ein)
pr!videdH
+& "%ec= t%e d!cumentati!n in case !+ availment !+
credits !n 2ills !+ ISD. "%ec= t%e returns +iled
6. Ot%er areas
a& "%ec= $%et%er t%e assessee %as a system !+
rec!nciliati!n 2et$een t%e +i)ures as per +inancial
led)ers and t%!se as per returns
2& "%ec= $%et%er t%e assessee is als! a manu+acturer
and i+ s! $%et%er applica2le duties !+ "( are c%ar)edH
I+ n!t $%et%er t%ere is any pr!cess carried !ut $%ic%
can 2e deemed t! am!unt t! manu+acture !r $%ic%
am!unts t! manu+acture as per "(A 1K66.
c& >%ere e*empti!ns are claimed $%et%er any
c!nditi!n !+ t%e n!ti+icati!ns %ave 2een +l!utedH "r!ss
c%ec= $it% t%e appr!priate n!ti+icati!n
/oteF ' ore coprehensive5 odified progras a!be required depending on the nature+
decentalised ethod of operation+ ode of recording+ level of anageent involveent in
accounting aong other factors(
ILLUST,ATIV( S(,VI"( TAL ASS(SS(( P,O/IL(
Name and address !+ t%e assessee@ A Pr!+ile revie$ed 2y@ A
204
"!ntact pers!ns@ A
"!ntact num2er and eAmail ID
Area 2ein) c!vered ,emar=s
1. Ascertain t%e past rec!rd pertainin) t! matters
liti)ated !r demands raised 2y t%e department and
c!mplied 2y t%e assessee
Assess ris= level E 5i)% L!$ !r M!derate
-. Ascertain t%e nature !+ services pr!vided 2y t%e
assessee and detail t%e classi+icati!n ad!pted 2y
t%e assessee +!r payment.
Assess ris= level E 5i)% L!$ !r M!derate
4. >%et%er any manu+acturin) inv!lvedH I+ s!
$%et%er assessee is re)istered under "(H
Assess ris= level E 5i)% L!$ !r M!derate
6. >%et%er t%e assessee %as incurred e*penditure
in +!rei)n currency and i+ s! E
>%et%er t%e assessee %as re)istered +!r payin)
applica2le ta*esH
Assess ris= level E 5i)% L!$ !r M!derate
8. >%et%er t%e assessee %as ass!ciates !r
c!mpanies $it%in t%e same )r!up $it% $%!m
transacti!ns e*istH
Assess ris= level E 5i)% L!$ !r M!derate
C. >%et%er assessee %as e*penditure $it%in India
!n services $it% re)ard t! $%ic% t%e service
receiver is lia2leH I+ s! $%et%er assessee is
re)istered +!r payin) applica2le ta*esH
Assess ris= level E 5i)% L!$ !r M!derate
3. Ascertain t%e met%!d ad!pted 2y t%e assessee t!
calculate %is lia2ility under t%e l!cal sales ta*BVAT
la$ !+ t%e c!ncerned state.
Assess ris= level E 5i)% L!$ !r M!derate
D. Ascertain $%et%er t%e assessee %as multiple
unitsB2ranc%es t! pr!vide services !r +!r
!perati!ns and t%e d!cumentati!n %andled 2y t%ese
!++icesBunits.
Assess ris= level E 5i)% L!$ !r M!derate
K. Ascertain $%et%er service ta* matters %andled
200
2y select individuals. I+ s! $%et%er t%ey are
=n!$led)ea2leH
Assess ris= level E 5i)% L!$ !r M!derate
1.. Ascertain t%e rep!rtin) +rame $!r= $it%in t%e
!r)anisati!n and t%e e*istence !+ pr!per MIS.
Assess ris= level E 5i)% L!$ !r M!derate
Overall audit ris= !n t%e 2asis !+ p!ints n!ted E 5i)% L!$ !r M!derate
20"
FRE3+ENT ERR#RS C#MM$TTE) $N SERV$CE TA&
Since service tax was introduced recentl! as copared to $entral Bxcise 'ct and $ustos 'ct
which have been in force for ore than three decades now+ and since the subject has been seeing
a lot of changes ever! !ear+ the chances of the assessees Lespeciall! those who are new to service
taxM going wrong or coitting ista-es at the initial stages of copliance are quite high( .n this
segent we shall ta-e a close loo- at soe of the errors we have noticed fro the assessees( ,he
assessees are advised to be careful in this regard to ensure that the! do not coit the ista-es
given here
1( ;rongl! classif!ing the services under a categor! which is not applicable to the(
2( ;rong availent of cenvat credit on ineligible docuents(
3( ;rong availent of $envat credit upto #
th
of the subsequent onth instead of
availing credit upto 30
th
or 31
st
of the onth as the case a! be(
#( ;rong availent of cenvat credits on services which do not qualif! as input services
such as construction credits for setting up within the definition of input service as
given in $envat $redit *ules 200#
@( Short pa!ent or excess pa!ent of service tax due to iproper accounting of the
aounts collected fro the custoers5clients especiall! on account of service tax
A( /on7pa!ent of service tax liabilit! for the onth of :arch b! 31
st
:arch(
4( :ista-es being coitted while filling up the S, 3 returns with regard to the value
of taxable services+ aounts received and the exeptions availed
0( ,reating the services provided fro .ndia to a person abroad as Bxport of Service
when it is not satisf!ing conditions to be treated as an export of service as per *ule
A' of Service ,ax *ules
"( &ailing to pa! tax u5s A0L2M on services received in .ndia fro abroad when the sae
constitutes an iport of service
10( &ailing to obtain registration under service tax for being an recipient of service in
service specified in rule 2L1MLdM
11( ?a!ing service tax on the gross value including aounts charged for transfer of
propert! in goods when the assessee could have claied deduction for such transfer
of propert! in goods under *ule 2' of S, %aluation *ules(
210
12( /ot considering out of poc-et expense while discharging service tax as per *ule @L1M
of the %aluation rules(
13( Bxporting services but not going in for either the rebate of service tax or refund under
*ule @ of $envat $redit *ules
1#( $onsidering export of service as exepted service
1@( $laiing full cenvat credit when the service provider has both taxable as well as
exepted services
1A( Utilising the cenvat credits in respect of the exepted services which are exported
14( ?a!ing service tax as well as excise dut! on service charges where the anufactured
goods are installed at the custoer3s preises
10( Bxcluding the expenses reibursed b! the service receiver fro the purview of
service tax where the sae is not incurred b! the service provider as a pure agent of
the service receiver
1"( /on segregation of the education cess and Secondar! 8igher Bducation cess aounts
fro the basic portion of service tax
20( /ot fulfilling the conditions laid down b! the exeption notifications while claiing
exeption benefits
21( $ollecting service tax fro the custoers5clients but not pa!ing the sae to the
governent
22( /ot registering and pa!ing service tax in respect of those services where the service
receiver is liable to pa! tax u5s A0L2M
23( 'vailing input service credits before the pa!ents of service tax and value of
services can be ade to the input service provider
2#( /ot availing cenvat credits in respect of input services on a tiel! basis thereb!
necessitating the pa!ent of taxes in cash
2@( 'ssesee fail to obtain cop! of relied upon docuents which the Service ,ax audit
tea use as a basis to issue S$/(
2A( .n case of suons and during investigation+ assessees tend to accept the
departent raise objection+ and blindl! signs the stateent dictated 5recorded b! the
departent(
,hese are soe of an! and a deeper anal!sis would lead to ore issues which are quite
coon especiall! in each of the individual services(
211
#THER M$SCELLANE#+S ASPECTS $N SERV$CE TA&
$nterest and 5enat8 6a6uati!ns
,he &inance 'ct 1""# has prescribed interest and penalties for contravention of an! provisions or
rules ade under the act( /o penalt! is leviable under sec 4A+ 44 or 40 if the assessee proves that
there was reasonable cause for such failure( ,he relaxation is provided u5s sec 00( ,his relaxation
is provided onl! under service tax law( 's per statutor! provisions onl! one penalt! can be
iposed for dela! in ta-ing registration for ore than one taxable service or for dela! in filing of
return b! assessee providing ore than one taxable service( .nterest pa!ents are andator! and
cannot be waived however penalt! can be waived partiall! or full!( ?enalt! u5s 4A+ which is
levied for failure to pa! tax+ cannot exceed the tax pa!able( &urther penalties under sec 4A and 40
are utuall! exclusive(
Illustrati!n 1@ Mr. NS Sid%u $as lia2le t! remit t%e service ta* t! t%e tune !+ ,s 38... +!r t%e
m!nt% !+ Marc%. Mr. NS Sid%u $as a ta* c!mpliant service pr!vider and %e $as !+ t%e
understandin) t%at t%e due date is 8
t%
!+ su2se<uent m!nt% and paid t%e am!unt 2y Apr 8
t%
. Later
!n Mr. NS Sid%u reali;es %is mista=e and $ants t! pay t%e interest +!r delayed p!rti!n.
SolutionF
?articulars 'ount
Due date for pa!ent 31
st
:arch
Date of ?a!ent @
th
of 'pril
Da!s of Dela! @
*ate of interest 13J
'ount of interest to be paid *s 4@000 P 13J P @53A@ V 13357
,he aount of interest is required to be paid in cash and adjustent in cenvat credit account
would not be available(
Illustrati!n -@ Mr. Prince service pr!vider +ails t! pay service ta* !+ ,s D la=%s paya2le 2y 8
t%
Manuary. Mr. Prince pays it !n -.
t%
Manuary. T%e de+ault %as c!ntinued +!r 18 days. Nuanti+y t%e
penalty t! 2e paid 2y Mr. Prince.
SolutionF
?articulars 'ount
Default in aount 0 la-hs
212
Da!s of default 1@ da!s
?enalt! LaM 2J P 0 la-hs P 1@531 V44#1
LbM 200 per da! P 1@ da!sV 3000
?enalt! under sec 4A is higher of LaM and LbM *s 44#157
,he aount of interest is required to be paid in cash and adjustent in cenvat credit account
would not be available(
Pr!visi!ns as t! 5enat8
,he provisions as to penalt! under service tax are as follows
Section 4A Deals with penalt! to pa! service tax at *s( 200 per da! of failure or at 2J
of such tax per onth whichever is higher+ fro the first da! after due date up to the date
of actual pa!ent( ?enalt! however cannot exceed service tax pa!able( .t is proposed to
reduce the penalt! b! half of what is presentl! being levied(
Section 40 Deals with penalt! for suppression of value of taxable service and the
penalt! shall not be less than the service tax and shall not exceed twice the aount of
service tax pa!able( ,his can be reduced on pa!ent of tax and interest within the stated
period of 30 da!s as explained earlier+ along with the penalt! deterined( L>%ere penalty
is levied uBs 3D n! penalty s%all apply uBs 3C&
5!$ever t%e revised penal pr!visi!ns $%ic% is e++ective +r!m t%e date t! 2e n!ti+ied is
pr!vided 2el!$.
Situation ?osition in
records
?enalt! and
provision
:itigation $oplete
waiver
/o fraud+
suppression
etc
$aptured 1J of tax or *s
100 per da! upto
@0J of tax
aount LSec 4AM
,otall! itigated if tax
and interest is paid
before issue of notice
)n showing
reasonable
cause under
section 00
$ases of
fraud+
suppression
etc
$aptured true and
coplete position
in records
@0J of the tax
aount Lproviso
to section 40M
LaM 1J ?(:F ax of
2@J if all dues
paid before issue
of notice
LbM 2@J of tax if all
dues paid within
30 da!s L"0 da!s
for sall
assesseeM
)n showing
reasonable
cause under
section 00
/ot so captured Bqual aount /o itigation /ot
213
section 40 possible
Section 44 Deals with penalt! for a contravention where no penalt! is prescribed under
law 7
'articulars -(ount of penalty in &s!
)n account of failure to a-e pa!ent and ta-e registration
under service tax
*s( 200 per da! of default or a
su of *s( @000 whichever is
higher
)n account of failure to a-e electronic pa!ent of tax *s( @000
&ailure to aintain proper records or boo-s *s( @000
&ailure to furnish inforation called for under this chapter
or&ailure to furnish docuents required under this chapter
or&ailure to appear before $B) when issued suons to
appear or produce docuents in an inquir!
*s 200 per da! of default or a
su of *s( @000 which ever is
higher
&ailure to issue proper invoice or issuing invoice with incorrect
or incoplete details or failure to account invoice in boo-s
*s( @000
)ther cases *s( @000
L.t is -now proposed to enhance the penalt! fro *s @00057 to *s 10+00057M
Sear6hing !" 5remises b8 auth!riHed !""i6ers
,he $oissioner of $entral Bxcise u5s 02 can authoriGe an! '$$B5D$$B to search for and
seiGe docuents or boo-s or things+ which have been secreted in an! place and which in his
opinion would be useful for or relevant to an! proceeding under this chapter( 8e a! even ta-e
up the tas- hiself( ,he $ode of $riinal ?rocedure 1"43 shall also appl! here(
#ther re6!ver8 5r!visi!ns
Section 04 of the &inance 'ct 1""#+ epowers the $entral Bxcise )fficer L$B)M to require an!
other person or other $B) to deduct the aounts due to the governent fro the assessee and
pa! the sae( ,his deduction would be relevant where the person to who a notice has been
issued+ owes soething to the person who owes one! to the governent( ;here the person to
who a notice is issued does not pa! the aount+ he hiself would be treated as an assessee in
default( ,he $B) can even send a certificate specif!ing the aount due+ to the collector of the
district where the person liable to pa! resides or has his propert!( ,his would be so where the
district is different fro the one over which the $B) has jurisdiction(
21#
Liabiit8 under A6t t! be First Charge
Section 00F ;here an assessee owing dues Laount of tax + penalt! interest or an! other suM
pa!able b! the assessee or an! person under this chapter+ shall be first charged to as provided in
*ecover! of Debt Due to =an-s and &inancial .nstitution 'ct 1""3 and SecuritiGation and
*econstruction of &inancial 'ssets and Bnforceent of Securit! .nterest 'ct 2002
#""en6e and 5enaties
Section 0"F ;here an offence nael!
a( =n!$in)ly evades payment !+ service ta* !r
2. Irre)ular availment !+ cenvat credit $it%!ut actual receipt !+ ta*a2le service !r e*cisa2le
)!!ds eit%er +ully !r partially in vi!lati!n !+ t%e rules made under t%is c%apter !r
c( Maintains +alse 2!!=s !+ acc!unts !r +ails t! supply any in+!rmati!n $%ic% %e is re<uired
t! supply under t%is c%apter !r rules made t%ere under !r
d( "!llects any am!unt as service as service ta*2ut +ails t! pay t%e am!unt s! c!llected t!
t%e credit !+ t%e central )!vernment 2ey!nd a peri!d !+ C m!nt%s +r!m t%e date !n $%ic%
suc% payment 2ec!mes due.
S%all 2e punis%a2le $it% impris!nment +!r t%e peri!d as may 2e prescri2ed.
T%e !++ences set !ut at #a& #2&#c& $%ere am!unts e*ceed speci+ied am!unts ,s 8. La=%s and
pr!vides +!r impris!nment +!r term upt! 4 years is c!)ni;a2le.
All !t%er !++ences are n!nAc!)nisa2le and 2aila2le.
A55i6ati!n !" the 5r!visi!ns !" the Centra E76ise A6t /@DD
,he assessee should note that certain provisions of $entral Bxcise 'ct 1"## would also appl!
with regard to service tax b! virtue of section 03( ,hus with regard to these aspects+ the aforesaid
law would have to be referred( Soe of the iportant aspects with regard to which the
provisions of $B' 1""# would appl! are as follows
$ertain offences to be non7cogniGable LSec "'M(
)ffences b! copanies LSec "''M
?ower of $ourt to publish nae+ place of business+ etc(+ of persons convicted under the
'ct(LSec "=M
?resuption of culpable ental state LSec "$M
*elevanc! of stateents under certain circustances LSec "DM
'pplication of section @A2 of the $ode of $riinal ?rocedure+ 10"0+ and of the ?robation
of )ffenders 'ct+ 1"@0 LSec "BM
21@
$lai for refund of dut! LSec 11=M
.nterest on dela!ed refunds LSec 11==M
?ower not to recover dut! of excise not levied or short7levied as a result of general
practice LSec 11$M
'pplication of the provisions of 1'ct /o( @2 of 1"A22 to $entral Bxcise Duties LSec12 M
Declaration of the aount of dut! on invoice LSec 12'M
?resuption that the incidence of dut! has been passed on to the bu!er LSec 12=M
$rediting of refunds to $onsuer ;elfare &und LSec 12$M
Utilisation of the &und LSec 12DM
?owers of $entral Bxcise )fficers LSec12BM
?ower to suon persons to give evidence and produce docuents in inquiries under
this 'ct LSec 1#M
Special audit in cases where credits availed or utiliGed are not within noral liits LSec
1#''M
)fficers required to assist $entral Bxcise )fficers LSec1@M
?rocedure for adjudication LSec 33'M
$onfiscation or penalt! not to interfere with other punishents LSec 3#'M
Deposit of dut! pending appeal LSec 3@&M
Sections 3@&& to 3@ ) dealing with 'ppeals.nstruction to officers LSec( 34=M
Service of decisions+ orders+ suons etc LSec 34$M
Bffect of aendents of rules+ notifications etc LSec 30'M
,he professional who advises on service tax should be aware of the iplications of the above
provisions which a!be judiciall! clear as the! have gone through a nuber of !ears of
odifications(
21A
S#ME #F THE $MP#RTANT C#MM#N SERV$CES
Preevant "!r an8 dis5utes "!r 5eri!d 5ri!r t! /=G=-./-Q
,he liitation in the siGe of this boo- constrains us fro discussing an!5 all the services( ;e
restrict to the ones where we find there is ore potential for disputes and litigation possible for
previous !ears(
Renting !" $mm!vabe Pr!5ert8 Servi6es
*enting of iovable propert! service was brought under service tax net with effect fro
01(0A(04( ,his lev! has led to a lot of confusion as one does not associate letting out of
iovable propert! with the concept of service for the siple reason that there is strictl!
spea-ing+ no service involved( ,his aspect however this !ear has been addressed b! the Delhi
8igh $ourt in responding to the writ petition filed b! certain assessees who had challenged the
lev! of service tax on the renting of iovable propert!( ,he 8igh $ourt has in 8oe Solution
*etail .ndia >td %s Union of .ndia L200"7,.)>71"A7DB>78$7S,M sought to draw a distinction
between Nservice in relation to renting of iovable propert!O and Nrenting of iovable
propert!O and held that renting in itself would not aount to provision of taxable service and held
both notification 2#52004 S, and circular "05152004 S, to be ultra vires the 'ct as far as
requireent for lev! of service tax on renting is concerned( .n the eantie the &inance 'ct 2010
has aended the definition of the taxable service in this respect+ retrospectivel! fro the date of
introduction of the service+ to include ere renting of iovable propert! also in the tax net( =ut
Delhi 8igh $ourt has again granted sta! to 8oe Solution *etail L.M >td( in ;(?( LcM /o 33"0 of
2010 on 10(0@(2010 fro pa!ent of service tax on ere renting of iovable propert!( )n
contrar! to Delhi 8igh $ourt decision ?unjab and 8ara!ana high court in case of in case of
Shubh ,ib Steels liited %s U). passed an order dated 22(11(2010 upholding the validit! of
lev! of service tax on renting of iovable propert! with retrospective aendent ade in
&inance 'ct 1""# vide &inance 'ct 2010+ in provisions relating to service tax on renting of
iovable propert!(
Constitutional validity
's per Bntr! #" of list ..+ tax on land and building is a subject atter of state+ there are divergent
views in this aspect+ wherein one view is that service tax cannot be levied under residuar! ite in
214
list . b! central governent( 8owever the other view is that service tax is not directl! on land or
building but onl! for use of such land or building( ;herein this aspect was upheld b! apex court
in the atter of $hartered 'ccountants 'ssociation %sU). 2000 S,, A#+ 4 S,, 2"++11@ ,axan
@#3+ 2@2 .,* @3 Euj 8$ D=(+
,his+ in view of the authors is an indicator as to the interpretation which could possibl! be ta-en
up the $ourts though the Supree $ourt is !et to repl! in respect of writ petitions l!ing before it
and there could be questions as to the applicabilit! of the stance of the 8igh $ourt to areas
outside its jurisdiction if one were to consider 'rticle 22A of the $onstitution of .ndia( Service
providers who have been charging service tax would be better off continuing to do so until the
atter is finall! decided b! the Supree $ourt(
"an "!nstructi!n service credit 2e availed 2y t%e service pr!vider pr!vidin) rentin) !+
imm!va2le pr!perty serviceH
's per circular issued b! $=B$ dated 0#(01(2000+ no credit of construction or industrial or
construction service be ta-en b! service provider providing renting of iovable propert!
service( 8owever the circular has overloo-ed the definition of input service which was wide
enough to cover availent of input service credit pertaining to construction services(
)ne of the ain drivers in taxing this categor! could have been the fact that in developed
countries which are under a unified %', the rents are also liable(
)ne saving grace is that the propert! should be used for business or coerce( .n other words
where letting out is not for business or coerce+ there would be no liabilit!(
*enting b! or to a religious bod! has been exepted as well as renting to an educational bod!
other than coercial training or coaching centre( :oreover+ renting of vacant land would not be
liable except where vacant land is given on lease or license and a building or a teporar!
structure is constructed for use in furtherance of business or coerce( =uildings used solel! for
residential purposes or for accoodation including hotels+ hostels+ boarding houses+ tents+
caping facilities etc( would also not be liable(
&ro the gross aount charged+ deduction would be available for the propert! tax levied and
collected b! the local authorities with the calculation of deduction being on a proportionate basis
under /otification 2#52004 S, dated 22(0@(04 ,here is no deduction for interest and penalt! and
what is deductible is propert! tax paid(
210
;here there is a case of co7ownership+ one should proceed on a reasonable basis to ascertain his
respective share in the propert! and the basis being adopted for .ncoe ,ax assessent could
possibl! be followed here( 8owever the agreeents would be critical here( Bven those cases
where there is teporar! letting out of spaces without there being an associated transfer of the
right of possession and effective control over such space+ to the user+ is to be covered under the
tax net( ,hus spaces let out in alls for vending achines+ cinea theatres etc+ would be liable(
Management, Maintenan6e !r Re5air Servi6es
,he activities covered here would be aintenance or anageent of properties whether ovable
or iovable+ aintenance or repair of goods( ,he activit! should be under a contract or
agreeent unless we have aintenance or repair of goods5properties b! a anufacturer in which
case+ an agreeent would not be a pre7requisite(
;here there is transfer of propert! in goods during the course of provision of service+ service tax
would have to be paid on the labour charges alone( ,he service provider can therefore exaine
availing the benefit of notification 1252003 S, as per which+ deduction would be given for the
value of aterials or goods sold( ,he assessee in such cases would not be able to avail cenvat
credit of excise duties paid on such goods and aterials though the credit of service tax on input
services and excise duties on capital goods would be available(
'ssessees a! note that the scope of this categor! would be ver! wide and ost of the repair
activities underta-en on goods would be liable under this categor!( ' classic exaple could be
that of reconditioning of goods underta-en b! a anufacturer on rejection b! his custoer where
the sae does not aount to anufacture under the $entral Bxcise 'ct 1"##( ;here the
anufacturer bills the custoer for the sae especiall! when not covered b! the warrant! period+
the sae could be liable to service tax under this categor!(
Bven aintenance of software and coputer hardware would be liable under this categor!( ;ith
regard to software what is taxed is aintenance of coputer software wherein the functionalit! of
the odules5software is not enhanced be!ond the existing capacit!( ,he aintenance activit!
should be under a contract5agreeent( *eaders a! also note that there a! be cases of contracts
for coposite services in which case the essential nature of the service5contract would have to be
deterined( ;here it is not one of taxable service+ it could not be taxable at all( .n $:S L.ndiaM
)perations 9 :aintenance $opan! L?M >td %s $$B ?ondicherr! L2004 L04M S,* 3A" L,ri7
$hennaiMM+ the contention of the departent regarding brea-ing up of a operation and
aintenance contract for operating and aintaining a facilit! for generating and suppl!ing
21"
electricit! to ,/B= was discarded b! the ,ribunal which held the said contract to be a wor-s
contract for anufacture of goods viG(+ electricit!(
'ssessees should be careful enough to distinguish this categor! of service fro that of =usiness
'uxiliar! Service as what is taxed here is repair or aintenance activit! and not processing of
goods which would be liable under ='S( Bxaple could be re7engraving of c!linders for printing
new designs would be processing and not repair(
;hether re7treading of old t!res would tantaount to anageent aintenance or repair serviceC
?resentl! this issue is being debated across the countr!+ as to retreading of old t!res would
aount to repair services+ wherein departent is issuing notices to the assessee considering the
activit! to be anageent aintenance or repair service( 8owever the authors are of the view
that the re7treading of old t!res would aount to wor-s contract+ however wor-s contract service
under service tax does not include anageent+ aintenance or repair service+ therefore the
sae would be out of the purview of service tax net( 8owever this view requires judicial
confiration(
$n"!rmati!n Te6hn!!g8 S!"t:are Servi6es
' review of the definition of taxable service under the new categor! of .nforation ,echnolog!
Software service which has coe into effect fro 1A(0@(00 reveals that the said categor! see-s to
lev! service tax on custoiGed software developental activit!( ,his has also been clarified b!
the departent through its letter &(/o( 33#5152000 ,*U dated 2"(02(00(+ ., software whether
used for business or not were liable to service tax( :ost of the activities which for part of the
S!stes Developent >ifec!cle and required to develop and ipleent software fro the
conceptualiGation stage and up to the stage of final ipleentation would be covered under this
categor!( /otification 1452010 dated 24(02(2010 provides for exeption for service provided for
pac-aged or canned software intended for single use subject to certain conditions entioned
therein(
's per notification @3520107 S,+ Service tax with respect to right to use canned or pac-ed
software+ is exepted fro service tax+ provided dut! of excise or custos dut! was paid(
&urther a declaration should be obtained fro the service provider+ that an aount not ore than
retail sale price was charged fro the custoers(
's highlighted above even the process of acquiring the right to use inforation technolog!
software for coercial exploitation including the right to reproduce or to distribute or to sell the
220
sae has been covered b! the definition under this categor!( Bven acquisition of the right to use
software coponents for the creation of and inclusion in other ., software products has been
included( ,his could lead to considerable litigation in future if one were to also ta-e into
consideration the verdict given b! the Supree $ourt in ,ata $onsultanc! Services %s State of
'ndhra ?radesh L200# L140M B>, 22 LS$MM where both canned and uncanned software were held
to be capable of being regarded as goods( ,his was also reinforced b! the decision of the :adras
8igh $ourt in .nfos!s ,echnologies >td %s $,) L 200" L233M B>, @A L8$7:adMM where both
tangible and intangible propert! Lincluding custoiGed or non7custoiGed softwareM were held to
be capable of being goods if the! had the required attributes to hold the as goods( .f that were
the case+ then acquisition of the right to use software or software coponents whether it is canned
software or uncanned software could also be held liable under the sales tax law b! the concerned
authorities( 8ere where sales tax is leviable+ the assessee would have to contend that the right is
with regard to goods and that the acquisition of right with regard to the sae cannot be subjected
to service tax(
.n case of .nfotech Software Dealer 'ssociation %s U). in 2010 L20M S,* 20" L:adM+ wherein
the issue as to whether right to use software was goods or service was exained( ,he honorable
high court ade an observation+ when a software was developed+ the cop!rights of the sae was
retained b! the developer and onl! the right to use the sae was given to an! subscribers+
which iplies that the ownership of the software was retained b! the developer onl! the facilit!
to use software was given to various subscribers+ therefore the said transaction was liable to
service tax+ in order to lev! sales tax under deeed sale+ right to use the goods should also be
transferred+ &ro the above it is clear that leviablit! of service tax or sales tax depend upon
nature of transaction(
>%et%er t%e service pr!vider $%! e*p!rts IT s!+t$are services a2r!ad $!uld 2e eli)i2le t! !pt +!r
re+undH
)ne advantage of the introduction of service tax lev! on ., software services has been the
opening up of options available for an exporter of services( ,he service provider exporting .,
software services in accordance with the Bxport of Service *ules 200@ can have the option of
going in for refund of the cenvat credit under *ule @ of $envat $redit *ules 200#( 'nother
alternative could be to go in for rebate of service tax paid under *ule @ of Bxport of Service *ules
200@( L/ote the service has been put under the third categor! i(e recipient based criterion for the
purpose of deterining whether the service has reall! been exported out of .ndia in accordance
221
with the Bxport of Service *ules 200@ where the services are provided fro .ndia to a person
residing abroad(M
*!!ds Trans5!rt Agen68 Servi6es
,his is one categor! which has been found to be posing probles to ost of the assessees under
service tax( ,he coon perception aong the assessees is that the service provider alone is
liable to service tax( ,he assessees often overloo- the provisions of section A0L2M of $hapter % of
&inance 'ct 1""# as aended fro tie to tie as per which a service receiver can also be held
liable b! the governent in certain cases b! issuing a notification in this regard( ,he notification
would appl! to certain categories of services rather than categories of assessees(
)ne of the categories with regard to which the service receiver is held liable is that of Eoods
,ransport 'genc! service( 8ere the consignor or the consignee whoever pa!s the freight would be
liable to service tax( =ut first of all+ the service provider should be a E,'( .(e( a person providing
services in relation to transport of goods b! road and issuing a consignent note( .n the opinion
of the paper writers+ the goods transport owner or operator who wor-s under a contract or who
bills on wee-l! 5 dail! basis or is paid per trip a! not be covered under this lev! as per the &:
speech as well as the $oittee established in 200# who opined that onl! boo-ing agents would
be liable( 'lso in the case of 6(:(=( Eranites ?( >td( v $o( of $entral Bxcise+ Sale 120102
2@ S,, 1#1 it was held that that transport underta-en b! individuals owning and operating lorr!
and truc-s is not subject to service tax(
,he liabilit! would be on the person pa!ing the freight is the pa!er happens to be an! one of the
following
&actor! registered under or governed b! &actories 'ct 1"#0
$opan! established under $opanies 'ct 1"@A
$orporation established b! or under an! law
Societ! registered under Societies *egistration 'ct 10A0
'n! cooperative societ! established b! or under an! law
' dealer registered under $entral Bxcise 'ct 1"##
=od! corporate established or a partnership fir registered b! or under an! law
,he person who is liable to pa! the freight is liable and the person who pa!s on behalf of another
would not be liable( &urther the benefit of sall service provider exeption would also not be
available((
222
,he service tax would not have to be paid on the entire aount and the pa!er can avail a
deduction of 4@J of the gross aount charged as freight( ,he condition as to getting the
declaration as to non availent of $envat credits fro the E,' which existed earlier has been
done awa! with((
,he liabilit! would arise where the freight charged exceeds *s( 4@0 for individual consignents
and *s( 1@00 for other consignents( ,he intention here is not to tax freight paid to local tepo
operators who do not issue a consignent note(
,he pa!ent would have to be ade in cash and once pa!ent has been ade+ the service tax
paid can be availed as credits if the service constitutes input service to the pa!er( ' controvers!
that the outward freight is not allowed has been precipitated b! the bureaucrats of this countr!
going against the concepts of $envat credit and oveent to ES,( .n case of =ellar! .ron and
ores ?vt >td %s $$B 2010 L10M S,* #0A L,ri7 =angM it was held that transportation of goods b!
truc- owners or operators was out fro the scope of taxabilit! under Eoods ,ransport 'genc!
Service+ onl! the boo-ing agents were ade liable to Service ,ax under Eoods ,ransportation
Services+ further the activit! carried out b! truc- owners was liable to service tax under Suppl! of
,angible Eoods services+ wherein the truc- owners operated the vehicle without transferring the
possession of such truc-s+ the said service was taxable onl! fro 1A(0@(2000 and not prior to that
date( &urther the ter road was also discussed as entioned in Eoods transportation 'genc!
Service+ wherein it was held that *oad would onl! ean public road+ and transportation b! ud
roads fored in the ining area could not be held to be transportation b! road
%!rks 6!ntra6t servi6e
,his entr! would be applicable to the following existing service providersF
.ndustrial and $oercial $onstruction
$onstruction of $oplex
Brection+ installation and $oissioning
.f there are wor-s contracts which cover activities not coing under the ones specified above+
the! would have to be taxed under other existing heads and consequentl!+ the coposition benefit
in such cases would not be available( .n such a scenario+ the existing notifications such as
1252003 S, and 15200A S, would have to be relied upon to get an! deduction(
&or pure labour services where there is no aterial involved the service would continue to be
covered under the above categories as the definition of wor-s contract a-es it clear as t! t%e
re<uirement !+ trans+er !+ pr!perty in )!!ds +!r a c!ntract t! 2e lia2le under t%is cate)!ry(
223
Whether 2oint develop(ent liable?
Under the Joint Developent 'greeent+ the builder delivers the share to the land owner in
exchange for land while retaining his own share( ;hat is the iplication under service tax on the
constructed portion shared with the land ownerC
,he $BS,', in the case of ?urvan-ara ?rojects >td %s $S, =angalore L20107,.)>7207
$BS,',7=ang7Sta!M where in the context of construction of flats and transferring the to land
owners who are co7developers it was held that in exchange for land received fro the it cannot
be held to be an! service( ' pria facie view was that there is no service involved in the
transaction( .t a! be noted that the final ruling of the ,ribunal in this regard is awaited(
,he service tax liabilit! is attracted on the value of taxable services( ,here was an explanation
inserted to the taxable service definition in construction services+ wef 1(4(2010 which sought to
tax the sums re6eived prior to grant of copletion certificate b! builder was levied to service tax(
8owever+ what was sought to be covered b! this deeing fiction was sus of one! received b!
the builder fro the bu!er as advances( .n view of paperwriters it cannot be extended to cover the
land5developent rights which is not a su(
's per erstwhile Section AA1presentl! AA=2 Lwhich was charging section prior to 1(4(2012M read
with Section A4 it levies tax on the vaue !" ta7abe servi6es where provision of service is for a
6!nsiderati!n( 's per explanation below section A4+ (*planati!nA/!r t%e purp!ses !+ t%is
secti!n#a& Oc!nsiderati!nO includes any a(ount that is payable +!r t%e ta*a2le services pr!vided
!r t! 2e pr!videdP
8owever deands could be ade b! revenue citing $ircular /o(1@1520127S, issued in &ebruar!+
2012( =oard $ircular /o( 1@152520127S(,(+ dated 107272012 clarifies on taxabilit! as underF
T:! di""erent identi"iabe transa6ti!ns9
7 LaM sale of land b! the landowner which is not a taxable serviceI and
7 LbM construction service provided b! the builder5developer(
,he builder5developer receives consideration for the construction service
provided b! hi+ fro two categories of service receiversF
7 LaM fro landownerF in the for of land5developent rightsI and
taxable in case an! part of the pa!ent5developent rights of the land was
received b! the builder5 developer before the issuance of copletion
22#
certificate and the service tax would be required to be paid b!
builder5developers even for the flats given to the land owner(
7 LbM fro other bu!ersF norall! in cash(
,he circular clarifies on valuation of land owners share as follows7
a( ,he value of these flats would be equal to the value of siilar flats charged b! the
builder5developer fro the end bu!ers for cash(
b( .n case the prices of flats5houses undergo a change over the period of sale Lfro the
first sale of flat5house in the residential coplex to the last sale of the flat5houseM+ the
value of siilar flats as are sold nearer to the date on which developent rights given
to develop the land could be used for arriving at the taxable value(
,hough there is a possibilit! of challenge to service tax on land owners share+ there could be a
deand of service tax on land owner3s share of constructed area b! revenue as the law stands
presentl! after 1(4(2012( ,hough there is a difference of views+ if the bu!ers are aware and
willing to pa! the service tax and therefore when in doubt it a!be preferable to collect and pa!
the service tax(
)ne thing the assessees have to anal!se is whether there exists a service provider who provides
the wor-s contract service and a service receiver who receives such service( .n the absence of
such service+ there would not be a liabilit! under service tax( Soeties+ the construction activit!
a! not be underta-en on behalf of a client5custoer but a! be underta-en b! the
builder5developer on his own account and the constructed propert! sold to bu!ers( .n such
situations+ there would be no liabilit! under service tax as there is no distinct service provider and
service receiver and the builder5developer cannot provide service to hiself( ,his has also been
decided b! the Eauhati 8igh $ourt in :agus $onstruction L?M >td %s U). L2000 L11M S,* 22@
LEauMM(
't sae tie+ wef 1(4(2010 where an! part of sus received b! builder before copletion
certificate+ it is liable to service tax(
,he assessees are advised to be careful even where partl! constructed propert! plus land is
transferred to prospective bu!ers and then the reainder of construction wor- underta-en on their
behalf as the entire aount involved in the project would not be liable to service tax because of
the land and partl! built up unit being sold5transferred to the bu!ers and then wor-s contract
service in relation to construction being provided( Due care is to be ta-en to ensure that the
22@
agreeents are properl! drawn up to indicate the various coponents and the aounts being
charged for the sae(
C!m5!siti!n S6heme
;or-s contract L$oposition Schee for ?a!ent of Service ,axM *ules 2004 has been notified
vide notification 3252004 S, dated 22(0@(2004 b! the $entral Eovernent for the purpose of
specif!ing the schee for coposition( ,he person executing wor-s contract has the option to
pa! tax under the coposition schee at the rate of four percent Lrate changed fro earlier rate of
2J b! notification 452000 S, wef 01(03(2000M on the gross aount charged for the wor-s
contract( Eross aount shall not include the %', or sales tax paid on the goods transferred during
the execution of such wor-s contract but shall include the value of all goods used in or in relation
the wor-s contract whether supplied under an! the contract for a consideration or otherwise and
all services used for execution of the wor-s contract Lnotification 235200" dated 04(04(200"M(
,he option is to be exercised prior to pa!ent of service tax in respect of the said wor-s contract
and once exercised+ shall be in force till the copletion of the wor-s contract(
E7em5ti!n
Services in relation to execution of wor-s contract provided b! an! person to an! other person in
relation to construction of ports or other ports has been exepted fro service tax( ,his
exeption shall not extend to services of copletion+ finishing+ repair+ alteration+ renovation+
restoration+ aintenance or repair(
Vauati!n
' new *ule 2' has been inserted b! notification 2"52004 S, dated 22(0@(2004+ which prescribes
the valuation ethod in case of wor-s contract service( ,he value of wor-s contract service shall
be equivalent to the gross aount charged for wor-s contract less the value of goods transferred
in respect of which %',5sales tax has been paid+ during the course of execution of wor-s contract(
,he gross aount shall not include the %', and sales tax paid on the goods transferred( ,he
service provider shall ensure that the value of wor-s contract service as aforesaid shall include the
following
>abour charges for execution of the wor-s
'ount paid to a sub7contractor for labour and services
$harges for planning+ designing and architect3s fees
22A
$harges for obtaining on hire or otherwise+ achiner! and tools used for execution of the
wor-s contract
$ost of consuables such as water+ electricit!+ fuel used in the execution of the wor-s
contract
$ost of establishent of the contractor relatable to suppl! of labour and services
)ther siilar expenses relatable to suppl! of labour and services and
?rofit earned b! the service provider relatable to suppl! of labour and services
Cenvat 6redit
;here the service provider opts for the coposition schee for the purpose of pa!ent of
service tax+ he shall not ta-e cenvat credit of dut! and cess paid on inputs used in relation to such
wor-s contract( 8owever the credit on capital goods used for providing the service as well as the
input service credit Lsub contractors+ insurance+ telephone+ anpower suppl!+ architect+ securit!+
suppl! of tangible goods+ etcM would be available(
;here the service provider does not opt for coposition schee+ he should be entitled to cenvat
credit on inputs+ input services and capital goods used in execution of such wor-s contract(
.n case of Sunil 8i7,ech Bngineerings >td %s $$B+ L2010 L14M S,* 121 L,ri7 :ubaiM it was
held that prior to introduction of ;or-s $ontract service+ the assessee was liable to service tax
under construction service+ however with respect to value of aterial on which sale tax was paid+
the assessee could clai the benefit of notification 1252003(
.t was held that when assessee had paid service tax under construction service prior to
introduction of wor-s contract service( ,herefore the plea of estoppel in tax atters and tax
liabilit! can be disowned 8owever there are contrar! decision wherein it was held that no tax was
pa!able+ if the activit! carried out b! the assessee was a wor-s contract service+ prior to
introduction of ;or-s $ontract Service(
8owever in case of $$B %s =S=6 decision ?vt >td+ 2010 L2@3M B>, @22 L,ri Del 7 >=M it was
held that coposite contracts would be divisible+ once the value of aterial was established+ the
balance would be value of labour and the sae would be liable to service tax( )n the basis of this
decision+ Daeli .ndustries case where it was held that coposite contract were not vivisectable+
was referred to larger bench of Supree $ourt(
224
/= P!ssibe $ssues9 %hether the ev8 !" servi6e ta7 !n :!rks 6!ntra6ts is 6!nstituti!na8
vaidA
C!mments9 ,he Union Eovernent has a right under Bntr! "4 of >ist . of Seventh Schedule
to lev! a tax on a subject+ which is not specificall! covered under >ist .. or >ist ... of ibid(
,he transaction of ;or-s $ontract is neither a sale nor a service as held b! the Supree
$ourt in case of Eannon Dun-erl!( ,he aended definition of sale of goods as per the
constitution covers onl! the transfer of goods in the course of execution of wor-s contract(
,herefore the service eleent is not a subject atter of lev! either under >ist .. or >ist ...(
,herefore in the opinion of the authors the sae would be well within the powers of the
Union Eovernent to lev! tax( 8owever another view in the industr! is that there is no
facilit! under the constitution to vivisect a single transaction and tax the portion of the sae(
-= %hether the :!rks 6!ntra6t!r 6an 6!ntinue under the e7isting entries "!r !ng!ing
6!ntra6tsA
C!mmentsF Since there is a new entr! it is presued that service providers a! have to
choose considering the principles of Section A@' on classification( 8owever if the! do
not transfer an! aterials the! would continue under construction or erection categories(
8erein it is iportant to note that the departent letter &(/o( =151A52004 ,*U dated
22(0@(2004 goes on to sa! that contracts which are treated as wor-s contract for lev!ing
%',5sales tax shall also be treated as wor-s contract for lev!ing service tax( 8owever+
this letter would have to be seen in the light of the explanation to section A@L10@MLGGGGaM+
which deals with the contracts which can be regarded as wor-s contract under this
categor!(
C= %hether the :!rks 6!ntra6ts inv!ving materias in 5r!gress 6an as! !5t "!r the
ne: entr8 th!ugh earier the8 :ere registered under the !d entriesA
C!mments9 'ssessees a! note that the departent had coe out with circular
"05152000 S, dated 0#(01(2000 which clarified that where service providers had
classified their services under other categories viG(+ erection+ coissioning or
coercial or industrial construction or construction of coplexes+ the! could not
reclassif! the single coposite service under wor-s contract( ,his circular also
ephasiGed the fact that a wor-s contract could not be vivisected and that the sae was
not legall! sustainable( ,he said circular was issued after the decision in case of
/agarjuna $onstruction $o( >td( %s( Eovernent of .ndia 120127,.)>71047S$7S,2
where Supree $ourt held that in respect of wor-s contract+ where service tax had
alread! been paid+ no option to pa! service tax under the ;or-s $ontract $oposition
Schee can be exercised( 'ssessee who wants to avail of benefit of pa!ent of service
220
tax as per $oposition Schee *ules ust opt to so do before a-ing pa!ent of
service tax in respect of said wor-s contract( )ption so exercised would appl! to entire
wor-s contract+ and assessee is not peritted to change option till said wor-s contract is
copleted(
#( %hether the !5ti!n !" avaiing the 6redit !n a the in5uts >6ement, stee, gaHing,
ties et6? and 5a8ing the servi6e ta7 !n the gr!ss am!unt is sti avaiabeA
$oentsF ,he coposition schee is optional and the wor-s contractor can even pa!
service tax on a value arrived at as aforesaid at the noral rate( ,he law as it stands toda!
is silent regarding the cenvat credit on inputs in such a scenario as the credit has been
expressl! barred onl! in case of an assessee opting for coposition schee( ,he assessee
can as per the huble view of the authors+ pa! service tax on the gross aount for the
service which should include the value of aterials transferred if the! are to avail $envat
credit of the excise duties on the aterials used for the construction wor-5wor-s contract
service( ,his could enable the contractor to bring down his construction costs and the
benefit of such reduced costs+ can be passed on to his bu!er(
<= %hether the !5ti!n 6h!sen under VAT a: has an8 bearing "!r the 6assi"i6ati!n !r
vauati!n under this ne: entr8A
$oentsF ,he ;$ option provides for the option of deducting the value on which %',
has been paid and on the balance the service tax would be leviable( ,his option if chosen
would require that the regular schee under %', has been opted for( 8owever for the
coposition schee the ethod under %', is not relevant(
A( %hether the servi6e 5r!viders under the s5e6i"ied 6ateg!ries :ere n!t iabe "!r
:!rks 6!ntra6ts earier t! this entr8A
$oentsF ,he entr! read with the &inance :inister3s Speech along with departent
circular indicates that wor-s contracts were not earlier covered( ,he purpose for which
this entr! was bought in also is favorable to this interpretation( ,herefore it can be
construed that there was no liabilit! earlier( ,his could lead to a situation where the
service provider who has paid the service tax fro their poc-ets Lnot recovered fro the
custoersM could go for a refund especiall! if the sae was done in pursuance of an
investigation(
22"
G= %hether the sub 6!ntra6t!rs :!ud be e7em5t as the main 6!ntra6t!r is 5a8ing the
servi6e ta7A
$oentsF ,he sub contractors would also have to discharge the S, under wor-s
contract or other categories and would be liable for the tax unless the! are below *s( 10
>a-hs(
0( %hether the deeming "i6ti!n !" servi6e ta7 :ith res5e6t t! an8 am!unt re6eived b8
the buider "r!m its 6ust!mer be"!re grant !" 6erti"i6ate !" 6!m5eti!n :!ud be
iabe "!r servi6e ta7 under :!rks 6!ntra6tA
$oentsF ,he author is of the opinion that the said explanation is provided under
section A@L10@MLGGqM i(e( L$onstruction services onl!M and the said explanation is not
provided under section A@L10@MLGGGGaM i(e( wor-s contract services( ,herefore the said
deeing fiction would not appl! to wor-s contract service(
/inance 0ill -.11 %as restricted cenvat credit t! an e*tent !+ C.7 $%en t%e service is received
+r!m service receivers pr!vidin) services classi+ia2le under c!nstructi!n !+ residential c!mple*
service "!mmercial and industrial c!nstructi!n service and erecti!n c!mmissi!nin) and
installati!n services $%! %ad !pted t! pay service ta* !n )r!ss am!unt includin) t%e value !+
inputs.
Su558 !" tangibe g!!ds "!r use servi6e
's per Section A@L10@MLGGGGjM of $hapter % of &inance 'ct as aended+ taxable service eans
an! service provided or to be provided to an! person+ b! an! other person in relation to suppl! of
tangible goods including achiner!+ equipent and appliances for use+ without transferring right
of possession and effective control of such achiner!+ equipent and appliances( ,hus if one
purel! goes b! the definition+ it a! also be possible to argue that what is liable is service in
relation to suppl! of tangible goods without transferring right of possession and effective control
of such achiner! and not the suppl! itself(
C!n6e5t !" tangibe g!!ds
,he ter Ntangible goodsO has not been defined under the &inance 'ct and one would have to
refer the definition of NEoodsO as per Sale of Eoods 'ct( 8ere+ it has been defined to ean ever!
-ind of ovable propert! other than actionable clais and one!I and including stoc- and
shares+ growing crops+ grass and things attached to or foring part of the land+ which are agreed
230
to be severed before sale or under the contract of sale( Eoods should thus be ovable propert!
capable of being bought and sold and capable of being transitted+ transferred+ delivered+ stored
and possessed( .ovable propert! is not being taxed under this categor! and would have to be
exained under the categor! *enting of .ovable ?ropert! service under service tax(
,he ter NtangibleO would have to be seen in light of the eaning assigned b! Bnglish
Dictionar!( 's per *ando 8ouse ;ebster3s Unabridged Dictionar!+ tangible eans capable of
being touched or discernible b! the touch( ,he goods being supplied should be tangible goods i(e(
having ph!sical existence and for+ in order to attract liabilit! under this categor!(
C!n6e5t !" su558, 6!ntr! et6
,he ter Nsuppl!O eans to furnish or provide La person+ establishent or place etcM with what is
lac-ing or requisite( ,he word suppl! need not necessaril! indicate transfer of the right of
possession or effective control over the goods5aterials in question(
,he ter NtransferO eans Nto a-e over the possession or control ofO or Nto conve! or reove
fro one place+ person to anotherO(
,he ter NpossessionO has been defined as Nactual holding or occupanc!+ either with or without
rights of ownershipO(
,he ter NcontrolO has been defined as Nto exercise restraint or direction overI doinate+
regulate+ or coand(O
.n order to a-e a transaction of suppl! of tangible goods not liable under this categor!+ there
should be a transfer of both possession as well as effective control over the said goods+ to the
user( ,he presuption here sees to be that %',5sales tax is levied in cases where both right of
possession as well as effective control over the goods is transferred to the user( ,he ris- and
reward of ownership would lie with the person who enjo!s the possession(
C!n6e5t !" deemed sae
.n this regard+ it would be interesting to go through 'rticle 3AAL2"'M of the $onstitution of .ndia
as well as the decision of the Supree $ourt in =harat Sanchar /iga >td and 'nother %s Union
of .ndia and )thers L200A7,.)>71@7S$7$,7>=M wherein the concept of sale+ deeed sale and the
powers of the states to lev! sales tax on deeed sales had been discussed in detail in light of the
#A
th
aendent to our $onstitution( 'rticle 3AAL2"'M after the said aendent+ goes thus Ntax
on the sale or purchase of goodsO includes
231
a tax on the transfer+ otherwise than in pursuance of a contract+ of propert! in an! goods
for cash+ deferred pa!ent or other valuable considerationI
a tax on the transfer of propert! in goods Lwhether as goods or in soe other forM
involved in the execution of a wor-s contractI
a tax on the deliver! of goods on hire7purchase or an! s!ste of pa!ent b!
installentsI
a tax on the transfer of the right to use an! goods for an! purpose Lwhether or not for a
specified periodM for cash+ deferred pa!ent or other valuable considerationI
a tax on the suppl! of goods b! an! unincorporated association or bod! of person to a
eber thereof for cash+ deferred pa!ent or other valuable considerationI
a tax on the suppl!+ b! wa! of or as part of an! service or in an! other anner
whatsoever+ of goods+ being food or an! other article for huan consuption or an!
drin- Lwhether or not intoxicatingM+ where such suppl! or service+ is for cash+ deferred
pa!ent or other valuable considerationI
and such transfer+ deliver! or suppl! of an! goods shall be deeed to be a sale of those goods b!
the person a-ing the transfer+ deliver! or suppl! and a purchase of those goods b! the person to
who such transfer+ deliver! or suppl! is ade(
,he Supree $ourt in the aforesaid case L=S/> %s U).M had reiterated that the sale eleent in
those contracts not falling under the aforesaid six clauses would be taxed depending on the
substance of the contract Li(e( appl!ing doinant nature testM( 8ere+ the intention of the parties
entering into the particular transaction of sale would be iportant( 8owever+ in cases where the
contract falls under an! of the six categories specified above under 'rticle 3AAL2"'M of the
$onstitution of .ndia+ the doinant nature test need not appl! and the sale eleent of those
contracts can be subjected to sales tax b! the concerned state even if one or ore of the
ingredients for sale as specified b! Section # of Sale of Eoods 'ct 1"30 are absent( ,hus one
would have to exaine the nature of transactions that one intends to bring under this categor! of
service as the sae would also have to be seen fro the sales tax5%', angle to -now the overall
liabilit! for the assessee(
,he departental letter tal-s about certain cases where both+ right as to possession and effective
control a! not be transferred to the user( ,hese could cover the present practice of hiring of
232
excavators+ wheel loaders+ dup truc-s+ crawler carriers+ copaction equipent+ cranes+ offshore
construction vessels and barges+ geotechnical vessels+ tug and barge flotillas+ rigs+ airplanes and
high value achineries( ,here a! however+ be cases where hiring of equipent involves
exercising of control over such equipent albeit teporaril!+ b! the user without ph!sicall!
operating the sae( .n such a scenario+ the transaction would be liable under service tax( 8ere+
there is a danger of the transaction inviting scrutin! of the >%) as well(
'ssessees a! here note that transfer of right to use goods for an! purpose falls under clause LdM
of 'rticle 3AAL2"'M of $onstitution of .ndia which can be subjected to sales tax b! the concerned
states as a deeed sale( 8ere+ the right in question is legal right to use goods( 's discussed in
=S/> %s U). case+ to constitute a transaction for the transfer of the right to use the goods the
transaction ust have the following attributes
,here ust be goods available for deliver!
,here ust be consensus ad idem as to the identit! of the goods
,he transferee should have a legal right to use the goods consequentl! all legal
consequences of such use including an! perissions or licenses required therefore should
be available to the transferee
&or the period during which the transferee has such legal right+ it has to be to the
exclusion of the transferor
8aving transferred the right to use the goods during the period for which it is to be
transferred+ the owner cannot again transfer the sae rights to others
;here the aforesaid criteria are satisfied in a transaction+ the sae would fall under clause LdM of
'rticle 3AAL2"'M of $onstitution of .ndia and would attract sales tax( ;hen the transaction is
subject to sales tax+ the sae cannot be subject to service tax( Bven where the transaction is one
of hiring+ the question of lev!ing sales tax5%', would arise where full possession and control is
given to the hirer5user as per the decision rendered in *ashtri!a .spat /iga %s State of 'ndhra
?radesh L20027,.)>7@A07S$7$,M(
E7em5ti!ns
,he suppl! of goods carriage to a Eoods ,ransport 'genc! for carriage of goods b! road liable
under E,' service+ without transferring the right as to possession and effective control+ has been
exepted under notification 15200" S,( ,he usage of the vehicle should be b! the said E,'(
233
2ene"its N Cenvat Credits
,he service provider is entitled to clai cenvat credits on the input services used for providing
such taxable service+ in the opinion of the authors( .nput services could be in the nature of
anpower recruitent and suppl! services+ authoriGed service station services+ securit! services
etc( ,he credit of excise dut! on capital goods would also be adissible where the equipents are
procured b! the assessee5service provider fro a anufacturer or a dealer registered under
$entral Bxcise and then supplied to the user( 8owever+ the goods in question should not fall under
the categor! of otor vehicles as credit would not be available on the( $redits would also be
adissible in ters of the excise dut! on the spares(
%hether the L!rries !:ned b8 mine !:ners4 *T# :!ud be eigibe t! avai 6a5ita g!!ds
6redit !n su6h !rriesA
's the definition of capital goods under $envat credit rules+ provides eligibilit! of credit with
respect to otor vehicles onl! for specified services+ wherein such specified service include Site
foration service and ining services+ therefore the said credits would be adissible with respect
to capital goods credits on such lorries(
.n case of .ndian /ational Ship7owners 'ssociation %s U). 200" L1#M S,* 20" L8$ =oM+ had
held that+ when vessel was given on tie charter basis without parting the right of possession and
effective control+ wherein such vessel was used either pre7ining or post ining+ such activit!
would not be construed as service in relation to ining+ but would be considered as service of
suppl! of tangible goods service and the sae was taxable onl! fro 1A(0@(2000 and not prior to
1A(0@(2000(
C!nstru6ti!n !" 6!m5e7es
Section A@L"1aM defines Nresidential coplexO to ean an! coplex coprising of 7
LaM ' building or buildings+ having ore than 12 residential unitsI
LbM ' coon areaI and
LcM 'n! one or ore of facilities or services such as par-+ lift+ par-ing space+ counit!
hall+ coon water suppl! or effluent treatent s!ste+ located within a preises and
the la!out of such preises is approved b! an authorit! under an! law for the tie being
in force+
23#
but does not include a coplex which is constructed b! a person directl! engaging an! other
person for designing or planning of the la!out+ and the construction of such coplex is
intended for 5ers!na use as residence b! such person(
&urther an explanation is added to the construction of coplex service definition vide the
&inance =ill+ 2010 in section A@L10@MLGGGhM which states that where the coplex is intended
for sale+ wholl! or partl!+ then an! su received fro the prospective bu!er b! the builder+
before+ during or after constructionI before the grant of the copletion certificate b! the
copetent authorit! would be deeed to be service provided and hence taxable(
.t a! be pointed out that in a recent judgeent passed b! the :ubai 8igh $ourt in the
case of :aharashtra $haber of 8ousing .ndustr! and )thers vs( Union of .ndia 10127,.)>7
4078$7:u7S,2 has upheld the $onstitutional validit! of lev! of service tax+ under clauses
LGGGhM and LGGGGuM of section A@+ on construction services provided b! a builder( ,he fact that
the activit! in question is an activit! which is rendered on land does not a-e the tax a taxon
land((
,here are two explanations to this clause which are as follows
LaM Npersonal useO includes peritting the coplex for use as residence b! another person on
rent or without considerationI
LbM Nresidential unitO eans a single house or a single apartent intended for use as a place
of residence
,hus+ in order to be regarded as a residential coplex+ a coplex should have ore than 12
residential units( ;here this condition is not satisfied+ there cannot be a liabilit! under this
heading( *eaders a! note that the definition of Nresidential coplexO given above would hold
good even under wor-s contract categor!( ,hus where the service of construction of coplex is
involved with transfer of propert! in goods during such execution+ the said coplex is required to
have ore than 12 residential units in the absence of which+ the said service would not be liable
even under wor-s contract service(
,he ter NcoplexO has not been defined and if one refers *ando 8ouse ;ebster3s Unabridged
Dictionar!+ NcoplexO has been defined to be coposing of an! interconnected parts(
Servi6e 5r!vider'servi6e re6eiver reati!nshi5
23@
$ircular /o( "A5452004 S, dated 23(00(2004 tal-s about the iportance of service provider and
service receiver relationship existing in order to attract liabilit! under service tax( ,his circular
clears doubts about liabilit! when the builder5developer hiself constructs the residential
coplex( ;hen the construction wor- is not ta-en up b! another contractor and the
builder5developer5prooter hiself underta-es the sae+ there is no service provider7service
receiver relationship and the services are in the nature of self suppl! and hence not liable to
service tax(
%hether sub'6!ntra6t!r iabeA
,he aforesaid circular also clarifies the liabilit! of the sub7contractor who provides taxable
service in relation to construction of residential coplex Li(e( coplex having ore than 12
residential unitsM( ;here the builder5developer5prooter appoints a contractor for carr!ing out the
construction wor-+ such contractor would be liable to service tax( ,he liabilit! would be on the
gross aount for the taxable service( ,he circular also goes on to clarif! that wherever a portion
of the wor- is sub7contracted and the sub7contractor provides taxable service+ he would be liable
to pa! service tax(
.n :agus $onstruction ?vt( >td( %s U). L2000 L11M S,* 22@ LEau(MM+ the 8igh $ourt held that
where the flats5preises were constructed and then transferred to the bu!ers5custoers under a
sale agreeent on copletion of construction and the agreeents had been relied on b! the
registering authorities and stap dut! levied on the basis of such agreeent+ the transaction was
one of sale and not service and hence service tax could not be levied( ,his position had also been
aintained earlier b! the 'llahabad 8igh $ourt in 'ssotech realt! ?vt( >td %s State of U? L2004
L04M S,* 12" L'llMM( 8owever as the concept of deeed service was upheld+ then views
expressed in :agus $onstruction ?vt >td and 'ssotech *ealt! ?vt >td would not hold good(
Cir6uar /.K4.-4-..@ ST -@=./=-..@
,his circular discusses the liabilit! where the flats5properties are transferred b! the
builders5prooters5developers after copletion of construction b! the and transfer is b!
executing a sale deed after receipt of full pa!ent( ;here the propert! is so transferred+ there
would not be service tax liabilit!(
8owever+ if the construction wor- is underta-en b! another contractor hired b! the builder 5
prooter 5 developer+ then such contractor would be liable to service tax as the service provider7
23A
service receiver relationship would coe into pla!( ,his has also been indicated b! the circular
"A5452004 S, stated earlier(
An!t%er aspect $%ic% %as 2een clari+ied 2y t%e circular is $it% re)ard t! lia2ility $%ere t%e
c!nstructi!n plannin) and desi)n are underta=en 2y t%e 2uilder !r pr!m!ter !r devel!per in
pursuance !+ a c!ntract $it% t%e ultimate !$ners #2ein) t%e +lat !$nerBresidents&. In suc% a
scenari! t%e service ta* lia2ility $!uld n!t arise $%ere t%e pr!perty is intended +!r pers!nal use
!+ t%e ultimate !$ner. T%is is an imp!rtant clari+icati!n as t%e 2uilderB +lat !$ners can n!$
e*amine t%e !pti!n !+ re+und $%ere service ta* %ad 2een c!llected +r!m t%em.
;here however+ a contractor is hired for construction b! the developer5builder+ the position for
the contractor would be the sae as explained earlier i(e( the contractor would be liable to service
tax(
E7em5ti!n
'ssessees who are liable under this heading would be entitled to the benefit of notification 15200A
S, dated 01(03(200A which exepts taxable service of the value of A4J of the gross aount
charged fro service tax( .n other words+ service tax would be pa!able on 33J of the gross
aount( ,he assessee would have to -eep couple of points in ind
1( ,his exeption is not available in respect of copletion and finishing services alone
being provided
2( ,he gross aount shall have to include the value of aterials and goods transferred
during construction as well
3( ,he service provider would not be entitled to benefit of $envat credits on inputs+ input
services and capital goods used for the said service as well as benefit of notification
1252003 S,
'ssessees are also advised to be careful while opting for the benefit of this notification where the
contract involves transfer of propert! in goods which are of high value( .n such circustances+
the assessee would lose out on the credits of excise duties on construction aterials as the benefit
of credits can be claied onl! when the service provider pa!s service tax at the noral rate i(e(
10(3J( ,his can at ties prove to be a better option as the excise duties would go towards
reducing the cost of aterials used in construction+ a benefit which can be passed on to the
service receiver(
234
/urt%er /inance 0ill -.11 %as amended $%erein t%e service pr!vider !ptin) +!r a2atement under
n!ti+icati!n 1B-..C needs t! +act!r in t%e a2ated p!rti!n !+ t%e service +!r t%e purp!se !+ rule C
as e*empted service.
What is the distinction between the category of wor:s contract service and this category?
*eaders a! note that there are two categories which virtuall! cover the sae set of activities
though with a difference( ,he wor-s contract categor! covers the activities specified in clauses
LaM+ LbM and LcM in the definition of Nconstruction of coplexO given above within its scope(
8owever+ assessees would have to ensure that the service the! provide is classifiable under the
heading wor-s contract service( ,his can happen where the service in relation to construction of
coplex involves transfer of propert! in goods during its execution( Unless there is transfer of
propert! in goods+ the sae would not be classifiable under wor-s contract(
Whether the buyers of the apart(ent can opt for clai(ing refund of service tax?
Ues+ if the bu!er has borne the incidence of the aount collected as service tax the! can appl! for
the refund( ,he aounts paid for the past 1 !ear as set out in Section 11= would be clearl!
available( 8owever for the period prior to that the atter a! have to be litigated on the
arguent that the aount was not a tax at all as there was no liabilit! under law for the sae(
%hether 6!nstru6ti!n !" r!ad is ta7abe servi6eA
's per circular 11050#5200" S, dated 23(2(200"+ which clarifies that construction of road was not
a taxable service+ however aintenance of road was taxable service+ under anageent
aintenance or repair service Lfor the period upto 200"M 's per the authors view even
aintenance of roads should not be taxed+ as the law specificall! entions services in respect of
road+ airports+ railwa!s+ transport terinals+ bridges+ das and tunnels were not taxable( ;hen
service in respect of road was not taxable+ how can a circular be issued b! $=B$ taxing
aintenance of road( ,herefore the circular was conflicting with the provision of law+ as held b!
8$ of ?98 in case of $$B %s Dr( >al ?ath >ab L?M ltd+ when there is specific entr! for an ite
in the tax code with respect to exeption+ the sae cannot be taxed under an! other entr!( &urther
in case of $$B vs *atan :elting 'nd ;ire industries+ it was held that an! circular which was
issued in contrar! to law are invalid in law(
/pecial /ervice by Huilder
230
,his service intends to cover the charges collected b! the builder fro the prospective bu!er for
providing preferential location or for the developent of residential coplex+ or a coercial
coplex( ,his service does not include the service provided in relation to *epairs+ :anageent
or :aintenance+ coercial or industrial construction+ construction of coplex and in relation to
par-ing place(
Bxplanation defines KKpreferential location to ean to have an! location having extra advantage
which attracts extra pa!ent over and above the basic sale price( ,he definition is ver! wide to
cover the developent of coercial or residential coplex( 8owever the ,*U circular has
clarified that scope of tax under this service to be internal or external developent charges which
are collected for
a( developing5aintaining par-s+
b( la!ing of sewerage and water pipelines+
c( providing access roads and coon lighting etcI
d( fire7fighting installation chargesI
e( power bac- up charges etc
8ence an! aount collected b! the builder in this respect will not get taxed prior to the
introduction of this service(
,*U circular also clarifies Developent charges+ to the extent the! are paid to State Eovernent
or local bodies+ will be would be excluded fro the taxable value lev!+ however the notification
for the sae is not in place as of now(
.t is expected that an! issues on valuation would arise as to what is the preiu for location
part as contract entered at different ties with different persons would be driven b! business
considerations which are difficult to differentiate( Under central excise where such disputes
abounded earlier+ the final decision was that different prices to different person5 sae person at
different ties is valid(
2usiness Au7iiar8 Servi6e
=usiness auxiliar! service is perhaps one of the ost iportant services liable to service tax( ,his
is one categor! which should be noted b! anufacturers under $entral Bxcise as well( ,he
activities liable here would be production+ processing of goods for or on behalf of client+
provision of services on behalf of client+ prooting or ar-eting the service5goods of client+
custoer care service on behalf of client+ procureent of goods or services which are inputs for
the client plus a service incidental or auxiliar! to services covered above( ?roduction or
23"
processing would not cover activities aounting to anufacture of excisable goods+ as per
$entral Bxcise 'ct 1"##(
,hus where one provides services on behalf of another part! or production is done for a client+
the sae would be liable to service tax here( ;ith regard to production or processing of goods
underta-en there is a notification L05200@ S,M which provides an exeption fro service tax
where the goods so processed or produced are used in subsequent anufacturing of dutiable
goods b! the client( ,his would basicall! provide relief to job wor-ers who underta-e processing
of goods+ which does not aount to anufacture as per $entral Bxcise law(
,here has been litigation related to job wor-er availing credits at sae tie ta-ing benefit of
exeption in notification 05200@7S, when principal anufacturer pa!s excise dut! on clearance
of final products( ;hile definitive decision in this regards is awaited erring on side of caution job
wor-er could under protest reverse such credits availed(
:an! of the services provided b! =?) industr! would be falling under this categor! as services
are provided to third parties on behalf of the client(
)ne of the activities liable here is that of procureent of goods and services+ which are inputs for
the client( ,his service has to be distinguished fro the services of a clearing and forwarding
agent( ,he $9& agenc! services also include the services provided b! a consignent agent(
;hile coission agents would be liable under ='S+ consignent agents would be liable under
$9& agent3s services( ;hile both coission agent and consignent agent are agents+ there are
differences between the scope of their activities and their relationship with the principal as well as
their dealings with third parties concerned(
,he coission agent can either act on behalf of the principal in his dealings with third parties or
act in his own nae and deals with goods or services or docuents of title to such goods or
services+ collects pa!ent of sale price of such goods and services+ guarantees for collection of
pa!ent for such goods and services+ underta-es activities in relation to sale or purchase of such
goods or services( ,he scope of consignent agent3s wor- is narrower as copared to that of a
coission agent and a! be restricted to ere handling of goods or ta-ing custod! on a
teporar! basis for facilitating either storage or oveent of goods( ,here a! be cases where a
consignent agent also acts as a coission agent in which case+ the classification would have
to be done -eeping in ind the essential characteristics of the agreeent(
2#0
=usiness 'uxiliar! service provided b! the .ndian /ew agenc! is exepted fro service tax
provided such .ndian /ews 'genc! was exepted fro service tax u5s 10L22=M of .ncoe ,ax
'ct+ and such incoe was not distributed in an! anner to its ebers(
.n case of =lue Star >td %s $$B+ 2000+ L11M S,* 23 L,ri7 =angM had held that+ boo-ing of orders
for foreign principal b! its .ndian counterpart+ on the basis of such order+ the foreign principle
supplies the goods to the custoer in .ndia and .ndian counterpart received coission in
convertible foreign exchange+ was held as service exported in ters of rule 3L2M of Bxport of
Service+ *ules+ 200@( Subsequentl! following sae principal sta! was granted in case of .=:
.ndia L?M >td+ 8owever there also exists a contrar! decision in case of :icrosoft $orpn L.ML?M >td
%s $S, 200" L1@M S,* A00 L,ri7 DelM+ the said decision was also affired b! Delhi 8igh $ourt(
.n 20117,.)>71@007$BS,',7DB> considering the two different views of the :ebers of the
bench of the ,ribunal this atter has now been referred to third eber b! $BS,', to deterine
whether Service provided to ?rincipal situated in Singapore to ar-et products in .ndia is Bxport
of service or service provided in .ndia( Since the issue is pending+ we a! have to wait for a final
decision for &./'> clarit! to eerge in this regards(
Su55!rt servi6es !" business !r 6!mmer6e
,he ter NbusinessO has not been defined for the purposes of this clause and one would have to
go b! the eaning assigned b! a standard dictionar!( 's per *ando 8ouse ;ebsterYs Dictionar!+
the ter NbusinessO eans an occupation+ profession or trade( N$oerceO has been defined as
an interchange of goods or coodities between different countries or between areas of the sae
countr!( ,hus in order to render the service provided liable to service tax as a taxable service
under this clause+ the service should be one which supports the service receiverYs business or
coerce( ;here the service cannot be related to his business or coerce+ the service
provided+ in our view+ cannot be brought under this heading(
&or the purposes of this clause+ Ninfrastructural support servicesO includes providing office along
with office utilities+ lounge+ reception with copetent personnel to handle essages+ secretarial
services+ internet and teleco facilities+ pantr! and securit!( ,he ter NinfrastructureO has been
defined b! *ando 8ouse ;ebsterYs Dictionar! as the basic underl!ing fraewor- or features of
a s!ste or organisation(
/inance 0ill -.11 %as replaced t%e $!rds !perati!nal assistance +!r mar=etin) $it% !perati!nal
!r administrative assistance in any manner.
2#1
5ere !perati!nal !r administrative assistance $!uld c!ver all supp!rt activates +!r !t%ers !n a
c!ntract !r +ee t%at are !n)!in) 2usiness supp!rt +uncti!n t%at t%e 2usiness !r !r)ani;ati!n
c!mm!nly d! +!r t%emselves 2ut s!metimes +ind it ec!n!mical t! !uts!urce.
H-/ ,s H//
'ssessees should note the distinction between the two categories being discussed here( $opared
to the =usiness Support Service categor!+ the categor! of =usiness 'uxiliar! Service is ore
specific see-ing to tax specified activities5services( ,here can be confusion at ties where the
services provided are those such as billing+ issue or collection or recover! of cheques+ pa!ents
or aintenance of accounts and reittance+ inventor! anageent+ evaluation or developent of
prospective custoer or vendor+ public relations service+ anageent or supervision as these too
are services in relation to business or coerce( =ut one essential difference between the two
categories being discussed here is that while business support service see-s to tax outsourced
service in relation to business or coerce+ business auxiliar! service would appl! to those
services which are incidental or auxiliary to services of prootion or ar-eting of goods or
service provided b! client+ custoer care service provided on behalf of the client+ procureent of
goods or services which are inputs for the client+ production or processing of goods for or on
behalf of the client or provision of service on behalf of the client(
)ne should also see whether services are provided to a client or on behalf of the client to a third
part!( ;here the services covered here are provided on behalf of the client to a third part!+ the
sae would be liable under business auxiliar! service as services provided on behalf of the client(
H// ,s &enting of )((ovable property service
=usiness Support Service also includes infrastructural support services within its purview( 't the
sae tie assessees should note the presence of another service categor! and that is renting of
iovable propert! service which was aended recentl! to include the service of letting out
space teporaril!( ;here space is let out teporaril! without transferring the right as to
ownership and control over such space to the service receiver+ the sae would be liable under the
categor! renting of iovable propert!( /ow a situation can arise sa!+ where space is provided in
an office to an entit! to either set up its counter for prooting its business5service or even a help
des- to assist the eplo!ees of the organisation( .n such a scenario one would have to scan the
agreeent if it is available+ to understand the exact nature of service involved( .n order to tax the
service under =SS+ the setting up of the counter or help des- should qualif! as a service which
would support or supports the organisationYs business or coerce( Soeties answering this
2#2
question could prove to be tric-! where the service a! not support the organisationYs business
directl! though it a! help its eplo!ees as in case of the help des- entioned above(
,he possible wa! to distinguish between =SS and renting of iovable propert! service is that+
when a portion of space in office along with personnel is provided along with infrastructure
support for a consolidated aount would fall within the preview of =SS( .n case were erel!
space was provided+ ;here the tenant hiself installs infrastructure facilit! li-e telephone
connection+ internet etc would fall within the purview of renting of iovable propert! service(
H// ,s Consulting *ngineer /ervice ,s Husiness I Janage(ent Consultancy
Soeties advice as well as services which support service receiverYs business+ a! be provided
b! the service provider( .n such cases+ the service agreeents would have to be reviewed to see
whether the service is reall! a coposite one or the services involved can be identified separatel!(
.n case of coposite services+ the service would be classified on the basis of the service which
gives it the essential character( 8ere it would be worthwhile to note the circustances under
which advice+ consultanc! or technical assistance can fall under consulting engineerYs categor!(
Such advice+ consultanc! or technical assistance should be provided b! a consulting engineer i(e(
professionall! qualified engineer or a bod! corporate or fir providing such service+ in one or
ore disciplines of engineering(
Soeties we a! also have a scenario where advice in relation to anageent is given b! the
service provider( .n that case+ we would have to loo- at another taxable service nael!+
anageent or business consultantYs service( )nce again in case of coposite service involving
advice as well as services supporting business+ the classification would have to be on the basis of
the service which gives the sae its essential character( 8ere one would have to distinguish
between services in relation to anageent and those which erel! support the business(
Services which enable the service receiver to effectivel! anage or organise his business can be
said to fall under anageent or business consultantYs service(
H// ,s Jailing List co(pilation and Jailing /ervices
'ssessees should note that where the services are provided in relation to ailing list copilation
and ailing+ the said service would have to be seen in light of the taxable service of ailing list
copilation and ailing service( &or this+ the assessee would have to anal!se whether the service
is one of pure ailing or whether it is part of a larger bouquet of services( .n case of the latter+ the
classification would have to be done as explained earlier i(e( using the essential character test(
;here the service is onl! in relation to copiling and providing list of nae and address and an!
2#3
other inforation fro an! source or erel! sending docuent+ inforation+ goods or an! other
aterial in a pac-et b! whatever nae called+ b! addressing+ stuffing+ sealing+ etering or
ailing+ the sae would be classifiable under ailing list copilation and ailing service(
H// ,s 4evelop(ent and /upply of Content
,he activit! of telear-eting i(e( selling or advertising over telephone would be liable under =SS(
8owever there can be a scenario where a service provider develops the content for such
advertising and then ta-es up the activit! of telear-eting as well( ;hen the essential character
of the service or arrangeent is one of telear-eting+ the sae would be liable under =SS in our
view( =ut where the service is essentiall! one of developent and suppl! of content+ the sae
would have to be seen under another heading( Services in relation to developent and suppl! of
content for use in telecounication services+ advertising agenc! services and on7line
inforation and database access or retrieval services would be taxed under the separate heading
developent and suppl! of content service(
H// ,s Janpower &ecruit(ent or /upply agencyKs service
'nother aspect which erits attention is the anner in which support services of business or
coerce are obtained( ,he anal!sis of Service level 'greeents along with the Stateent of
;or- L for exaining what are the deliverablesM in ost of the cases where processes are
outsourced+ would assue significance as there have been cases where the agreeents were
essentiall! for suppl! of anpower though the activities underta-en were intended to support the
service receiverYs business( ;here the agreeent is one for suppl! of anpower where the
personnel continue to be the service providerYs eplo!ees but wor- on support services to service
receiverYs business under receivers supervision would be liable under anpower recruitent or
suppl! agenc!Ys service( .n this case the service is erel! of suppl!ing people with the requisite
s-ill 5 qualifications( Such suppl! a! be teporar! or otherwise( ,his would have soe
iplications as anpower recruitent or suppl! agenc!Ys services has been in existence for quite
soetie now though =SS was introduced onl! with effect fro 01(0@(0A(
H// ,s Gn8line infor(ation and 4atabase -ccess andBor &etrieval service
Support services of business or coerce a! also involve usage of coputer networ- b! the
service provider+ for the purpose of sending5receiving inforation to5fro the service receiver( 's
per the views of the paper writers+ one would have to see whether such usage of coputer
networ- is onl! incidental to carr!ing out the support services for business or coerce( ,his
2##
would have to be evident fro a reading of the agreeent( ;here the ain intention is to carr!
out the activities laid down under this categor!+ it should be possible to hold the service provided
as liable under business support service though revenue a! tr! to classif! the sae under on7
line inforation and data base access or retrieval service(
Sae !" g!!ds
Service providers a! at ties end up transferring propert! in goods during the course of
providing taxable service( ;here this happens+ the benefit of notification 1252003 S, which
provides an abateent for the value of goods and aterials sold+ can be availed b! the service
provider where he charges %',5$S, on the value such goods sold(
.n S* 6al!ana-rishnan 9 Sree 6rishna :andira %s $$B $ochin L20047,.)>71"1#7$BS,',7
=angM+ the service of verification of correctness+ fairness and authenticit! of inforation
furnished b! those see-ing loan fro .$.$. ban- was distinguished fro activit! of prooting
the clientYs business and held to be liable under =usiness Support Service and taxable fro
01(0@(0A and not under =usiness 'uxiliar! Service and therefore not taxed for the service
provided prior to 01(0@(0A
.n Jaded Siddappa 9 $o %s $$B :angalore L2004 L0"M >$P 0201 ,ri7=angM+ the activit! of
outsourcing of eter reading+ billing and ledger posting was held not to fall within the abit of
professional activit! of $hartered 'ccountants and was held to be classifiable under business
support service( ,hus+ in other words+ just because support services happen to be provided b!
professionals+ the sae would not be assessable as a professional service unless the professional
is reall! called upon to bring in his professional expertise in carr!ing out or perforing the
service(
.n case of 'garwal $olour 'dvance ?hoto S!ste %s $$B 2010 L1"M S,* 101 L,ri7DelM+ it was
held that when the contract was for provision of service+ divisibilit! of service and goods
coponent unwarranted+ as the contract was not for sale of goods but used for provision of
service+ therefore the deduction towards aterial under notification 1252003 was not
unwarranted( &urther it was held that the judgent in case of Shilpi $olor >abs was required to
be re7considered( ,herefore the said atter was referred to larger bench for re7consideration(
$nteri!r de6!rat!r
.t a! be seen fro the definitions that the interior decorator a! be an! person including an
individual and need not be a fir5corporate assessee( ,he interior decorator should be providing
the services of planning+ designing or beautification of spaces and this service a! be b! wa! of
2#@
advice+ consultanc!+ technical assistance or a! also be provided in an! other anner( >andscape
designers have also been ade liable under this categor! even though the services the! render is
generall! outdoor in nature(
.n order to tax the service under this head+ the presence of advice+ consultanc! or technical
assistance is a requireent and in the absence of these requireents+ the liabilit! cannot be under
this head( .n this regard+ the advisor! function as is covered here should be distinguished fro the
function of execution( ;here an assessee executes the tas- of beautification of spaces or
landscaping on the basis of the advice of a consultant+ he would not be liable and the liabilit!
would be on the consultant for providing such advice(
>%et%er Vaastu B /en) S%ui c!nsultants lia2leH
,hese consultants norall! offer advisor! services in relation to planning+ designing or
beautification of spaces and therefore would be liable under this categor!(
>%et%er su2 c!ntract!r lia2leH
Ues( ?ost 23(00(04+ even sub contractors are required to pa! the service tax and the principal is to
avail the credit at his option+ on the service tax paid(
Value +!r service ta*
,he interior decorator a! wherever possible+ tr! to bifurcate the contract into one of advice and
one of suppl! and execution5suppl! of aterials( ,his would enable hi to identif! the charges
towards advice which can then be taxed under the interior decorator categor! with suppl! of
aterials suffering %',5$S, as this would reduce the scope for litigation( ,he interior decorator
in such a case would be entitled to benefit of notification 1252003 S, with regard to sale of
aterials subject to pa!ent of %',5$S,(
Renting !" 6abs
,he service provider a! be an! person engaged in renting of otor cab+ axi cab or otor
vehicle as put down in the definition explained above( ,hus even an individual would be liable if
he is engaged in renting of cabs( 's per the clarification given b! the $hief $oissioner of
$entral Bxcise $oibatore+ rent a cab does not cover etered taxis or radio taxis used for
transportation fro one place to another+ as the! are not rented as such for a period of tie(
.t is worthwhile to note here that the definition of rent a cab operator had been aended in 1""0
and till such tie the lev! was onl! on a person who held a license under the *ent a cab schee
1"0" fraed b! the central governent under :otor %ehicles 'ct 1"00( $onsequentl!+ persons
having a iniu of @0 cabs alone were taxed as such persons alone were given licenses(
2#A
;ith effect fro 01(0A(04 the clause relating to otor vehicles carr!ing ore than twelve persons
was inserted to expand the scope of lev! under this categor!( 't the sae tie+ a relaxation has
been introduced b! wa! of exclusion of renting of axi cabs and otor vehicles b! an
educational bod!( Bducational bod! for this purpose shall not include coercial training or
coaching center( ,hus with effect fro 01(0A(04 while renting out of otor vehicles other than
otor cabs and axi cabs would be liable+ renting of axi cabs and otor vehicles Ldesigned to
carr! ore than twelve passengers excluding the driverM b! educational bodies would be exept(
O$ners%ip !+ ve%icles n!t t%e criteria +!r c%ar)in) service ta*
's decided in ,ransport Solution Eroup %s( $$B :ubai LL200AM 1 S,* L30"M ,rS:ubaiM
case+ the service provider would be liable even if he does not own the otor vehicles( 8owever
where he does not own the otor vehicles+ credit on such vehicles as capital goods ight not be
available as the definition of capital goods under $envat $redit *ules 200# requires vehicles to
be registered in the nae of the service provider(
>%et%er transp!rt !+ empl!yees +r!m !++ice is lia2le !r is t! 2e distin)uis%edH
.t is interesting to note that the decisions given b! the ,ribunals have led to considerable
confusion in this regard( .n Shiva ,ravels %s( $$B+ :eerut case LL200AM L#M S,* L@00M L,ri7
DelMM+ the assessee was held liable even though he tried to argue that the possession of the vehicle
had not been transferred to the client and that his own driver was in control of the vehicle5cab(
,his decision was also followed in Sonia ,ravels %s( $$B Jaipur+ case(
8owever in 6uldip Singh Eill %s( $$B+ Jalandhar LL200AM L3M S,* A0" L,ri7DelMM case+ the
,ribunal sought to distinguish between renting of cabs and hiring of cabs for transportation under
a contract where the vehicles were not leased to the client for use at his discretion( .n this case+
onl! renting of cabs was held liable and not all anner of transport or vehicle hire services( 's
per the discussion held under this case+ where the vehicles are not rented or leased for use b! the
client at his discretion+ service tax need not be levied( ,he sae stance was also adopted b! the
'hedabad ,ribunal in Dharabha-ti ,ravels %s( $$B+ *aj-ot case(
.n Sur!a ,ours and ,ravels %s $$B Jaipur .. L20007,.)>7203@7$BS,',7DB>M+ the activit! of
providing a cab on hire on per7-iloeter basis b! providing driver and retaining control of
vehicle+ was held not to be liable to service tax(
:ere hiring of cabs could be liable under suppl! of tangible goods for use service+ and that too+ if
one were to strictl! follow the said categor! without question the lev!(
,eaders are als! advised t! re+er c%apter !n e*empti!ns +!r t%e e*empti!ns !n t%is cate)!ry.
2#4
T!ur !5erat!rFs servi6e
,he service provider is required to be a tour operator( ;here the service provider holds a tourist
perit granted under the :otor %ehicles 'ct 1"00+ he shall autoaticall! be covered under the
definition of tour operator( )ne a! note that the earlier definition of tour operator had been
aended in 200# to expand the scope of the categor! b! including transport b! an! ode as
being liable rather than the earlier concept of operating tours in a tourist vehicle Las per :otor
%ehicles 'ct 1"00M alone being liable(
;hat is liable is not just pac-age tour but even ere boo-ing or arranging of accoodation b!
the tour operator as well as other services provided in relation to a tour b! the tour operator(
Services provided in relation to tours abroad would not be taxed and in case of coposite tours
one would have to refer Bxport of Service *ules 200@ to find out whether the sae would aount
to export of service( ,he liabilit! extends to contract carriage as well(
,he concept of NtourO does not include a journe! organiGed or arranged for use b! an educational
bod!+ other than a coercial training or coaching centre+ iparting s-ill or -nowledge or
lessons on an! subject or field(
>%et%er t!ur in a ve%icle %avin) sta)e carria)e permit is lia2leH
,he definition with effect fro 1A(0@(00 does not cover transport under stage carriage perit and
therefore the sae would not be liable( ,ransport under contract carriage would be liable
provided the operator engages in planning+ scheduling+ organiGing or arranging tours(
.n ,ail /adu State ,ransport $orporation >td %s $$B ,rich! L200"7,.)>7A237$BS,',7:adM+
the activit! of deplo!ing the ,ail /adu State ,ransport $orporation buses to transport
eplo!ees of =8B> fro various points was held not to be liable to service tax under this
categor!(
>%et%er services in relati!n t! c!mp!site '!urneys $%ere part !+ travel is a2r!ad and part !+ it is
in India 2e lia2leH
.f one goes through circular "A5A52004 dated 23(00(04 issued b! the departent+ the gross aount
would be liable where the ultiate destination is outside .ndia or it is a round the world trip and
one lup su aount is charged( ,his was in context of travel b! air for international journe!
,eaders s%!uld als! re+er t%e c%apter !n e*empti!ns +!r e*empti!ns under t%is cate)!ry.
%hen a t!ur !5erat!r dire6t8 b!!k 6ruise 5a6kage !utside $ndia, :hat is the im5i6ati!n !"
servi6e ta7A
2#0
's the said service was provided in relation to outbound tours+ it would be covered under tour
operator service( 8owever if the conditions pertaining to export of service rules are dul!
coplied with+ the sae would treated as export of services and not be liable to service tax(
%hen a t!ur !5erat!r d!es a h!te b!!king, via an intermediar8, :hat is the im5i6ati!n !"
servi6e ta7 A
,he aforesaid activit! would enable the custoers boo- hotel roos in .ndia+ and the sae would
be covered under the categor! of tour operator service+ the service provider would get an
abateent of "0J fro gross aount+ and wherein the service provider also provides service of
accoodation+ the value should also include the cost of such accoodation(
C!mmer6ia training !r 6!a6hing
' review of the definitions would reveal that an! institute or establishent iparting s-ill or
-nowledge or lessons on an! subject other than sports would be liable( ,he service in relation to
coercial training or coaching a! be provided to an! person( =ut where the said institute or
establishent issues an! certificate or diploa or degree or an! educational qualification whether
or not recogniGed b! law+ there would be liabilit! under this categor! on such coaching5training(
8ere+ readers should note that where the institute or establishent issues a degree or diploa or
certificate or educational qualification whether or not recogniGed b! law+ the said institute or
establishent would be regarded as a coercial training or coaching centre and therefore even
other coaching services li-e preparation of candidates for entrance exas or copetitive exas
would be liable to service tax(( ?reschool coaching is not taxable(
,hus where the taxabilit! is to be exained under this heading+ one should first of all ascertain
whether the service provider can be regarded as a coercial training or coaching centre at all(
%ide the &inance =ill+ 2010 an explanation was added+ with effect fro 01(04(2003+ that a
coercial training or coaching centre shall include an! training centre or institute whether
registered as a trust or societ! or not and whether having profit otive or not( 8ence now
exclusion cannot be claied b! non7profit organiGations( ;here the service provider cannot be
regarded as a coercial training or coaching centre+ the service provided cannot be held to be
liable under this categor!( .n this regard+ the eaning of the ters NestablishentO and NinstituteO
would have to be studied( ,hese ters have not been defined under service tax but if one were to
refer *ando 8ouse ;ebster3s Dictionar!+ the following would eerge
2#"
NBstablishentO can ean a peranent civil+ ilitar! or other force or organisation( N.nstituteO in
this context+ eans a societ! or organisation for carr!ing on a particular wor-+ as of a literar!+
scientific or educational character( So+ unless the service provider can be regarded as being an
establishent or institute+ there cannot be a liabilit! under this heading(
/ervices provided in relation to co((ercial training or coaching by a vocational training
institute or a recreational training institute
,he services in relation to coercial training or coaching provided b! a vocational training
institute or a recreational training institute to an! person+ has been exepted fro service tax
vide /otification 2#5200# S, dated 10(0"(200#( &or this purpose+ Nvocational training instituteO
eans a coercial training or coaching centre which provides vocational training or coaching
that ipart s-ills to enable the trainee to see- eplo!ent or underta-e self7eplo!ent+ directl!
after such training or coaching( ' Nrecreational training instituteO eans a coercial training or
coaching centre which provides training or coaching relating to recreational activities such as dance+
singing+ artial arts or hobbies(
Services pr!vided 2y a c!mmercial trainin) !r c!ac%in) centre t! an institute !r esta2lis%ment
leadin) t! issue !+ de)ree !r certi+icate !r educati!nal <uali+icati!n $%et%er !r n!t rec!)ni;ed
rec!)ni;ed 2y la$
,he services in relation to coercial training or coaching provided b! the coercial training
or coaching centre would be exept fro service tax where the sae fors an essential part of
the curriculu or course of the other institute or establishent leading to an issue of degree or
certificate or diploa or educational qualification recogniGed b! law for the tie being in force(
,his exeption has been in force fro 01(04(2003 under /otification 1052003 S, dated
20(0A(2003(
Services in relati!n t! c!mmercial trainin) !r c!ac%in) pr!vided 2y a c!mputer trainin) institute
/otification 1"5200@ S, dated 04(0A(200@ was issued b! the Eovernent which specificall!
excludes services in relation to coercial training or coaching provided b! a coputer training
institute+ fro the purview of exeption notification 2#5200# S,( .n other words where a
coputer training institute provides vocational training+ the sae would not be exept fro
service tax( ,hough this aendent was ade in 200@+ the services referred to here+ enjo!ed
specific exeption under notification "52003 dated 20(0A(03 whose validit! had been extended up
2@0
to 30(0A(200#( &or this purpose+ the Ncoputer training instituteO was defined to be a coercial
training or coaching centre which provides coaching or training relating to coputer software or
hardware(
Whether the service of pre8screening of candidates and conducting assess(ent tests in order to
ad(it the( to specific courses, is liable under this category?
/o( ,his activit! cannot be liable under this heading where no s-ill or -nowledge transfer is
involved( ,he activit! would have to be seen under the heading :anpower recruitent or suppl!
agenc!3s services where once again the sae would not be liable as the service is not in relation
to recruitent5suppl!(
Whether the co(puter training provided to clients now would be taxable?
Ues( ,he exeption on vocational training under notification 2#5200# S, was revo-ed in 200@
with regard to training provided b! a coputer training institute( ,herefore+ coputer training
Lwhether in relation to software or hardwareM provided now would be taxable even if the sae is
to enable the client to ta-e up eplo!ent or to engage hiself in self7eplo!ent(
Whether higher education is to be distinguished fro( co((ercial training and coaching as
defined under 0inance -ct?
,he decision given in Ereat >a-es .nstitute case has also been followed in :agnus Societ! %s
$o( )f $ustos+ Service ,ax and $entral Bxcise 8!derabad L20007,.)>710127$BS,',7
=angM where the ,ribunal went one step further to distinguish higher education Lli-e :=' and
:anageent in $oputer Science or other disciplinesM fro coercial training and coaching as
defined under &inance 'ct as higher education was far ore coprehensive as copared to
training in particular s-ill( 8igher education could include coaching and training but vice7versa
was not possible( =ut whether this view would prevail in the long run is soething that would
have to be seen in due course of tie(
Whether co((ercial training or coaching institutes which prepare applicants for Hoard
*xa(s or co(petitive exa(s or entrance exa(s etc are liable to service tax?
Ues( ,his atter had been specificall! clarified b! $ircular @"5052003 S, dated 20(0A(2003 which
held the said service of preparing applicants for copetitive exas+ liable to service tax(
'ostal coaching
2@1
Bven postal coaching i(e( distance education where coaching is done b! sending across aterials
to the candidates would be liable to service tax( ,he service provider would however have to
exaine the option of availing the benefit of /otification 1252003 S, in respect of the value of
the goods and aterials sold to the service receiver( $ircular @"5052003 S, clarifies that where the
service provider sells standard text boo-s which are priced+ the sae can be excluded for the
purpose of charging service tax( ,he value being charged for sale of boo-s should be separatel!
identifiable( *eaders a! however note that the ,ribunal had granted a sta! on recover! of
service tax in $hate $oaching $lasses L?M >td %s $$B 'urangabad L2000 L0"M S,* 204 L,ri7
:uMM where the departent had sought to den! benefit of notification 1252003 S, where the
boo-s sold were not standard text boo-s( ,he ,ribunal held that the circular cannot whittle down
the effect of a notification( ,he assessee would however do well to wait for soe ore clarit! in
this regard if benefit is to be claied without an! hassles(
Circular $"BB#$$; /. dated #9!$!#$$;
,his $ircular see-s to clarif! an! of the doubts that have arisen with regard to taxabilit! of
coercial training or coaching services under his categor!( ,he following aspects have been
clarified
O2'ective !+ t%e institute !r esta2lis%ment pr!vidin) c!mmercial trainin) !r c!ac%in)
,he objective of the institute or establishent a! not be to a-e profit( .n other words+ even not
for profit organiGations would be liable to service tax( ,he circular draws distinction between the
nature of training provided b! the institute and the otive of the institute in providing such
training( ,he training should however be for a consideration as there cannot be service tax
liabilit! in the absence of consideration(
,here a! be a view contrar! to the one given above if one were to go b! the decision of the
,ribunal in Ereat >a-es .nstitute of :anageent >td %s $S, $hennai L2000 L10M S,* 202 L,ri7
$hennaiMM where service tax was held to be applicable onl! where the institute providing
education was a coercial concern( ,his view of the ,ribunal was contradictor! to the
$oissioner3s view that what was essential was the coercial nature of the services provided
and not the nature of the entit! itself i(e( whether the entit! could be regarded as a coercial
concern or not( .nterestingl!+ this view of the departent has now been put forth in the new
circular 104515200" S, which could lead to soe ore litigation in this area( 8owever Supree
$ourt in case of $S, %s Ereat >a-es .nstitute of :anageent >td+ had directed the ,ribunal to
2@2
exaine de novo in light of explanation inserted under $oercial ,raining or $oaching
services(
,he view of the departent regarding the training and coaching service having to be coercial
would also have to be studied( ?resentl! this is not clear(
;here private institutes issue a diploa or certificate of educational qualification to students
which are recogniGed abroad and which enable the to secure jobs+ the sae would not be
covered under the exepted categor! and would be liable to service tax unless such qualification
is recogniGed b! statutor! authorities li-e UE$ or '.$,B(
.n a recent decision .ndian .nstitute of 'ircraft Bngineering %s U). 20137,.)>7#3078$7
DB>7S, in the bac-drop of .nstruction /o( 1345132520107S, dated 11(0@(2011+ $=B$
clarif!ing that &l!ing ,raining .nstitutes providing training for obtaining $oercial ?ilot
>icence L$?>M and on 'ircraft Bngineering .nstitutes for obtaining =asic 'ircraft :aintenance
Bngineer >icence L=':B>M would clearl! coe in the categor! of coaching centres(
^uashing circular held that even if the certificate5degree5diploa5qualification is not the product
of a statute but has approval of soe -ind in YlawY+ would be exept( ,he 8igh $ourt was of the
view that the 'ct+ the *ules and the $'*+ having provided for grant of approval to such institutes
have recogniGed the $ourse $opletion $ertificate and the qualification offered b! such
.nstitutes( ,he $ourse $opletion $ertificate5training offered b! such .nstitutes is recogniGed b!
law( Delhi high court has ruled that training provided for obtaining $?> and =':B> is
not liable to service tax(
Institutes pr!vidin) )eneral c!urse !n impr!vin) certain s=ills
,he circular specificall! covers certain general courses aied at personalit! developent+
iproving general grooing+ counication s-ills+ effectiveness in group discussion and in
facing personal interviews+ provided b! institutes and holds such courses liable to service tax b!
distinguishing the fro vocational courses which would equip the candidates to ta-e up
eplo!ent or engage theselves in self7eplo!ent( ,hus institutes providing general courses
and not pa!ing service tax run the ris- of facing S$/s fro the departent where none has been
issued so far(
2@3
Management !r business 6!nsutantFs servi6es
;hat is sought to be taxed under this categor! is the taxable service provided b! a anageent
or business consultant in connection with the anageent of an! organisation or business( ,he
areas which are generall! dealt with are those spanning financial anageent+ huan resource
anageent+ ar-eting anageent+ production anageent+ logistics anageent
procureent and anageent of inforation technolog! resources or other siilar areas of
anageent(
;hile the service provider is to be a anageent or business consultant+ there is no specific
requireent as to educational qualification and this was also highlighted in ?arasal =a %s
$$B .ndore L200A L03M S,* 43 L,ri7DelMM(
Janage(ent consultancy ,s Consulting engineer ,s /cientific or technical consultancy
service
*eaders should be able to distinguish between anageent consultanc! services and that of
consulting engineer( ,he classification of the taxable service would be under the latter categor!
when the service involves advice+ consultanc! or technical assistance in an! anner in one or
ore disciplines of engineering including coputer hardware engineering( ,he consultanc! can
be b! a professionall! qualified engineer or b! an! bod! corporate or fir( ,he liabilit! would be
under anageent or business consultant3s service where the advice+ consultanc! or technical
assistance is in relation to anageent as explained earlier( ,his would have to be ascertained b!
reviewing the agreeent( Soeties there could be soe confusion especiall! in ters of
production related advice or consulting in case of a anufacturer and the doinant nature of the
service would have to be ascertained as to whether it is one of advice in engineering field or one
of advice in relation to anageent of the function itself(
,he question of the service being liable under scientific or technical consultanc! service would
arise where advice+ consultanc! or scientific or technical assistance in one or ore disciplines of
science or technolog! is provided b! scientist or technocrat or a science or technolog! institution
or organisation( ,hus a proper understanding of the contract would be critical(
C!m5!site servi6es
*eaders a! also note that there a! be cases where a coposite contract is entered into li-e for
instance an agreeent5contract for operating and aintaining a power plant( .n such a scenario+
2@#
one question that arises is whether such an agreeent can be bro-en up5 vivisected in order to
identif! possible service eleents and tax the sae( .n $:S L.M )perations 9 :aintenance $o(
L?M >td %s $$B ?ondicherr! L2004 L04M S,* 3A" L,ri7$hennaiMM+ the ,ribunal held that the
contract was for generation of power and that no taxable service was provided and that generation
of electricit! was within the eaning of anufacture under $entral Bxcise(
Heath Servi6e
,his service intends to cover the service provided b! an! hospital+ nursing hoe or a ulti7
specialt! clinic in relation to health chec-7up+ preventive care or treatent in certain cases( Such
services would be taxable onl! whenF
a. 'n! health chec-7up or preventive care is given to an eplo!ee of a business entit! and
the pa!ent for the sae is ade b! such business entit!
b. 'n! health chec-7up or treatent is given to a person covered b! health insurance
schee and the pa!ent for the is ade b! the insurance copan!(
,his service was introduced b! the &inance =ill+ 2010 and the effective date of taxing was fro
01(04(2010(
8owever &inance =ill 2011 has proposed a coplete revap in the definition+ which shall be
effective fro the date to be notified(
.n previous !ear budget+ service tax was levied on the health service provided b! a
8ospital+ /ursing 8oe and :ultispecialt! clinic to the insured patient and
consideration received directl! fro the .nsurance $opan!( .n this budget the service
tax base has been enhanced to include clinic+ individual doctor etc(
a( ,reatent
i( ,he taxable service is diagnosis+ treatent or care for illness+ disease+
injur!+ deforit!+ abnoralit! or pregnanc!(
ii( ,he service provider is N$linical BstablishentO eans a hospital+
aternit! hoe+ nursing hoe+ dispensar!+ clinic+ sanatoriu or an
institution+ b! whatever nae called(
iii( .t should andatoril! have the facilit! of central air7condition and should
be having ore than 2@ beds at an! tie during the financial !ear(
b( Diagnosis
i( ,he taxable service is diagnosis of diseases through pathological+
bacterial+ genetic+ radiological+ cheical+ biological investigations or
other diagnostic or investigate service
ii( .t should have the aid of laborator! or other edical equipent(
2@@
iii( ,he service provider is an! entit! either independent or as a part of an!
clinical establishent(
c( Doctor
i( ,he taxable service is diagnosis+ treatent or care for illness+ disease+
injur!+ deforit!+ abnoralit! or pregnanc!(
ii( ,he service provider is a individual doctor+ not being an eplo!ee of the
clinical establishent
iii( ,he service has to be provided in a clinical establishent(
d( Bxclusion
Bstablishent owned or controlled b! Eovernent or a local authorit!(
;ith the introduction of this service+ now the hospitals are also into tax net and the! would be
eligible to ta-e the $B/%', credit on the excise dut! paid on capital goods+ input service and
service tax paid on input service( )n the other hand the .nsurance $opan! or the =usiness
Bntit! Lif anufacturer or taxable service provideM would be eligible ta-e the credit of the sae(
;hether value of edicine supplied during the course of providing treatent was to be included
to discharge service taxC
:edicine consued during the course of treatent was essentiall! a service contract+ further
rel!ing upon the decision of Supree $ourt in case of ,ata :ain 8ospital 2000 L2M J$* 14#+ it
was held that suppl! of edicines during treatent in hospital is incidental to the ain activit! of
providing health service and thus not liable under sales tax(
%hen a heath servi6e 5r!vider !""ers 6ash ess "a6iities "!r the 5atients :h! are the
em5!8ees !" Centra 0 State *!vernment auth!rities, :hat are the $m5i6ati!ns under
servi6e ta7A
,he service provider would be liable onl! when the consideration is received fro business entit!
or insurance copanies( 's a business entit!+ is defined under sec A@L1"bM to include an
association of person+ bod! of individuals+ copan! or fir but does not include an individual( .n
the view of the author Eovt cannot be considered as a business entit!(
,his taxable services categor! was full! exepted fro service tax b! exeption notification
no(30520117S, wef 1(@(2011(
Lega C!nsutan68 servi6e
,his services covers services provided in relation to advice+ consultanc! or assistance in an!
branch of law+ in an! anner but does not include an! service of appearance before an! court of
law or statutor! authorit!( &urther the service provider and service recipient shall be business
2@A
entit! for the sae to be taxable( 8ence where service is provided b! an individual or service is
received b! an individual then there is no liabilit!(
&inance =ill 2011 has expanded the coverage to either a business entit! providing the service or
business entit! receiving the service( ,herefore onl! services provided b! individuals and
received b! individuals would be outside the net(
=usiness entit! includes an association of persons+ bod! of individuals+ copan! or fir but does
not include an individual(
,his service was introduced b! the &inance 'ct+ 200" and the effective date of taxing this service
was 01(0"(200"
/ervices that would be exe(pt under this head
,he circular 33#5135200" dated 0A(04(200" clarifies the exclusion of appearance before an! court
of law or appearance before an! statutor! authorit! fro service tax( So preparation of
eorandu appeal which are subissions before statutor! authorit! in support of the case
would also not be liable( &urther preparation and certification of affidavit+ acting as an official
liquidator etc( would be outside the purview of service tax( 8owever with &inance bill 2011+ the
aforesaid exclusion with respect to appearance before an! court of law or appearance before an!
statutor! authorit! is brought into the tax net which is against the rights of the citiGen(
Services t%at mi)%t )et c!vered under t%is %ead
?reparation of notice b! law!er fir would get covered as it would be in the nature of technical
assistance and an! consultanc! or advice provided b! non individual to a non individual would
get covered(
.n opinion of the authors+ law!ers are professionals as the! are not engaged in an! activit! of
trade+ but render service to the clients as the! are governed b! the code of ethics siilar to the
$hartered 'ccountants( ,herefore the! a! not be considered as business entities and
consequentl! a! not be covered(
2rand Pr!m!ti!n servi6e
,his service intends to cover the under entioned activit! done b! appearing in advertiseent
and prootional event or carr!ing out an! prootional activit! for such goods+ service or event
a( prootion or ar-eting of a brand of F
i( goods+
ii( service+
2@4
iii( event
b( endorseent of nae including a F
i( trade nae+
ii( logo of a business entit!
iii( house ar- of a business entit!
=rand has also been defined for this purpose to include s!bol+ onogra+ label+ signature or
invented words which indicate connection with the said goods+ service+ and event or business
entit!(
,he service in relation to prooting or ar-eting or sale of goods is alread! covered under the
categor! N=usiness 'uxiliar! ServiceO+ however the cases of prootion of the brand of the
copan! per sa! and not related to an! product was escaping tax net+ to tap this t!pe of
prootion+ a new service has been introduced( ,he ,*U circular expresses the intention of
introduction of this service as to tax the celebrities Lfil stars+ cric-eters etcM who act a brand
abassador(
%hether mere a6ting :!ud am!unt t! brand 5r!m!ti!n servi6eA
,he intension of the said service was to onl! tax brand prootion service+ in case of an! person
erel! acts+ without prooting the brand would not be taxed under this head(
2@0
2$2L$#*RAPH(4REFERENCES4 ACKN#%LE)*EMENTS
Service ,ax >aw Euide b! :r( *6 Jain
?ractical Euide to Service ,ax b! :adhu-ar / 8iregange+ *ajesh 6uar ,* and %S
Sudhir ?ublished b! =harat >aw 8ouse
$entral Bxcise :ade Bas! published b! :adhu-ar / 8iregange+ *ajesh 6uar ,* and
%S Sudhir( ?ublished b! =harat >aw 8ouse
$entral Bxcise >aw 9 ?rocedures 13
th
Bdition %( *aghuraan and :adhu-ar /
8iregange( ?ublished b! $entax ?ublication
$entral Bxcise :anual b! :r( *6 Jain
'rticles fro web site7 hiregange(co
Legends
$$B $oissioner of $entral Bxcise
'$$B 'ssistant $oissioner of $entral Bxcise
D$$B Deput! $oissioner of $entral Bxcise
S,*? Service ,ax *eturn ?reparer
$B,' $entral Bxcise ,ariff 'ct
$,' $ustos ,ariff 'ct
S8B Secondar! 9 8igher Bducation
., .nforation ,echnolog!
&B:' &oreign Bxchange :anageent 'ct
='S =usiness 'uxilliar! Service
=SS =usiness Support Service
;$ ;or-s $ontract Service
E,' Eoods ,ransport 'genc! service
2@"
APPEN)$&
A55endi7 $
NAME !" Registered Assessee9 RRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRRR
STC >Servi6e Ta7 C!de4 Registrati!n C!de?9 RRRRRRRRRRRRRRRRRR
/= )ivisi!n9
-= Range9 >Pease menti!n Range Number? RRRRRRRRRRRRRRRRR
C= Emai id9 RRRRRRRRRRRRRRRRRRRRRRRRRRRR
D= Re5eat Emai id9 RRRRRRRRRRRRRRRRRRRRRRRRRRRR
<= C!nstituti!n !" 8!ur Firm9 RRRRRRRRRRRRRRRRRRRRRRRRRRRR
L?roprietorship 5 ?artnership 5 *egistered ?ublic >iited
$opan! 5 *egistered ?rivate >iited $opan! 5
*egistered ,rust 5 Societ! 5 $o7operative Societ! 5
)thersM
;= C!nta6t Pers!n Name9 RRRRRRRRRRRRRRRRRRRRRRRRRRRR
G= C!nta6t Number9 RRRRRRRRRRRRRRRRRRRRRRRRRRRR
$, hereb8 de6are the $ am du8 auth!riHed b8 M4s RRRRRRRRRRRRRRRRRRRRRR t! sign this
de6arati!n and the 6!ntents !" this de6arati!n are true and 6!rre6t=
>Signature?
Name9 RRRRRRRRRRRRRRRRRRRRRRR
)esignati!n9RRRRRRRRRRRRRRRRRR
)ate9RRRRRRRRRRRRRRRRRRRRRRRR
T! L?lease send to the concerned jurisdictional DivisionM
APPEN)$& $$
A "ied F!rm ST'/
;e would ta-e a siple exaple of an assessee who wishes to register a single preises for 2
services(,he sae for would have to be used in case it is an aendent of an existing
2A0
registration Lli-e sa! change of address or change in authoriGed signator! etc(M ,he for that is
filled below is self explanator! except certain aspects which are explained belowF
$ategor! of registrantF .n case an assessee is liabile to pa! service tax as a recipient of service
Lsa! E,'M then he would have to select the option Kservice recipient3 as well+ else just selecting
the option Kservice provider3 would suffice(
/ature of registrationF ;here an assessee provides or receives taxable services fro5at ore than
one preises then he shall have to register all such preises( ;here the assessee has a centraliGed
accounting or billing then he can get a centraliGed service tax registration b! selecting the option
Kcentralised registration for ore than one preises3( 8e shall be required to ention the
addresses of all the preises he wishes to register in @LbM( &urther the address of the preises
where there is centraliGed accounting or billing would have to be entioned in S /o( A in the
for(
.n S /o( 4 all the taxable services for whih the assessee wishes to register shall be entioned(
F!rm ST N /
[-pplication for( forregistration under /ection 7; of the 0inance -ct, ;;3 >1# of ;;3?%
LPlease tic= appr!priate 2!* 2el!$M
Ne: Registrati!n
Amendments to inforation declared b! the existing *egistrant
*egistration /uber in case of existing *egistrant see-ing 'endent
/( >a? /ae of applicant
L E R C # N S T R + C T $ # N S L T )
>b? 'ddress of the applicant
< K 4 - ; @ * A N ) H $ N A * A R
P A N 1 A * + T T A
H ( ) E R A 2 A )
< . . . / -
2A1
-( Details of ?eranent 'ccount /uber L?'/M of the applicant
>a? ;hether ?'/ has been issued b! the .ncoe ,ax Departent
( E S
Ues /o
>b? .f Ues+ the ?'/
A ) F T * H 1 C G <
>6? /ae of the applicant Las appearing in ?'/M
C( >a? $onstitution of applicant L,ic- as applicableM
LiM ?roprietorship
LiiM ?artnership
LiiiM *egistered ?ublic >iited $opan!
_
LivM *egistered ?rivate >iited $opan!
LvM *egistered ,rust
LviM Societ!5$ooperative societ!
LviiM )thers
>b? /ae+ 'ddress and ?hone /uber of ?roprietor5 ?artner5 Director
LiM /ae
2A2
L E R C # N S T R + C T $ # N S L T )
M R= R A 1 $ V M E H T A
LiiM 'ddress
/ D P A N 1 A * + T T A R # A )
H ( ) E R A 2 A )
LiiiM ?hone /uber
@ G D ; C < ; G K C
D( $ategor! of *egistrant LPlease tic= appr!priate 2!*M
>a?Pers!n iabe t! 5a8 servi6e ta7
LiM Service provider
LiiM Service recipient
>b?#ther 5ers!n46ass !" 5ers!ns
LiM .nput service distributor
LiiM 'n! provider of taxable service whose aggregate value of taxable service in a
financial !ear exceeds nine la-h rupees
<( >a? /ature of *egistration #Tic= as applica2le&
LiM *egistration of single preises
LiiM $entraliGed registration for ore than one preises
>b? 'ddress of preises for which registration is sought
LiM /ae of ?reises5 =uilding
LiiM &lat5 Door5 =loc- /o(
< < 4 - ; @
LiiiM *oad5 Street5 >ane
* A N ) H $ N A * A R
2A3
LivM %illage5 'rea5 >ane
P A N 1 A * + T T A
LvM =loc-5 ,alu-5 Sub7Division5 ,own
LviM ?ost office
? ' / J ' E U , , '
LviiM$it!5 District
H ( ) E R A 2 A )
LviiiMState5 Union ,erritor!
A N ) H R ' ? * ' D B S 8
LixM ?./
< . . . / -
LxM ,elephone /os(F
- C ; G D C < @
LxiM &ax /o(
LxiiM B7ail 'ddress
R A 1 $ V S L E R = C P M
>6? .n case of application for $entraliGed *egistration+ furnish address of a the preises
fro where taxable services are provided or intended to be provided L&orat as per
@LbM aboveM
Premises9 /
LiM /ae of ?reises5 =uilding
2A#
LiiM &lat5 Door5 =loc- /o(
LiiiM *oad5 Street5 >ane
LivM %illage5 'rea5 >ane
LvM =loc-5 ,alu-5 Sub7Division5 ,own
LviM ?ost office
LviiM$it!5 District
LviiiMState5 Union ,erritor!
LixM ?./
LxM ,elephone /os(F
LxiM &ax /o(
LxiiM B7ail 'ddress
Premises9 -
LiM /ae of ?reises5 =uilding
2A@
LiiM &lat5 Door5 =loc- /o(
LiiiM *oad5 Street5 >ane
LivM %illage5 'rea5 >ane
LvM =loc-5 ,alu-5 Sub7Division5 ,own
LviM ?ost office
LviiM$it!5 District
LviiiMState5 Union ,erritor!
LixM ?./
LxM ,elephone /os(F
LxiM &ax /o(
LxiiM B7ail 'ddress
2AA
>d? .n case of application for .nput Service Distributor+ furnish address of a the
preises to which credit of input services is distributed or intended to be distributed
L&orat as per @LbM aboveM
;= 'ddress of the preises or office pa!ing service tax under centralised billing or
centralised accounting under sub7rule L2M and L3'M of rule # of the Service ,ax *ules+
1""#(
'ddress
G= Description of taxable services provided or to be provided b! applicant
Sr(
/o(
Description of service *elevant clause of section A@ of
the &inance 'ct+ 1""#+ to be
indicated+ if possible
L1M L2M L3M
1 $oercial or .ndustrial constructions GGq
2 $ostruction of coplex GGGh
K= /ae+ designation and address of the auth!riHed signat!r84 signat!ries9
/ae Designation 'ddress
*ajiv :ehta )ire6t!r 1#+ ?anjagutta *oad+ 8!derabad
)ECLARAT$#N
.+ Rajiv Mehta hereb! declare that the inforation given in this application for is true+ correct
and coplete in ever! respect and that . a authoriGed to sign on behalf of the registrant(
>a? F!r ne: registrati!n9
2A4
. would li-e to receive the *egistration $ertificate b! ail 5 b! hand5 B7:'.>
>b? F!r amendments t! in"!rmati!n 5ertaining t! e7isting registrant9
Date fro which aendents are adeF
#Ori)inal e*istin) ,e)istrati!n "erti+icate is re<uired t! 2e encl!sed&
DateF
?laceF H8derabad LSignature of the applicant5 authoriGed person with stapM
ACKN#%LE)*EMENT
L,o be given in the event *egistration $ertificate is not issued at the tie of receipt of application
for *egistrationM
. hereb! ac-nowledge the receipt of !our application for
LaM &or new *egistration
L's desired+ the /ew *egistration $ertificate would be sent b! B7:'.>5 ail5 handed
over to !ou in person on\\\\\\\\\\\\\M
LbM &or aendents to inforation in existing *egistration
L. hereb! ac-nowledge receipt of original existing *egistration $ertificateM
DateF Signature of the )fficer of $entral Bxcise
Lwith /ae 9 )fficial SealM
A55endi7'$$$
2A0
Ti5s "!r "iing the ST'C Return
S=N!=
return
Parti6uars Remarks
'1 Eeneral .nforation 'ssesssee is required to ention whether the return is
original or *evised return
'2 S,$ /uber Service tax registration nuber of the assesssee is required
to be entioned
'3 /ae &ull /ae of the assesssee to be entioned
'# &inancial Uear &inancial !ear to which the return pertains needs to be
entioned(
'@ *eturn for the period ?eriod for which the return belongs required to be
entioned i(e( 'pril7Septeber or )ctober to :arch( &or
this tie it is Jul! 2012 to Septeber 2012
'A >arge ,ax ?a!ers details .f assesssee is >,U then he has to select and also required
to ention the >,U nae fro drop down list(
'4 ?reises code 'ssesssee needs to ention the preises code of the
business allotted b! the departent( .t is suggested to ta-e
the sae fro the S,72 while filling the return(
'0 $onstitution $onstitution of the assesssee needs to be selected
'" $ategor! of Service 'ssesssee is required to ention the categor! of service
under which he is providing service is required to ention(
'10 'ssesssee liable to pa! service
tax
'10(1 Service ?rovider under Section
A0L1M
'll 'ssessee3s except those who are liable to pa! service
tax under reverse charge and joint charge are required
select this colun
'10(2 Service receiver under Section
A0L2M
,he assesssee who is receiver of service of service and is
liable to pa! service tax is required to select this colun( .t
covers onl! reverse charge .(e( iport of service excluding
the partial reverse charge(
'10(3 Service provider under partial
reverse charge under Section
A0L2M
,he 'ssessee who is liable to pa! service tax under partial
reverse charge basis as a service provider such as
anpower+ securit!+ rent a cab and wor-s contract is
required to select this colun(
'10(# Service receiver under partial
reverse charge under Section
A0L2M
,he 'ssessee who is liable to pa! service tax under partial
reverse charge basis as a service receiver such as
anpower+ securit!+ rent a cab and wor-s contract is
required to select this colun(
'10(@ ?ercentage of service tax for
'10(3 above
,he assessee who is liable to pa! service tax as a service
provider under partial reverse charge basis is required to
ention the percentage of service tax he is required to pa!(
'10(A ?ercentage of service tax for
'10(# above
,he assessee who is liable to pa! service tax as a service
receiver under partial reverse charge basis is required to
ention the percentage of service tax he is required to pa!(
'11 Bxeption details .n this colun the assessee is required to ention whether
he is opted for an! exeption and also /otification
nuber of that exeption(
'12 'bateent .f assessee is claiing an! abateent under /otification
2A52012 dated 20(0A(2012 then he required to select this
2A"
colun and also required to ention the above notification
nuber and corresponding Sl(no( of the notification(
'13 ?rovisional 'ssessent .f assessee opted for provisional assessent for then he is
required to select this colun and also required to ention
the order nuber of the provisional assessent(
2 Vaue !" ta7abe servi6e and
servi6e ta7 5a8abe
=1(1 Eross aount .n this colun the assessee being a service provider is
required ention the gross aount for which bills+
invoice+ challans+ invoices or an! other docuents has
been issued related to service provided or to be provided
including export and exepted service( =ut in the above
aount aounts received in advance and aount taxable
on receipt basis for which bills+ invoice or challans have
not been raised have to be excluded(
=1(2 'dvance received .n this colun the assessee is required to ention the
aount received as advance but for which bills+ invoice or
challans have not been raised(
=1(3 ,axable on receipt basis under
third proviso to *ule AL1M
.n case of .ndividual and ?artnership firs whose
aggregate value of taxable services provided fro one or
ore preises is fift! la-hs rupees or less in the previous
financial !ear the service provider shall have the option to
pa! service tax on receipt basis up to rupees fift! la-hs in
the current financial !ear( .f the assessee coes under the
above categor! then he is required to ention the aount
in this colun(
=1(# =ills5 .nvoice or challans not
been raised
,he aount of service provided for which bills+ invoice or
challans have not been raised is required to ention in this
colun(
=1(@ /on onetar! consideration ,he aount received in non7onetar! consideration for
service provided is required to ention in this colun(
,he value of such service should be equivalent of one!(
=1(A ?artial reverse charge ,he assessee who is liable to pa! service tax under partial
reverse charge is required to ention the aount of
service which is liable in this colun(
=1(4 ,otal of Eross aount ,otal of all the above colun should coe in this colun(
=1(0 Bxport of service 'ount which is considered as export of service as per the
place of provision of service rules and also *ule A' of
service tax rules is required to be entioned in this
colun(
=1(" Bxepted Service ,he services which are exepted fro pa!ent of service
tax b! virtue of /otification no(2@52012 are to be
considered in this colun excluding the export of service
as entioned above(
=1(10 ?ure agent service ,he aount of service which is considered as provided
under pure agent concept as specified in the service tax
Ldeterination of valueM *ules is required to be entioned
in this colun(
=1(11 'bateent aount ,he aount which is claied as abateent as per
/otification /o(2A52012 is required to be entioned in
240
this colun(
=1(12 'n! other Deduction 'part fro above if assessee is claiing an! deduction
li-e adjustent of excess aount and all is to be
entioned in this colun(
=1(13 ,otal of all deductions ,otal of all deduction fro =1(0 to =1(12 is to be
entioned in this colun(
=1(1# /et taxable value 'fter deducting =1(13 fro =1(4 assessee will get the /et
taxable aount(
=1(1@ 'dvolore rate Service tax 'dvolore rate is to be entioned in this
colun i(e(12J(
=1(1A Specific rate 's per the *ule A Service tax *ules in case of certain
categor! of services there is specific rate is applicable if
the sae is applicable for assessee then he is required to
ention that rate(
=1(14 Service tax pa!able ,he aount pa!able as service tax after appl!ing the
'dvolore or specific rate is be entioned here(
=1(10 * 9 D cess .n case of iport of certain software there is lev! of
*esearch and Developent $ess( .f the assessee has been
levied such cess then he can ta-e deduction of such cess
while a-ing pa!ent of service tax on the sae( ,he
sae aount of *9D cess is required to be entioned
here(
=1(1" /et Service tax pa!able 'fter deducting the *9D cess fro the service tax
pa!able net service tax pa!able will coe(
=1(20 Bducation $ess Bducation $ess on the net service tax pa!able at the rate of
2J needs to be entioned here(
=1(21 Secondar! and 8igher
Bducation $ess
Secondar! and 8igher Bducation $ess on the net service
tax pa!able at the rate of 1J needs to be entioned here
=2 Service receiver details ,his colun contains the sae details as entioned in =1
but the onl! difference is it is applicable for service
receiver(
PART C Advan6e 5a8ment !" servi6e
ta7
,his part contains the aount of service tax paid in
advance details( ,he sae needs to be entioned with the
brea-up of service tax+ Bducation and S8B cess with
corresponding challans details(
PART ) Servi6e ta7 5aid detais
D1 $ash .f service tax is paid using cash then the assessee is
required to ention the aount which is paid through cash
in this colun(
D2 $envat $redit .f 'ssessee is a-ing pa!ent b! utiliGing the cenvat
credit then such aount is required to be entioned here(
.n addition to that it is specificall! entioned that this
colun is not applicable for recipient of service therefore
if the assessee is a service receiver then he supposed to
pa! through cash onl!(
D3 'djustent of excess aount 's alread! entioned in the ?'*, $ if an! is paid as an
advance then such aount can be utiliGed for a-ing
pa!ent of service tax without an! liit as per service tax
rules(
D# 'djustent as per *ule AL3M 's per *ule AL3M+ Service ,ax paid on accrual basis but
241
credit note raised subsequentl! can be adjusted against
future pa!ent of Service ,ax( ?a!ent ade through
such adjustents required to be entioned here(
D@ 'djustent as per *ule AL#'M 's per rule AL#'M+ if the assessee pa!s the excess aount
of Service ,ax in the previous onth+ the sae can be
adjusted for the current period( Such adjustents required
to be entioned here(
DA 'djustent as per *ule AL#$M 's per rule AL#$M+ if the assessee pa!s the Service ,ax on
*enting of .ovable propert! without considering the
propert! tax paid+ such excess pa!ent can be adjusted for
future pa!ents( Such adjustents required to be
entioned here(
D4 =oo- adjustents b!
governent departents
.t is applicable onl! for governental departents where
there would be option to pa! Service tax b! boo-
adjustents( BgF for .ndian post dept(
D0 ,otal tax paid .t is su total of D1 to D4(
PART E N Edu6ati!n Cess Paid in Cash and Thr!ugh CENVAT Credit
B 1 .n $ash Details of Bducation ?aid in $ash for the relevant onth
to be provided here
B2 =! $B/%', $redit Lnot
applicable where the service tax
is liable to be paid b! the
recipient of ServiceM
Details of Bducation paid b! utiliGation of $B/%', $redit
to be provided here( &urther+ it sa!s Lnot applicable where
the service tax is liable to be paid b! the recipient of
ServiceM( ,his is because+ the under Joint 9 reverse charge
echanis+ the Service receiver should require to pa!
service tax b! cash onl!( 8ence+ pa!ent b! wa! of
$B/%', $redit is not allowed here
B3 =! adjustent of aount paid
as service tax in advance under
*ule AL1'M of the S, *ules
.f the Bducation $ess requires to be adjusted against the
pa!ent ade in the previous onth+ the sae requires to
be entioned here(
B# =! adjustent of excess aount
paid earlier as service tax and
adjusted+ b! ta-ing credit of
such excess service tax paid+ in
this period under *ule AL3M of
the S, *ules
.f the Service ,ax has paid in earlier period and credit note
has been issued for the sae+ the sae can be adjusted for
the current period( ,his details required to be furnished
here(
B@ =! adjustent of excess aount
paid earlier as service tax and
adjusted in this period under
*ule AL#'M of the S, *ules
.f an! Service ,ax has been paid excess under *ule AL#'M
i(e( pa!ing the tax in cash which is ore than the liabilit!
in the previous period+ the sae can be adjusted in the
current period( Such adjustents required to be furnished
here(
BA =! adjustent of excess aount
paid earlier as service tax in
respect of service of *enting of
.ovable ?ropert!+ on
account of non7availent of
deduction of propert! tax paid
and adjusted in this period
under *ule AL#$M of the S,
*ules
's per *ule AL#$M excess pa!ent against *enting of
.ovable propert! Service b! not considering exeption
available for propert! tax can be adjusted against future
pa!ents( Such adjustents required to be disclosed here(
B4 =! boo- adjustent in the case ,his is applicable onl! for specified governent
242
of specified Eovernent
departents
departents for which the! can pa! the liabilit! through
boo- adjustents
B0 ,otal Bducation $ess paid .t is the suar! fro B1 to B4
PART F N Se6!ndar8 0 Higher Edu6ati!n Cess Paid in Cash and Thr!ugh CENVAT Credit
&1 .n $ash Details of S8B $ess ?aid in $ash for the relevant onth
to be provided here
&2 =! $B/%', $redit Lnot
applicable where the service tax
is liable to be paid b! the
recipient of ServiceM
Details of S8B $ess paid b! utiliGation of $B/%', $redit
to be provided here( &urther+ it sa!s Lnot applicable where
the service tax is liable to be paid b! the recipient of
ServiceM( ,his is because+ the under Joint 9 reverse charge
echanis+ the Service receiver should require to pa!
service tax b! cash onl!( 8ence+ pa!ent b! wa! of
$B/%', $redit is not allowed here
&3 =! adjustent of aount paid
as service tax in advance under
*ule AL1'M of the S, *ules
.f the S8B $ess requires to be adjusted against the
pa!ent ade in the previous onth+ the sae requires to
be entioned here(
&# =! adjustent of excess aount
paid earlier as service tax and
adjusted+ b! ta-ing credit of
such excess service tax paid+ in
this period under *ule AL3M of
the S, *ules
.f the Service ,ax has paid in earlier period and credit note
has been issued for the sae+ the sae can be adjusted for
the current period( ,his details required to be furnished
here(
&@ =! adjustent of excess aount
paid earlier as service tax and
adjusted in this period under
*ule AL#'M of the S, *ules
.f an! Service ,ax has been paid excess under *ule AL#'M
i(e( pa!ing the tax in cash which is ore than the liabilit!
in the previous period+ the sae can be adjusted in the
current period( Such adjustents required to be furnished
here(
&A =! adjustent of excess aount
paid earlier as service tax in
respect of service of *enting of
.ovable ?ropert!+ on
account of non7availent of
deduction of propert! tax paid
and adjusted in this period
under *ule AL#$M of the S,
*ules
's per *ule AL#$M excess pa!ent against *enting of
.ovable propert! Service b! not considering exeption
available for propert! tax can be adjusted against future
pa!ents( Such adjustents required to be disclosed here(
&4 =! boo- adjustent in the case
of specified Eovernent
departents
,his is applicable onl! for specified governent
departents for which the! can pa! the liabilit! through
boo- adjustents
&0 ,otal Secondar! 9 8igher
Bducation $ess paid
.t is the suar! fro B1 to B4
Part *' Arrears, $nterest, Penat8, An8 #ther Am!unt et6 5aid
E1 'rrears of revenue L,ax
aountM paid in cash
,he details of Service ,ax paid in cash in the current
period for the previous periods required to be disclosed
here
E2 'rrears of revenue L,ax
aountM paid b! utilising
$B/%', credit
,he details of Service ,ax paid b! wa! of $B/%', $redit
in the current period for the previous periods required to
be show here
243
E3 'rrears of Bducation $ess paid
in cash
,he details of Bducation $ess paid in cash in the current
period for the previous periods required to be disclosed
here
E# 'rrears of Bducation $ess paid
b! utilising $B/%', credit
,he details of Bducation $ess paid b! wa! of $B/%',
$redit in the current period for the previous periods
required to be show here
E@ 'rrears of Secondar! 9 8igher
Bducation $ess paid in cash
,he details of S8B $ess paid in cash in the current period
for the previous periods required to be disclosed here
EA 'rrears of Secondar! 9 8igher
Bducation $ess paid b! utilising
$B/%', credit
,he details of S8B $ess paid b! wa! of $B/%', $redit
in the current period for the previous periods required to
be show here
E4 'ount paid in ters of section
43' of &inance 'ct+ 1""#
?a!ent Service ,ax which collected excess than required
to be disclosed here
E0 .nterest paid Lin cash onl!M .nterest paid in cash to be disclosed here
E" ?enalt! paid Lin cash onl!M ?enalt! paid in cash to be disclosed here
E10 'ount of >ate fee paid+ if an!( ?enalt! paid for dela! in filing of return to be disclosed
here
E11 'n! other aount paid Lplease
specif!M
'n! other aount other than this requires to be disclosed
here
E12 ,otal pa!ent of arrears+
interest+ penalt! and an! other
aount+ etc( ade
E12VLE1QE2QE3QE#QE@QEA
QE4QE0QE"QE10QE11M
.t is suar! of E1 to E11
Part H
81 DB,'.>S )& $8'>>'/ .n this details of challan li-e $hallan nuber+ challan date+
and challan aount pertaining to the respective onth to
be disclosed in that onth( $hallan nubers will first
=an- =S* code+ then date of pa!ent in Date5::5Uear
for and sl(no(
82 Source docuents
details for pa!ents ade in
advance 5 adjustent+
.n this filed the details of source docuent nuber
required to be disclosed for a-ing adjustents+ advance
pa!ents+ pa!ent of arrears etc( Source docuent
nuber is previous S, 3 return ac-nowledgeent
nuber
Part $ N )etais !" CENVAT Credit
.1(1 ;hether providing an!
exepted service or non7taxable
service LKU35K/3M
Select Ues5/o( Ues if providing an! exepted service or
non taxable service
.1(2 ;hether anufacturing an!
exepted excisable goods
LKU35K/3M
Select Ues5/o( Ues if anufacturing exepted goods(
.1(3 .f repl! to an! one of the above
is KU3+ whether aintaining
separate account for receipt or
consuption of input service
and input goods 1refer to *ule A
L2M of $B/%', $redit *ules+
Select Ues if separate accounts is being aintained
24#
200#2LKU35K/3M
.1(# .f repl! to an! one of the
coluns .1(19.1(2 above is KU3
and .1(3 is K/3+ which option+
fro the below entioned
options+ is being availed under
*ule AL3M of the $B/%',
$redit *ules+ 200#
)ption under *ule AL3M of the $envat $redit *ules+ 200#
should be selected here
.1(#(1 ;hether pa!ing an aount
equal to AJ of the value of the
exepted goods and exepted
services 1refer to *ule AL3MLiM of
$B/%', $redit *ules+ 200#2
LKU35K/3MI or
$lic- Ues if opted for this schee
.1(#(2 ;hether pa!ing an aount
equivalent to $B/%', $redit
attributable to inputs and input
services used in or in relation to
anufacture of exepted goods
or provision of exepted
services 1refer to *ule AL3MLiiM
of $B/%', $redit *ules+ 200#2
LKU35K/3MIor
$lic- Ues if opted for this schee
.1(#(3 ;hether aintaining separate
account for receipt or
consuption of input goods+
ta-ing $B/%', credit onl! on
inputs Lused in or in relation to
the anufacture of dutiable
final products excluding
exepted goods and for the
provision of output services
excluding exepted servicesM
and pa!ing an aount
equivalent to $B/%', $redit
attributable to input services
used in or in relation to
anufacture of exepted goods
or provision of exepted
services 1refer to *ule AL3MLiiiM
of $B/%', $redit *ules+ 200#2
LKU35K/3M
$lic- Ues if opted for this schee
$-= Am!unt 5a8abe under rue ;>C? !" the CENVAT Credit Rues, -..D=
.2(1 %alue of exepted goods
cleared
:ention value of exepted goods
.2(2 %alue of exepted services
provided
:ention value of Bxeption Service
.2(3 'ount paid under *ule AL3M of
$B/%', $redit *ules+ 200#+
:ention aount paid under rule AL3M b! $B/%', $redit
24@
b! debiting $B/%', $redit
account
.2(# 'ount paid under *ule AL3M of
$B/%', $redit *ules+ 200#+
b! cash
:ention aount paid under rule AL3M b! cash
.2(@ ,otal aount paid under *ule
AL3M of $B/%', $redit *ules+
200#
.2(@ V .2(3 Q .2(#
:ention total aount paid under *ule AL3M of $B/%',
$redit *ules+ 200#
$C=/ )ETA$LS #F CENVAT CRE)$T #F SERV$CE TA& AN) CENTRAL E&C$SE )+T(
TAKEN AN) +T$L$SAT$#N THERE#F N
.3(1(1 )pening =alance )pening balance of $B/%', credit to be entioned here
.3(1(2 $redit ta-en
.3(1(2(1 on inputs $envat $redit availed on .nputs required to be entioned
here
.3(1(2(2 )n $apital goods $envat credit availed on $apital goods required to be
entioned here
.3(1(2(3 )n .nput Services received
directl!
$envat credit availed on .nput services required to be
entioned here
.3(1(2(# 's received fro .nput Service
distributor
$envat $redit received as a distribution fro .nput Service
distributor require to be entioned here
.3(1(2(@ &ro inter unit transfer b! a
>,U
$envat credit received fro >,U unit Lonl! applicable for
>,UM to be shown here
.3(1(2(A 'n! other credit ta-en Lplease
specif!M
$redit ta-en in an! other wa! required to be ta-en
Lillustration for this aM departent allows to ta-e credit in
the current onth which is issed out in the previous
onth b! letter( bM availent of excess reversal of credit
under *ule A of $$*+ 200#
.3(1(2(4 ,otal $redit ,a-en Su of $redit ta-en
.3(1(3 $redit utiliGed
.3(1(3(1 &or pa!ent of Service ,ax $redit utiliGed for pa!ent of Service ,ax required to be
entioned here
.3(1(3(2 &or pa!ent of education $ess
on a taxable service
$redit utiliGed for pa!ent of Bducation cess on service
tax required to be entioned here
.3(1(3(3 for pa!ent of Secondar! and
8igher Bducation $ess on
taxable services
$redit utiliGed for pa!ent of S8B $ess of Service ,ax
required to be entioned here
.3(1(3(# for pa!ent of excise dut! or
an! other dut!
$redit utiliGed for pa!ent of Bxcise dut! required to be
entioned here
.3(1(3(@ towards clearance of input
goods and capital goods
reoved as such or after use
$redit utiliGed for pa!ent of $envat reversal as such as
per rule 3 of $envat $redit *ules+ required to be
entioned here
.3(1(3(A towards inter unit transfer to
>,U
$envat $redit transferred to inter unit transfer to be
entioned Lapplicable onl! for >,U unitM
.3(1(3(4 for pa!ent of an aount under
rule AL3M of $B/%', $redit
$envat $redit utiliGed for pa!ent ade under rule AL3M
of $B/%', $redit *ules to be entioned here(
24A
*ules+ 200#
.3(1(3(0 for an! other
pa!ents5adjustents5reversal
L?lease specif!M
?a!ent ade for an! other reasons apart fro above
required to be entioned( BgF $envat reversed for wrong
availent of $envat $redit etc
.3(1(3(" ,),'> $*BD., U,.>.SBD
.3(1(3("VL.3(1(3(1Q.3(1(3(2Q.3(1
(3(3Q.3(1(3(#Q
.3(1(3(@Q.3(1(3(AQ.3(1(3(4Q.3(1(
3(0M
,otal $envat $redit utiliGed
.3(1(# $losing =alance of $B/%',
credit
.3(1(# V `L.3(1(1 Q .3(1(2(4M
.3(1(3("a
$losing balance to be entioned here
$C=- )ETA$LS #F CENVAT CRE)$T #F E)+CAT$#N CESS TAKEN 0 +T$L$SAT$#N
THERE#F N
.3(2(1 )pening =alance of Bducation
$ess
$losing balance of previous return to be entioned here
.3(2(2 $redit of Bducation $ess ta-en
.3(2(2(1 on inputs B( $ess credit availed on inputs for the current onth
required to be entioned here
.3(2(2(2 on capital goods B( $ess credit availed on $apital goods for the current
onth required to be entioned here
.3(2(2(3 on input services received
directl!
B( $ess credit availed on input services for the current
onth required to be entioned here
.3(2(2(# as received fro .nput Service
Distributor
B($ess credit received fro .nput Service Distributor
required to be entioned here
.3(2(2(@ fro inter unit transfer b! a
>,U
B($ess credit availed fro .nter transfer unit required to be
entioned here L.t is applicable onl! for >,U UnitsM
.3(2(2(A 'n! other credit ta-en Lplease
specif!M
'n! other credit availed required to be entioned here
.3(2(2(4 ,otal credit of Bducation $ess
ta-en .3(2(2(4V
L.3(2(2(1Q.3(2(2(2Q.3(2(2(3Q.3(2
(2(#Q .3(2(2(@Q.3(2(2(AM
,otal of the above
.3(2(3 $redit of Bducation $ess
utilised
.3(2(3(1 for pa!ent of Bducation $ess
on goods 9 services
$redit used for pa!ent of Bducation $ess on goods and
services required to be entioned here
.3(2(3(2 towards pa!ent of Bducation
$ess on clearance of input
$redit used for pa!ent of Bducation $ess on clearance of
.nput goods and capital goods reoved as such should be
244
goods and capital goods
reoved as such or after use
entioned here
.3(2(3(3 towards inter unit transfer to
>,U
$redit transferred to inter unit to be entioned hereL this is
applicable onl! for >,U unitsM
.3(2(3(# for an! other
pa!ents5adjustents5 reversal
Lplease specif!M
$redit reversed for an! other reasons required to be
entioned here
.3(2(3(@ ,otal credit of Bducation $ess
utilised
.3(2(3(@V
L.3(2(3(1Q.3(2(3(2Q.3(2(3(3Q.3(2
(3(#M
,otal reversal 5 pa!ent of Bducation $ess
.3(2(# $losing =alance of Bducation
$ess .3(2(#V`L.3(2(1Q.3(2(2(4M7
.3(2(3(@a
$losing balance of Bducation $ess
$C=C )ETA$LS #F CENVAT CRE)$T #F SEC#N)AR( AN) H$*HER E)+CAT$#N CESS
TAKEN 0 +T$L$SAT$#N THERE#F N
.3(3(1 )pening =alance of S8B$ $losing balance of previous return to be entioned here
.3(3(2 $redit of S8B$ ta-en
.3(3(2(1 on inputs She $ess credit availed on inputs for the current onth
required to be entioned here
.3(3(2(2 on capital goods She $ess credit availed on $apital goods for the current
onth required to be entioned here
.3(3(2(3 on input services received
directl!
She $ess credit availed on input services for the current
onth required to be entioned here
.3(3(2(# as received fro .nput Service
Distributor
She $ess credit received fro .nput Service Distributor
required to be entioned here
.3(3(2(@ fro inter unit transfer b! a
>,U
She $ess credit availed fro .nter transfer unit required to
be entioned here L.t is applicable onl! for >,U UnitsM
.3(3(2(A 'n! other credit ta-en Lplease
specif!M
'n! other credit availed required to be entioned here
.3(3(2(4 ,otal credit of S8B$ ta-en
.3(3(2(4V
L.3(3(2(1Q.3(3(2(2Q.3(3(2(3Q.3(3
(2(#Q.3(3(2(@Q.3(3(2(AM
,otal of the above
.3(3(3 $redit of S8B$ utilised
.3(3(3(1 for pa!ent of S8B$ on goods
9 services
$redit used for pa!ent of S8e $ess on goods and
services required to be entioned here
.3(3(3(2 towards pa!ent of S8B$ on
clearance of input goods and
capital goods reoved as such
or after use
$redit used for pa!ent of She cess on clearance of .nput
goods and capital goods reoved as such should be
entioned here
.3(3(3(3 towards inter unit transfer to
>,U
$redit transferred to inter unit to be entioned hereL this is
applicable onl! for >,U unitsM
.3(3(3(# for an! other
pa!ents5adjustents5reversal
Lplease specif!M
$redit reversed for an! other reasons required to be
entioned here
.3(3(3(@ ,otal credit of S8B$ utilised
.3(3(3(@V
,otal reversal 5 pa!ent of She $ess
240
L.3(3(3(1Q.3(3(3(2Q.3(3(3(3Q.3(3
(3(#M
.3(3(# $losing =alance of S8B$
.3(3(# V `L.3(3(1Q.3(3(2(4M7
.3(3(3(@a
$losing balance of She $ess
Part 1' CRE)$T )ETA$LS F#R $NP+T SERV$CE )$STR$2+T#R
>T# 2E F$LLE) #NL( 2( AN $NP+T SERV$CE )$STR$2+T#R?9
J1 DB,'.>S )& $B/%', $*BD., )& SB*%.$B ,'P 9 $B/,*'> BP$.SB DU,U ,'6B/ '/D
D.S,*.=U,.)/ ,8B*B)&
J1(1 )pening =alance of $B/%',
credit
)pening balance of $B/%', $redit required to be
entioned here
J1(2 $redit ta-en Lfor distributionM
on input services
$envat $redit availed on .nput Services for distribution to
be entioned here
J1(3 $redit distributed ,otal aount of credit distributed for the onth to be
entioned here
J1(# $redit not eligible for
distribution in ters of rule 4LbM
of $B/%', $redit *ules+ 200#
$redit not eligible as per rule 4LbM of $envat $redit *ules+
200# requires to be entioned here
J1(@ $losing =alance of $B/%',
credit J1(@ V `LJ1(1QJ1(2M
LJ1(3QJ1(#Ma
$losing balance of $envat $redit requires to be entioned
here
1- )ETA$LS #F CENVAT CRE)$T #F E)+CAT$#N CESS TAKEN AN) )$STR$2+T$#N
THERE#F
J2(1 )pening balance of $B/%',
credit of Bducation $ess
)pening balance of $B/%', $redit of Bducation $ess
required to be entioned here
J2(2 $redit of Bducation $ess ta-en
Lfor distributionM on input
services
$envat $redit of Bducation $ess availed on .nput Services
for distribution to be entioned here
J2(3 $redit of Bducation $ess
distributed
,otal aount of credit distributed for the onth to be
entioned here
J2(# $redit of Bducation $ess not
eligible for distribution in ters
of rule 4LbM of $B/%', $redit
*ules+ 200#
$redit not eligible as per rule 4LbM of $envat $redit *ules+
200# requires to be entioned here
J2(@ $losing =alance of $B/%',
credit of B$ V
J2(@V`LJ2(1QJ2(2M
LJ2(3QJ2(#Ma
$losing balance of $envat $redit of Bducation $ess
requires to be entioned here
1C )ETA$LS #F CENVAT CRE)$T #F SEC#N)AR( AN) H$*HER E)+CAT$#N CESS
TAKEN AN) )$STR$2+T$#N THERE#F N
J3(1 )pening balance of $B/%',
credit of S8B$
)pening balance of $B/%', $redit of S8B $ess required
to be entioned here
J3(2 $redit of S8B$ ta-en Lfor
distributionM on input services
$envat $redit of S8B $ess availed on .nput Services for
distribution to be entioned here
J3(3 $redit of S8B$ distributed ,otal aount of credit distributed for the onth to be
entioned here
24"
J3(# $redit of S8B$ not eligible for
distribution in ters of rule 4LbM
of $B/%', $redit *ules+ 200#
$redit not eligible as per rule 4LbM of $envat $redit *ules+
200# requires to be entioned here
J3(@ $losing =alance of $B/%',
credit of S8B$ V J3(@
V`LJ3(1QJ3(2M LJ3(3QJ3(#Ma
$losing balance of $envat $redit of S8B $ess requires to
be entioned here
J3(1 )pening balance of $B/%',
credit of S8B$
?art >7 Self 'ssessent :eorandu .n this assessee requires to declare the self assessent
procedure followed+ above particulars are in with the records and boo-s aintained+ $envat credit has
been availed properl!+ interest deposited for the dela! pa!ent ade+ authoriGed person on behalf of the
copan! for subitting the return( ,his declaration to be subitted b! clic-ing the spaced provided for
this( &urther+ nae of the signator!+ date and place should be provided
?art >7 Service ,ax *eturn preparer .f the assesssee has ta-en the help of Service ,ax return preparer+
the details of this requires to be subitted here(
200