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Thread: 014 - Service Tax - Circulars - Year 2007 - Circular No.- 90 /1/2007, dated - 03-01-2007 - Applicability of service tax on international in-bound

  1. #21
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    Thumbs up Service Tax - Circulars - Year 2007 - Trade Notice No : 43 / 2007- dated - 12-06-2007- Service Tax on 07 new Services, opening of new Head of Accounts

    Service Tax


    Circular/Instructions/Trade Notices

    Service Tax on 07 new Services, opening of new Head of Accounts communication of ? reg


    OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE: MADURAI-02


    Trade Notice No: 43 / 2007

    Dated: 12 -06-2007

    Service Tax No: 13 / 2007

    Sub :- Service Tax on 07 new Services, opening of new Head of Accounts communication of ? reg.


    A copy of letter No: Co-ord/13-6/2003-04/Vol.IV/350 dated: 29-05-2007 received from the Principal Chief Controller of Accounts, Central Board of Excise and Customs, New Delhi is communicated herewith for information, guidance and necessary action.

    2. The contents of the above said letter may be brought to the notice of all the constituent members of your Trade Association.

    File C.No.IV/16/12/2007 STU


    (G.SREE HARSHA)
    ADDITIONAL COMMISSIONER

    To: As Per Mailing List Nos : I, II & III
    Copy of letter No:Co-ord/13-6/2003-04/Vol. IV/350 dated: 29-05-2007 cited above:
    To Shri Gautam Ray,
    Joint Secretary (TRU)
    CBEC ,North Block, New Delhi
    Sub: as above.

    Sir,

    I am to invite reference to TRU Notification No: 23/2007- Service Tax dated 22-05-2007 on the above subject and enclose a list of new Heads of Accounts opened under the Major Head ? 0044 ? Service Tax? in respect of 07 new services and Education Cess brought under the Service Tax with effect from 01-06-2007.

    It is requested that the accounting code may please be intimated to the Commissioners Customs Central Excise & Service Tax. They may also be advised to issue a Trade Notice for information of the assessees. Yours faithfully, Sd /- Encl : as above. ( Siya Sharan ) Controller of Accounts HEADS OF ACCOUNTS FOR VARTIOUS SERVICES UNDER SERVICE TAX

    Sl No.
    Name of Service
    ACCOUNTING CODE


    Tax Collection
    Other Receipts
    Deduct Refunds**
    1.
    Services provided by a Telegraph authority in relation to telecommunication services
    00440398
    00440399
    00440400
    2
    Services provided in relation to mining of mineral, oil or gas
    00440402
    00440403
    00440404
    3.
    Services provided in relation to renting of immovable property for use in course or furtherance of business or commerce
    00440406
    00440407
    00440408
    4.
    Services provided in relation to execution of a works contract.
    00440410
    00440411
    00440412
    5
    Services provided in relation to development and supply of content for use in telecom services , advertising agency services and on-line information and database assess or retrieval services.
    00440414
    00440415
    00440416
    6.
    Services provided by any person, except a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern, in relation to asset management including portfolio management and all forms of fund management.
    00440418
    00440419
    00440420
    7.
    Service provided in relation to design services
    00440422
    00440423
    00440424

    Note A : ?The sub-head ?Other Receipts? is meant for interest, penalty , leviable on delayed payment of Service Tax.

    **The Sub-head ?Deduct Refunds? is not to be used by the Assessees.

    Education Cess on all taxable services : 00440298




  2. #22
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    Thumbs up Service Tax - Circulars - Year 2007 - F.No. 137/85/2007-CX.4 - dated - 19-06-2007 - Draft Circular - Procedural issues in Service Tax-clarification

    Service Tax


    Circular/Instructions/Trade Notices

    Procedural issues in Service Tax-clarification reg

    Draft Circular

    Circular No. / /2007


    New Delhi, the July, 2007

    F.No. 137/85/2007-CX.4

    Government of India
    Ministry of Finance

    Department of Revenue

    (Central Board of Excise and Customs)


    ***

    Subject:- Procedural issues in Service Tax-clarification reg.
    The service tax levy wasimposed vide Chapters V of the Finance Act, 1994 (the Act). The provisions relating to law and procedures, as applicable to service tax, are incorporated in this Chapter and the rules framed there under, such asthe Service tax Rules, 1994; the CENVAT Credit Rules, 2004; the Export of Service Rules, 2005; the Taxation of Services Received from Outside India, Rules 2006; and the Service Tax (Determination of Value) Rules, 2006.

    2. A number of circulars/clarifications/instructions have been issued, since the inception of the levy, for (a) clarifying the scopes of statutory provisions; (b) providing legal interpretations of the provisions of the Act, the rules and the notifications; and (c) clarifying as well as prescribing the procedures to be followed for carrying out service tax administration. Over a period of time there have been significant changes in law and procedures. While certain circulars/clarification/ instructions have become redundant and anachronistic, new issues have arisen on account of changes in law and procedure. In view of these changes, a need was felt to re-examine the utility of these circulars/instructions. Accordingly, all these circulars/clarifications/ instructions issued by the Board [as also by the Director General (Service Tax)], since the introduction of Service Tax in 1994, have been reviewed. For this purpose, the Government engaged Shri T.R.Rustagi, Chief Commissioner (retired). A Report, dated 22.02.2007 submitted by Shri Rustagi, was placed on the official web-site for soliciting views/comments/suggestions from the trade and industry associations, officers from field formations and others stakeholders. The report as well as the responses were examined. In the first phase, a total of 48 circulars/instructions (which had become redundant or inconsistent with the exiting law and procedures) were withdrawn vide circular No. 93/4/2007-ST dated 10.5.2007. Subsequently the remaining circulars/clarifications/ instructions, were reviewed and it has been decided to issue two comprehensive and consolidated circulars; one, dealing with the procedural issues and the second dealing withthe scope of the taxableservices. This circular aims to consolidate the service tax procedural issues including those relating to availment and utilization of CENVAT credit in so far as they relate to service tax. This circular supersedesall previouscirculars/clarifications/instructions on these subjects. It is however, clarified here that this circular intends only to clarify the scope of the Act and the rules and therefore in the event of any inadvertent inconsistency or contradiction between this circular and the provisions of the Act or the rules, the latter would prevail.

    3. The salient features of various procedures relating to service tax have been enumerated in the following paragraphs.

    4. Registration:

    4.1 The provisions relating to registration are contained in section 69 of the Chapter V of the Finance Act, 1994 and rule 4 of the Service Tax Rules, 1994. The salient features are as under.

    4.2 Every person providing a taxable service and liable to pay service tax is required to take registration with the Central Excise & Service Tax department. Further, in certain cases liability to pay service tax has been shifted to service receiver or other specified persons, in terms of section 69 (2) of the Act. These cases are

    (i) insurer in case of service provided by insurance agent;
    (ii) person making payment of freight in such cases where goods transport agency provides taxable service to specified consignor and consignee
    (iii) Asset management company in case of service provided by a distributor to a mutual fund;
    (iv) where the service is provided to a person in India by any person from a country other than India;
    (v) body corporate or a firm located in India receiving sponsorship service. In all these cases, the person liable to pay service tax will seek service tax registration.

    4.3 The turnover limit for threshold based exemption is, currently Rs 8 lakh in a year. However, person availing this exemption is required to seek registration on achieving a turnover of Rs 7 lakh in a financial year in respect of all taxable services provided by him.

    4.4 Further, input service distributor, which is an office of a manufacturer of excisable goods or taxable service provider for distribution of credit on input services, is also required to take separate service tax registration.

    4.5 Application for registration is required to be made in Form ST-1 to the Superintendent of Central Excise/Service tax within 30 days of levy of service tax coming into effect on such taxable service, or in case the business is commenced after the levy coming into effect, the application for registration is required to be made within 30 days of commencement of business of providing a taxable service. A person providing more than one taxable service is required to take single registration. He should indicate all taxable services provided by him in Form ST_1.

    4.6 Any person liable to pay service tax, who provides taxable service from more than one premises, can apply for centralized registration in respect of premise/ premises, where his centralized billing system or centralized accounting system in respect of taxable services provided by him, is /are located. Similarly, any other person, other than service provider, who is liable to pay service tax,-
    (a) if receives taxable services in more than one premises; or
    (b) if has more than one premises engaged in relation to such taxable service,
    can also seek centralised registration, provided he maintains centralised accounting in respect of such taxable services. In case service taxpayer opts for
    centralised registration, the office or premises from where centralised billing is done or centralised accounting is maintained, will be required to be registered. Centralised registration is granted by the Commissioner of Central Excise/Service Tax having jurisdiction over such premises.

    4.7 The registration certificate is granted by department, in Form ST-2, within seven days of filing of complete application for registration. In case registration certificate is not issued within seven days, the registration deems to have been granted. Registration No., also known as Service Tax Code (STC) is a fifteen digit PAN based number. First 10 digits of this number are same as the PAN of such person. Next two digits are 'ST'. Next three digits are S. No. indicating the number of registrations taken by the service taxpayer against a common PAN. In addition to PAN, another number, namely, premises code is also issued vide S. No. 5 of Form ST-2. This number indicates the code of concerned Commissionerate, division, range and S. No. in the range. This number is issued for easy identification of location of registration of service taxpayer.

    5. Payment of service tax:

    5.1The provision related to payment of service tax are contained in section 68 of the Chapter V of the Finance Act, 1994 and rule 6 of the Service Tax Rules, 1994. The salient features are as under.
    5.2 In terms of rule 6 of the Service Tax Rules, 1994, service tax liability for a particular month or quarter is to be discharged on the payments received towards the value of taxable service received in that month or quarter, as the case may be. The service tax is required to be paid on monthly basis, by all service taxpayers, other than individuals and proprietary/partnership concerns. The individuals and proprietary or partnership concerns are required to pay service tax on quarterly basis. The service tax is to be deposited by the 5th of month following the month or quarter for which service tax is paid. Service tax is to be deposited in the designated banks. For depositing the service tax, the duty paying challan should be filled complete in all respect.

    5.3 E-payment of service tax: The service tax can be paid electronically also. For this purpose, the service taxpayer needs to have an account in any branch of the designated banks. For availing facility of e-payment, the service taxpayer will have to obtain a user-id and password from the bank in which he has the account. The procedure of e-payment is that the service taxpayer would log on to the web-site of the bank with his user-id and password. He will then choose the option of payment of service tax. On choosing this option, the service taxpayer will be guided to e-payment portal wherein he would be filling the challan for payment of service tax and would authorize payment of service tax by way of debit to his account. On submission, copy of acknowledgement and challans would be generated for the records of service taxpayer.

    6. Mandatory e-payment of service tax

    6.1 The e-payment of service tax has been made mandatory w.e.f . 1.10.2006, vide sub-rule (2) of rule 6 of the Service Tax Rules, 1994, for all assesses who have paid (in cash plus through CENVAT Credt) a service tax amounting to Rs 50 lakh or more in the preceding financial year or in the current financial year. For such service taxpayer, if he pays any further service tax in cash, it would be mandatory to make such payment through e-payment only.
    6.2 It has been brought to the notice of the Board that there are certain problems like procedural delays in opening of account in designated banks and issue of user's-id and password by banks for internet banking; delays in passing a resolution by the Board of Directors of a company to authorize any person for making e-payment (a requirement stipulated by banks for internet banking); systems failure, particularly at bank's end, are causing some difficulties to the service taxpayer in complying with the requirement of mandatory e-payment of service tax. Keeping in view the systemic and procedural problems during initial phase of implementation of this scheme, it is advised that such taxpayers should contact the jurisdictional service tax/ central excise office or the jurisdictional commissioner, who would extend all possible help to the taxpayers to comply with this requirement of mandatory e-payment. At the same time, such taxpayers should expeditiously complete the procedural formalities required at their end for availing internet banking facility from designated banks and complying with this requirement.
    6.3 For a person providing taxable service from more than one premises and where each of such premises is separately registered with the department for payment of service tax, the criterion of Rs 50 lakh would apply to each registered premises individually, as each registered premises is separately an assessee in terms of law. Similar is the situation in the case of a person paying service tax on taxable service received by him. However, in case of a Large Taxpayer (LTU), the cumulative service tax paid by all registered premises of such Large Taxpayer will be taken into account for satisfaction of criterion of payment of service tax amount of Rs 50 lakh.
    6.4 If a person provides taxable service, also receives taxable services on which he is liable to pay service tax and has a single registered premises, the criterion of payment of service tax amount of Rs 50 lakh for the purposes of mandatory e-payment would be the total service tax paid by him.

    7. Issuance of invoices, bills, challan, consignment note and other documents:

    7.1The provisions relating to issuance of such documents, in respect of taxable service, are prescribed in rule 4A and 4B of the Service Tax Rules, 1994. The salient features are as under.
    7.2 Every taxable service provider is required to issue a document (i.e. invoice, bill or challan) with in 14 days from either the date of completion of provision of service or receipt of any service charges (which ever is earlier). Such document should be serially numbered and should contain the name and address of service provider and service receiver, description and value of service provided and service tax payable thereon.
    7.3 An input service distributor is also required to issue such a document in favour of the recipient of the credit distributed. This document should also be serially numbered and should give the details of the invoices under which the taxable service has been received, the name, address and registration of the input service distributor as well as the recipient of the credit. The amount of credit is also to be mentioned.
    7.4 For banking, financial or other service providers, providing 'banking & other financial services', certain relaxations are available. For such service provider there is no need of serial numbering and address of the service receiver. Similar dispensation is available for input service distributors of such type of service provider.
    7.5 For providers of taxable service of transport of goods by road (i.e. goods transport agency) the invoice/bill/challan should, in addition to the information required, as mentioned in para 7.2, contain the consignment note number and date and gross weight of the consignment.
    7.6 Rule 4B of the Service Tax Rules prescribes that the goods transport agency would issue a consignment note, which would be serially numbered and contain the name of the consigner and consignee, the vehicle registration number, details of goods transported, details of place of origin and destination, and the person (consigner / consignee/goods transport agency) liable to pay service tax. In case of less container load (LCL) cargo, where the goods transport agent is not aware of the vehicle registration number at the time when he receives the goods and issues consignment note, he may mention the non-availability of vehicle registration number on the copy issued to the consigner. However, after he comes to know about the vehicle registration number, he should mention the same in his office copy of the consignment note, so as to enable future verification. Similarly, in case of transshipment of goods, the goods transport agency would make entry of such transshipment, in their copy of consignment note. For example, if goods moves from Delhi to Agra, and is transshipped from there for further movement to Mumbai, the goods transport agency would mention in his copy of consignment note, against vehicle No. as " (i) Delhi to Agra: Vehicle No.- XXX (ii)Agra to Mumbai: Vehicle No.- XXXX". This would satisfy the requirement of the said rule 4B.

    8. Classification of taxable service

    8.1 The taxable services are classifiable in respective sub-clauses of clause (105) of section 65 of the Act. In case a service is prima facie classifiable under two or more sub-clauses of clause (105), the classification is to be determined in terms of principles for classification of services is enunciated in section 65A of the Act.

    9. Service tax return:

    9.1The provisions relating to service tax returns are contained in section 70 of the Chapter V of the Finance Act, 1994 and rule 6 of the Service Tax Rules, 1994. The salient features are as under.
    9.2 Every assessee is required to file a half yearly return in Form ST-3. This return, for the periods from April to September and October to March, is to be filed by the 25th October and the 25th April respectively. Further, 'Input Service Distributor' is also required to file this return.
    9.3 The service tax return is required to be filed under Section 70 of the Act, by 'any person liable to pay the service tax'. Similarly, as per Rule 7 of the ST Rules, 1994, 'every service taxpayer' is required to submit service tax return. By definition, an 'assessee' is a person liable to pay service tax. Thus, persons, who are not liable to pay service tax (because of the exemption including threshold exemption), are also not required to file ST-3 returns.

    9.4 E-filing of return- The service tax return can be filed electronically after logging into the website www.servicetaxefiling.com. For this purpose the assessee is required to obtain user-id and login password from department. For this purpose a simple application may be made to the jurisdictional Central Excise Officer, giving details of STC No. and an 'e-mail id'. 'User id' and 'password' for the service taxpayer will be communicated, on the 'e-mail-id' furnished by him, within ten days after filing the application along with technical details required for accessing the relevant site and the procedure for making entries and other guidance as may be necessary. While filing the return electronically, the service taxpayer is required to file details as contained in Form ST-3 and duty paying challans. On submission of return, complete in all respect, a key number will be generated by the system which will depend on the STC No., date of filing, value of services declared and tax paid and an acknowledgement would be generated by the system along with a copy of Form ST-3 and Challan which could be printed by the service taxpayer for his records.
    9.5 In case of any difficulty faced in e-filing, the service taxpayer may send an e-mail at the address specified by the Commissioner explaining the difficulties and if any reply is not received within 2 days he may send a mail to
    saps@excise.nic.in
    9.6 The Automation of Central Excise and Service Tax (ACES) is under implementation. Subsequent to its implementation, the electronic returns would be filed through ACES.

    10 Assessment

    10.1 Normally under self assessment scheme, the service taxpayer himself assesses his tax liability and pays the same (a) for the period; and (b) by a date that has been stipulated. However, if an service taxpayer is not in a position to determine the service tax liability, say, for the reason that valuation or classification of taxable service or issue of admissibility of an exemption notification could not be determined (or any such other reason), he may opt for assessment of service tax on provisional basis after obtaining an order from jurisdictional Deputy Commissioner/ Assistant Commissioner, in terms of such order. The assessment in such case would continue to be provisional till the issue is finalized and upon such finalization if the tax liability arises more than what has been paid by the service taxpayer on provisional assessment basis, the service taxpayer would pay the differential amount along with applicable interest else,if the service tax paid on provisional assessment basis is more than the finalized service tax liability, the differential amount would be refunded by the department subjectto provisions relating to refund of service tax.

    11. CENVAT Credit

    11.1 With effect from 10.9.2004, CENVAT Credit across goods and services has been allowed. In this regard the manner of availing credit and the procedure to be followed is prescribed in the CENVAT Credit Rules, 2004 (herein after called 'the Credit Rules'). This circular deals with only certain commonly raised issues relating to certain provisions of these rules that relate to service tax credit, namely, (a) those pertaining to credit of service tax paid on taxable service i.e. 'transportation of goods by road'; and (b) eligibility to avail credit on service tax paid on mobile phones. The following are the issues have been examined in this circular,-
    (a)ISSUE: Whether a manufacturer or taxable service provider having credit balance in his account can utilize that credit for payment of service tax on goods transport by road, as a consignor or as a consignee?
    COMMENTS : In terms of rule 3 (4) of the Rules CENVAT credit can be utilized for the following payment of ,-
    (a) any duty of excise payable on any final product;
    (b) any amount payable while removing (i) inputs as such or in partially processed form or (ii) capital goods as such;
    (c) any amount payable on duty-paid goods, when such goods are brought back to a factory and subsequently remove after carrying processes, not amounting to manufacture (rule 16 (2) of the Central Excise Rules);
    (d) service tax on any output service
    In terms of the Credit Rules, 'output service' means any taxable service provided by the provider of taxable service, to service receiver. Further, the definition of 'provider of taxable service' includes a person liable for paying service tax. Therefore, reading the two definitions in conjunction, it is clear that to form 'output service', taxable service has to be actually provided by the 'provider of taxable service'. Even if due to a legal fiction, a consignor or a consignee becomes 'a person liable to pay service tax' (and consequently a 'provider of taxable service'), it cannot be said that they have actually provided any taxable service. The service provided by a Goods Transport Agent (GTA) for which the consignor or the consignee are made liable to pay service tax, does not become an 'output service' for such consignor or the consignee. Therefore, the service tax payable by the consignor or consignee on transportation of goods by road cannot be paid through credit accumulated by such consigner or consignee. Accordingly, the consigner and consignee has to be pay tax in cash on goods transport by road service.
    (b)ISSUE ; Whether a consignee can take the credit of the amount paid as service tax either by himself (as consignee), or by the consignor or by the Goods Transport Agency?
    COMMENTS: As per Rule 3 of the CENVAT Rules, 2004, CENVAT Credit of, inter alia, service tax leviable and paid on any 'input services' can be taken. The rule does not distinguish as to who (i.e. the GTA, the consignor or the consignee himself) has paid the aforesaid tax. The only conditions required to be satisfied is that the consignee must be a manufacturer of excisable goods or a provider of taxable service and the service must be in the nature of 'input service' for such activity. In case of inward transportation of inputs or capital goods, such service (being specifically mentioned under the definition of 'input service') would qualify to be called as 'input service' and thus the service tax paid (by any of the persons mentioned above) on it would be eligible as credit to the receiver if he is either a manufacturer of excisable goods or a provider of taxable service.
    (c) ISSUE; Up to what stage a manufacturer/consignor can take credit on the service tax paid on goods transport by road?
    COMMENTS: This issue has been examined in great detail by the CESTAT in the cases of M/s Gujarat Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (006)STR 0249 Tri-D],. In this case CESTAT has held as follows,
    "the post sale transport of manufactured goods is not an input for the manufacturer/consignor. The two clauses in the definition of 'input services' take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal. The two clauses, one dealing with general provision and other dealing with a specific item, are not to be read disjunctively as to bring about conflict to defeat the laws scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions".
    In conclusion a manufacturer / consignor can take credit on the service tax paid on out ward transport of goods up to the place of removal and not beyond that.
    11.2 A related question that requires further elaboration is the place, which should be treated as 'place of removal' for the aforesaid purposes. The phrase 'place of removal' has not been defined in CENVAT Credit Rules. In terms of sub-rule (t) of rule 2 of the said rules, if any words or expressions used in the CENVAT Credit Rules and are not defined therein but are defined in the Central Excise Act or the Finance Act, 1944, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase 'place of removal' is defined under section 4 of the Central Excise Act, 1944. It states that,-
    "place of removal" means-
    (i) a factory or any other place or premises of production or manufacture of the excisable goods ;
    (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty ;
    (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;
    from where such goods are removed."
    It is therefore, clear that to a manufacturer/consignor the eligibility for availment of credit on the service tax paid on the transportation, the factual situation (whether a factory gate sale, sale from a non-duty paid warehouse, depot sale or sale from any other place or premises from where the excisable goods are to be sold after their clearance from the factory) would determine the extent of such eligibility. In this regard, in the case of CCE, Indore Vs NHK Springs Ltd, the CESTAT[ order No. 907/8, dated 26.4.2007] has observed,
    'The definition of "place of removal" has expanded by virtue of Section 4 of Central Excise Act, 1944, beyond the factory premises to other place or premises wherein the goods are permitted to be deposited without payment of duty, from where the goods are removed, and also depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory. In view of the expanded meaning of the expression 'place of removal', outward transportation upto the place of removal has been recognized as 'input service'.
    For illustration if the goods are first sold at the factory gate or depot and then the transportation is being undertaken for delivery of the goods at the destination. In such cases, the factory /depot would become the 'place of removal' and any transportation thereafter would be transportation beyond such 'place of removal'. As such no credit would be admissible on such outward freight. However, there are situations, where by way of the terms of contract a sale is in the nature of destination sales. In such cases, the ownership of the goods rests with the seller of the goods till the delivery of the goods to the purchaser at his door step. The seller not only bears the freight for such transportation but also suffers the risk of loss of or damage to the goods during transit to the destination. The terms of the contract for sale also makes it clear that the property in the goods would stand transferred upto the purchasers only when such goods are delivered in acceptable condition to the purchasers, and the purchasers accept such delivery. Obviously in such a case the door step of the purchaser is the 'place of removal' within the meaning of section 4(3) (c) of the Act as the goods are being sold at such place after their clearance from the factory. Therefore, the credit of service tax paid on outward transportation up to such place of removal would be clearly admissible as credit to the manufacturer of any excisable goods, if its sale takes place in above manner.
    11.3 A doubt has also been raised regarding admissibility of CENVAT credit on service tax paid in respect of mobile phones. In the Service Tax Credit Rules, 2002, it was prescribed that credit of service tax was admissible only on telephone connection installed in the business premises. A clarification to this effect was also issued vide circular No. 59/8/2003-ST dated 20.6.2003, in the context of the Service Tax Credit Rules, 2002. However, in the CENVAT Credit Rules, 2004 no such condition has been prescribed. Therefore, w.e.f. 10.9.2004, credit of service tax paid in respect of mobile telephone service is admissible, provided the mobile phone is used for providing out put service or used in or in relation to manufacture of finished goods.

    12 Delay in payment of service tax

    12.1 Delay in payment of service tax, including a part thereof, attract simple interest in terms of section 75 of the Act, The rate of interest is as prescribed from time to time, in accordance with this section. At present the rate of interest is 13% per annum (notification No. 26/2004-ST, dated 10.9.2004).

    13 Any amount recovered by any person as service tax

    13.1 Any amount collected by a person as service tax from any other person, which is not chargeable in terms of services tax, such amount is required to be deposited with the Central Government. In other words no amount collected as service tax could be retained by person who has collected such amount. Any delay in depositing such amount attracts simple interest at rate prescribed under section 73 B of the Act. At present the rate of interest is 13% per annum (notification No. 8/2006-ST, dated 19.4.2006).

    14 Scrutiny of return and audit

    14.1 The selective scrutiny of return or audit of service taxpayer and other assessees, like input service distributor, may be done by the jurisdictional central excise officer (authorized for the purpose) in terms of the instructions/guidelines issued by the Board, from time to time. Similarly, an audit party deputed by the Comptroller and Auditor General of India may also undertake audit of service tax assessee. The rule 5 of the Service tax Rules makes it mandatory for every assessee to make available the records, on demand, for inspection and examination to such authorized person/audit parties.

    15. Adjudication of cases

    15.1 Section 73 of the Act deals with the adjudication of cases of short levy or non levy of service tax or service tax short paid or not paid or erroneously refunded. For quick settlement of disputes, this section prescribes that (i) in cases other that those involving fraud, collusion, wilful mis-statement, suppression of fact or contravention of provisions of Act or rules made thereunder with intent to evade tax, the person chargeable to service tax, or to whom service tax has been erroneously refunded may make payment suo-moto along with interest, as applicable, and, consequently no Show Cause Notice would be served in respect of amount so paid; (ii) in other cases involving fraud, collusions, wilful mis-statement and suppression of facts, etc., the dispute could be settled by making payment of service tax amount specified in the notice along with interest and penalty equal to 25% of service tax amount, within thirty days of issue of show cause notice. Section 83A confers powers on the Central Excise Officer for adjudging a penalty under the provisions of the said Act or the rules made thereunder. Board has specified monetary limits for adjudication of cases under section 83A of the said Act vide notification No. 30/2005- Service Tax dated 10th August, 2005. The monetary limits are as follows:

    S.No
    Central Excise Officer
    Amount of service tax or CENVAT credit specified in a notice for the purpose of adjudication under section 83A
    (1)
    (2)
    (3)
    (1).
    Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise
    Not exceeding Rs. 5 lakhs
    (2).
    Joint Commissioner of Central Excise
    Above Rs. 5 lakhs but not exceeding Rs. 20 lakhs
    (3).
    Additional Commissioner of Central Excise
    Above Rs. 20 lakhs but not exceeding Rs. 50 lakhs
    (4).
    Commissioner of Central Excise
    Without limit.
    Uniform monetary limits apply for the purposes of adjudication under section 73 and section 83A of the said Act.
    The monetary limits specified in the above Tables for adjudication of service tax cases are irrespective of whether or not such cases involve fraud, collusion, willful mis-statement, suppression of facts or contravention of any of the provisions of the said Act or the rules made thereunder with an intent to evade payment of service tax and whether or not extended period has been invoked.

    Further, those cases where there is no alleged failure to pay or evasion/avoidance of service tax or utilization of CENVAT credit is to be adjudicated by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise.
    15.2 A notice to show cause under the provisions of the said Act or the rules made thereunder is to be approved in writing and signed by the Central Excise Officer who is competent to adjudicate the said notice.

    15.3 Where simultaneously different cases involving the same issue are due to be adjudicated in a Commissionerate, all such cases may be adjudicated by the Central Excise Officer competent to decide the case where the service tax or CENVAT credit involved is of the highest amount.
    15.4 For cases where the appellate authority remands the case for de-novo adjudication specifically mentioning the authority that has to adjudicate the case, then such authority specified in the said appellate order should adjudicate such cases. Where the appellate authority does not specifically mention the authority who has to adjudicate the case, then it should be decided by the authority who passed the said remanded order. The above specified monetary limits are not applicable in such cases.
    15.5 As decided earlier by the Board, in respect of issue involving Show Cause Notice for an amount of Rs one thousand and below, towards short payment/non-payment of service tax, the jurisdictional officer should give an opportunity and allow the service taxpayer to deposit the amount of service tax not paid alongwith interest, if any. In case the service provider pays the service tax alongwith interest within period of one month of the default in payment being pointed out, recourse should be made to section 80 of Finance Act, 1994 as amended provided the service taxpayer fulfils the conditions therein. However, in other cases of failure on behalf of Service provider to pay the service tax and interest, if any, normal procedure shall be followed.

    16 Revision of orders:
    16.1 The adjudication order passed by the officers subordinate to the Commissioner of Service Tax could be revised by the Commissioner after causing inquiry as he deems fit, in terms of section 84 of the Act. The limitation period for issuing such reversionary order is two years from the date on which original order is passed.However, the issue against which appeal has been filed by the service taxpayer before Commissioner (Appeal) cannot be revised. Thus if an order deals with several issues and party files appeal only in respect of few issues, the commissioner can pass revisionary order in respect of remaining issues against which appeal has not been filed by the party.
    16.2 Further, before revising any order, an opportunity for hearing is to be given to service taxpayer to comply with the principle of natural justice.

    17 Appeals provisions
    17.1If the service taxpayer is aggrieved by any order passed by an adjudication authority lower than the Commissioner, he may file an appeal before the Commissioner (Appeal). Such appeal is required to be filed within three months of communication of such orders to party.
    17.2 Appeal against an order of Commissioner, including a revisionary order, and order of Commissioner (Appeal) lies with the Appellate Tribunal.


    Yours faithfully,
    (Gautam Bhattacharya)
    Commissioner(Service Tax)

    *******
    CBEC solicits views, comments and suggestions on the draft circulars, particularly suggestion for inclusion of any additional issues in the proposed circulars, from the trade and industry associations, departmental officers and others. The views, comments and suggestions may be sent so as to reach CBEC on or before 29th June, 2007.

    Comments and suggestions on the draft circulars -
    (i) on technical issues may be sent to Shri Girdhar G. Pai, Under Secretary (TRU), CBEC, Room No.146-G, North Block, New Delhi. Fax No. 011-23093037. E-mail: tru.finmin@gmail.com
    (ii) on the procedural issues may be sent to Shri G.D. Lohani, OSD (Service Tax), CBEC, North Block, New Delhi. Fax No. 011-23092275. E-mail: geebeetru@rediffmail.com / gdlohani@gmail.com



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    Thumbs up Service Tax - Circulars - Year 2007 - F.No.354/28/2007-TRU - dated - 19-06-2007 - Draft Circular - Clarification on technical issues

    Service Tax


    Circular/Instructions/Trade Notices

    Clarification on technical issues relating to scope and classification of taxable services, levy of service tax and valuation of taxable services - reg


    DRAFT CIRCULAR
    Circular No. / /2007-ST
    New Delhi, dated - - July, 2007

    F.No.354/28/2007-TRU

    Government of India
    Ministry of Finance

    Department of Revenue
    Tax Research Unit

    Sub: Clarification on technical issues relating to scope and classification of taxable services, levy of service tax and valuation of taxable services - reg.

    ****

    Service Tax was introduced in the year 1994 with three taxable services. At present, one hundred services are specified as taxable services. Since the introduction of service tax, number of clarifications in the form of circulars/instructions/letters has been issued by the Central Board of Excise & Customs (CBEC), Director General (Service Tax) and field formations.

    2.Government decided to undertake a comprehensive review of all the clarifications issued since the introduction of service tax on matters relating to service tax in various forms by different authorities keeping in view the changes that had taken place in the statutory provisions, the judicial pronouncements and other relevant factors and appointed a Committee under Shri T.R.Rustagi, former Chief Commissioner of Customs & Central Excise and Director General of Inspection to undertake the review of clarifications.

    3. Comments, views and suggestions were also sought from the trade and industry associations, departmental officers and interested persons.

    4. Shri T.R.Rustagi submitted his report to the Government and suggested to withdraw all the clarifications and codify the clarifications into two circulars - one relating to technical issues and the other relating to procedural issues. The report of Shri T.R.Rustagi has been placed on the CBEC web site for comments and suggestions.

    5. Taking into consideration the report submitted by Shri T.R.Rustagi, views and suggestions received from the trade and industry associations, departmental officers and other stakeholders, it is proposed to codify and issue a comprehensive circular on technical issues. A separate circular will be issued for procedural issues.

    6. This circular supersedes all circulars, clarifications and communications issued from time to time by the CBEC, DG (Service Tax) and various field formations on all technical issues including scope and classification of taxable services, valuation of taxable services, export of services, services received from outside India, scope of exemptions and all other matters on levy of service tax. With the issue of this circular, all the clarifications issued on technical issues relating to service tax stand withdrawn.

    7. At the time of introduction of the Finance Bills and after enactment of respective Finance Acts, TRU issue letters explaining the scope of various provisions contained in the Finance Bills/Acts. Such letters explaining the provisions contained in the Finance Bill/Finance Act would be read in the relevant context.

    8. Views stated in the circular reflect the interpretation of the law and the current practice of the department. This circular is not to be treated as part of law and does not override it. Relevant statutory provisions are to be referred.

    9. REFERENCE CODING SYSTEM: In the circular, for ease of reference a coding system is followed. Views are indicated separately for each individual issue. For each issue, a corresponding reference code is given. Each taxable service is identified by a three-digit code. First three digits of the reference code relates to a specific taxable service. In addition, following three digit codes are also followed:
    996 - Services provided from outside India and received in India.
    997 - Export of Services
    998 - Valuation of taxable services.
    999 - Miscellaneous purposes.
    Three-digit code is followed by a dot and two digits. The two digits after the dot indicate number of the issue clarified under that particular taxable service. Digit codes are followed by a slash and thereafter the date of issue of the clarification is indicated.

    10. List of three-digit codes and the corresponding subject is given in Annexure I.
    Reference Code
    Issue
    Comment
    (1)
    (2)
    (3)
    002.01 / 01.07.07
    Whether service tax is leviable on the amount collected as surcharge for delayed payment of telephone bills?
    An amount collected for delayed payment of a telephone bill is not to be treated as consideration charged for provision of telecom service and therefore, does not form part of the value of taxable service under section 67 read with Service Tax (Determination of Value) Rules, 2006.
    004.01 / 01.07.07
    Persons / agencies canvass advertisements for publishing, on commission basis. Such persons / agencies do not provide any other services like making, preparation, display or exhibition of advertisement. Whether merely canvassing advertisement for publishing on a commission basis by persons / agencies is classifiable as Advertising Agency service [section 65(105)(e)] or not?
    Merely canvassing advertisements for publishing, on commission basis, is not classifiable under the taxable service falling under section 65(105)(e).
    Such services are leviable to service tax under business auxiliary service [section 65(105)(zzb)].
    005.01 / 01.07.07
    Some transporters undertake door- to-door transportation of goods or articles and they have made special arrangements for speedy transportation and timely delivery of such goods or articles. Such services are known as 'Express Cargo Service' with assurance of timely delivery.
    Whether such 'Express cargo service' is covered under courier agency service [section 65(105)(f)]?
    The nature of service provided by 'Express Cargo Service' provider falls within the scope and definition of the courier agency. Hence, the said service is leviable to service tax under courier agency service [section 65(105)(f)].
    005.02 / 01.07.07
    "Angadia" undertakes delivery of documents, goods or articles received from a customer to another person for a consideration.
    Whether services provided by angadia is leviable to service tax under courier agency service [section 65(105)(f)]?
    Angadias are covered within the definition of 'courier agency' [section 65(33)]. Therefore, such services provided by angadia is leviable to service tax under courier agency service [section 65(105)(f)].
    006.01 / 01.07.07
    Whether a self-employed professionally qualified engineer can be considered as 'consulting engineer' [section 65(31)] and service provided by such self-employed professionally qualified engineer to a client in relation to one or more discipline of engineering is leviable to service tax under consulting engineer service [section 65(105)(g)]?
    Consulting engineers include self-employed professionally qualified engineer, whether or not employing others for assistance.
    Services provided by such self-employed professionally qualified engineer to a client in relation to one or more discipline of engineering is leviable to service tax under consulting engineer service [section 65(105)(g)].
    010.01/ / 01.07.07
    Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate houses / MNCs, who come to the institutes for recruiting candidates through campus interviews. Whether services provided by such institutions in relation to recruitment of manpower are leviable to service tax under 'manpower recruitment or supply agency' service [section 65(105)(k)]?
    'Manpower recruitment or supply agency' is defined as "any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client" [section65 (68)]. Educational institutes such as IITs, IIMs, fall within the definition of 'manpower recruitment or supply agency', and service tax is leviable on services provided by such institutions in relation to campus recruitment under section 65(105)(k).
    012.01 / 01.07.07
    "Mandap" is defined as any immovable property as defined in section 3 of the Transfer of Property Act, 1882 and includes any furniture, fixtures, light fittings and floor coverings therein let out for a consideration for organizing any official, social or business function. [section 65(66)]
    "Mandap keeper" is defined as a person who allows temporary occupation of a mandap for a consideration for organising any official, social or business function [section 65(67)].
    Whether hotels / restaurants letting out their halls, rooms etc. for social, official or business functions fall within the definition of "mandap" and allowing temporary occupation of halls, rooms etc by such hotels / restaurants for organizing any official, social or business function is leviable to service tax under "mandap keeper service" [section 65(105)(m)]?
    Halls, rooms etc. let out by hotels / restaurants for a consideration for organising social, official or business functions are covered within the scope of "mandap" [section 65(66)], and such hotels and restaurants are covered within the scope of "mandap keeper" [section 65(67)].
    Accordingly, service tax is leviable on services provided by hotels and restaurants in relation to letting out of halls, rooms, etc. for organizing any official, social or business function under mandap keeper service [section 65(105)(m)].
    012.02 / 01.07.07
    Whether allowing temporary occupation of a hall for the purpose of holding dance, drama or music programme or competitions is leviable to service tax under Mandap Keeper Service?
    Dance, drama or music programme or competitions are social functions and allowing temporary occupation of a hall for a consideration for organizing such functions are leviable to service tax under Mandap Keeper Service [section 65(105)(m)].
    017.01 / 01.07.07
    Whether services provided in relation to merger or acquisition is covered under management or business consultant service [section 65(105)(r)]?
    Services provided in relation to merger, acquisition and other form of restructuring of business organization are covered within the scope of management or business consultant service [section 65(105)(r)].
    032.01 / 01.07.07
    Whether Prasar Bharati Corporation (Doordarshan and All India Radio) are liable to pay service tax under Broadcasting Service [section 65(105) (zk)]?
    Prior to 1.3.2003, Prasar Bharati Corporation did not pay service tax by virtue of erstwhile section 22 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990. However, the said section 22 was omitted vide section 163 of the Finance Act, 2002 with effect from 1.4.2003. In view of the above statutory changes, with effect from 1.4.2003 Prasar Bharati Corporation is liable to pay service tax for the broadcasting services provided like any other broadcasting agency or organization engaged in providing service in relation to broadcasting.
    034.01 / 01.07.07
    Moneychangers are persons authorized under section 7 of Foreign Exchange Management Act, 1973 to deal in foreign currency. Explanation given under Section 7 of the said Act states that 'dealing' means purchasing foreign currency in the form of notes, coins or traveller's cheques or selling foreign currency in the form of notes or coins.
    Whether services provided by a money changer in relation to dealing of foreign currency (buying or selling), at specified rates, without separately charging any amount as commission for such dealing, is leviable to service tax as foreign exchange broking under 'banking and other financial services' [section 65(105) (zm)]?
    Moneychangers are authorized by RBI to buy and sell foreign exchange at the prevalent market rates. Buying or selling of foreign exchange by such persons without separately charging any amount as commission or brokerage does not fall within the scope of foreign exchange broking and is not leviable to service tax under section 65(105)(zm).
    034.02 / 01.07.07
    'Asset management and all other forms of fund management' are leviable to service tax under 'banking and other financial service' [section 65(12)].
    Whether the amount charged as 'entry and exit load' from the investor by a mutual fund is leviable to service tax as asset / fund management services under banking and other financial services [section 65(105)(zm)]?
    Entry load and exit load charged by a mutual fund are not for the purpose of management of assets. Thus, amount charged as "entry and exit load" are not to be treated as consideration received by Asset Management Company for asset management and hence not be leviable to service tax under banking and other financial service [section 65(105)(zm)].
    034.03 / 01.07.07
    Whether depository services and Electronic Access to Securities Information (EASI) services provided by Central Depository Services (India) Ltd., (CDSL) is leviable to service tax under Banking and other Financial Services[section 65(105)(zm)]?
    Definition of "Banking and other Financial Services" specifically includes "provision and transfer of information and data processing [section 65(12)(a)(vii)]". Services provided by CDSL falls within the scope of "provision and transfer of information and data processing". These services are not in the nature of "on-line information and data base access or retrieval services". Therefore, the depository services provided by CDSL including Electronic Access to Securities Information (EASI) for a fee are leviable to service tax under Banking and other Financial Services. [section 65(105)(zm)]
    035.01 / 01.07.07
    Whether repair of ships during dry-docking by persons duly authorized by the Port is leviable to service tax under port service [section 65(105) (zn)]?
    Repair of ships in an Indian port, whether or not during dry-docking, by the port or by the person duly authorized by the port authorities is leviable to service tax under port service.
    035.02 / 01.07.07
    Management Committee of Paradeep Port was constituted as per the directions of Supreme Court of India. The Committee operates under the "Paradeep Port, Clearing, Forwarding and Handling Workers (Regulation of Employment) Scheme, 1994". Officers of the Paradeep Port Trust are associated with the Committee. The Committee is authorized by the Port Trust to provide a number of services within the port area for a consideration. Whether services provided by the Management Committee within the port area for a consideration is leviable to service tax under Port Service?
    As the Management Committee of Paradeep Port is authorized by the Port Trust to provide services within the port area at the prescribed rates, such services provided by the Committee are leviable to service tax under Port Service. [section 65(105) (zn)]
    036.01 / 01.07.07
    Authorized dealers of motor vehicles provide to customers free servicing of motor vehicles without charging any amount as service charge from the customers. The vehicle manufacturer promises such a facility to attract customers and reimburses the service charges to the authorised dealers, who provide to customers free servicing of motor vehicles. However, as per agreement, consideration for the service provider is not directly paid by the customer but by the vehicle manufacturer.
    Whether such 'free services' given to the customer free of cost by the authorized dealers (for which they are reimbursed by the vehicle manufacturers) are leviable to service tax under authorised service station service [section 65(105) (zo)]?
    In this case, service is provided by an authorised service station to a customer and the service provider receives the consideration for the services provided.
    Service tax is leviable on the amount received from the vehicle manufacturer for the purpose of servicing of vehicles.
    036.02 / 01.07.07
    Whether servicing / repair of heavy vehicles like trucks by authorized service station is leviable to service tax under section 65(105)(zo)?
    Service tax is leviable on services provided by an authorised service station to a customer in relation to service, repair, reconditioning or restoration of motorcars, light motor vehicles or two-wheeled motor vehicles [section 65(105)(zo)].
    Thus, servicing of heavy vehicles like trucks, not being one of the specified categories of motor vehicles, is not covered within the scope of the said taxable service.
    036.03 / 01.07.07
    Whether spare parts sold by a service station during the servicing of vehicles is liable to payment of service tax?
    Whether exemption can be claimed on the cost of consumables that get consumed during the course of providing service?
    Service tax is not leviable on sale of goods. Whether a given transaction between the service station and the customer is a sale or not, is to be determined taking into account the real nature and material facts of the transaction. When there is a sale, sales tax / VAT would have been paid.
    Any goods used in the course of providing service are to be treated as inputs for providing the service and accordingly, cost of such inputs should form integral part of the value of the taxable service.
    041.01 / 01.07.07
    Organizers of Trade Fairs and Exhibitions solicit participation from the trade and industry and provide space and other facilities, including furniture, cabins, security, electricity, etc., to display products and provision of services.
    Whether services provided by the organizers of trade fairs / exhibitions are covered within the scope of event management service [section 65(015)(zu)]?
    In such cases, the event, namely organizing trade fairs and exhibitions, is managed by the organizer himself and hence, being in the nature of self supply of service, this service is not leviable to service tax as 'Event Management' service. However organizers do provide service to an exhibitor and such service is leviable to service tax under "Business Exhibition Service [Section 65(105)(zzo)].
    047.01 / 01.07.07
    Whether services provided in relation to handling / storage and warehousing of empty containers is leviable to service tax under storage and warehousing service [section 65(105)(zza)]?
    Empty containers are covered within the meaning of "goods" [section 65(50)]. Thus, services provided in relation to storage and warehousing of empty containers is leviable to service tax under storage and warehousing service [section 65(105)(zza)].
    048.01 / 01.07.07
    Whether commission received by distributors for distribution of mutual fund units is liable to Service Tax under business auxiliary service?
    Distributors receive commission from mutual fund for providing services relating to purchase and sale of Mutual fund units. Services provided by such distributors are in the nature of commission agent and are, thus, leviable to service tax under business auxiliary service [section 65(105)(zzb)].
    076.01 / 01.07.07
    "Club or association" is defined as any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include such person or body of persons engaged in any activity having objectives which are of a charitable nature.
    Whether a club or association enjoying exemption under the provisions of Income Tax Act as a public charitable institution gets automatically excluded from levy of service tax under section 65(105)(zzze) read with section 65(25a) of the Finance Act, 1994?
    Exemption under the Income Tax Act on the ground of being a public charitable institution is of no consequence or relevance for service tax purposes.
    Levy of service tax is entirely governed by the provisions contained in the Finance Act, 1994 and the rules made there under.
    "Charity" is defined as "aid given to the poor, the suffering or the general community for religious, educational, economic, public safety, or medical purposes", and "charitable" is defined as "dedicated to a general public purpose, usually for the benefit of needy people who cannot pay for the benefits received" [Black's Law Dictionary].
    Whether a club or association are engaged in activity having objectives, which are of a charitable nature, or not is to be determined purely on the basis of the circumstances and material factors.
    086.01 / 01.07.07
    An international journey commencing from an Indian airport involves stopover / transfer at intermediate airports outside India before reaching the destination (say Mumbai-Dubai-London-New York). Whether service tax would be leviable in such case on the value indicated in the ticket for the entire journey or only on that part of the value attributable to the first sector (Mumbai-Dubai) of the journey?
    Aim of the passenger is to travel from Mumbai to New York. Actual destination of the international journey is the criteria to decide the value of the service. (in this case, New York). Stopover / transfer at intermediate airports, being merely incidental and part of the main journey, is of no relevance or consequence for levy of service tax under section 65(105)(zzzo) read with section 66.
    Service tax in such cases is leviable on the total consideration of a single composite service relating to the entire journey. i.e., value indicated in the ticket for the entire journey.
    086.02 / 01.07.07
    An international journey (say Delhi-Mumbai-London) includes travel in a domestic sector (Delhi - Mumbai) as part of the international journey Whether service tax is leviable on the value of whole journey or after excluding the value attributable to the domestic sector from the total value of the ticket?
    In this case, the journey is a single composite journey. The aim of the passenger is to travel from India to outside India. Part of the travel in the domestic sector cannot be segregated from the single journey. service tax is, therefore, leviable on the total value of the ticket treating the domestic sector as integral part of international journey without excluding the value attributable, if any, to the domestic sector travel.
    086.03 / 01.07.07
    An international journey commences from an airport outside India and completed at an airport outside India but including a sector wherein the passenger disembarks and subsequently embarks at an Indian airport as part of international journey (say Sydney-Mumbai-Dubai-Singapore-Sydney). Whether service tax is leviable for Mumbai-Dubai sector only or on the total value of the ticket?
    In this case, the journey being a single one and the aim of the passenger is not to travel from India to outside India, service tax is not leviable under section 65(105)(zzzo).
    086.04 / 01.07.07
    Whether ticket issued outside India for an international journey commencing from India (say Delhi-London) is leviable to service tax?
    Service tax is payable by the service provider, namely aircraft operator, for the taxable service provided. Place of purchase/ issue of ticket is of no relevance or consequence to determine the levy of service tax under section 65(105)(zzzo) read with section 66. Service tax is leviable as long as the passenger embarks in India for international journey, in any class other than economy class.
    999.01 / 01.07.07
    Sovereign/public authorities perform functions assigned to them under the law in force, known as "statutory functions". For example,
    · Regional Reference Standards Laboratories (RRSL) undertake verification, approval and calibration of weighing and measuring instruments;
    · Regional Transport Officers (RTO) issue fitness certificate to motor vehicles;
    · Directorate of Boilers inspects and issues certificates for boilers; or
    · Explosive Department inspects and issues certificate for petroleum storage tank, LPG/CNG tank in terms of provisions of the relevant laws.
    Authorities providing such functions, required to be performed as per law, may collect specific amount or fee and the amount so collected is deposited into government account.
    Whether such activities of a sovereign / public authority, performed under a statute, can be considered as 'provision of service' for the purpose of levy of service tax and the amount or fee collected, if any, for such purposes can be treated as consideration for the services provided?
    Activities assigned to and performed by the sovereign / public authorities under the provisions of law, are statutory. The fee or amount collected as per the provisions of the relevant statute for performing such functions is in the nature of a compulsory levy and are deposited into the Government account.
    Such activities are purely in a public interest and are undertaken as a mandatory and statutory function. These are not to be treated as services provided for a consideration. Therefore, such activities assigned to and performed by a sovereign / public authority under the provisions of law, does not constitute provision of taxable service. Any amount / fee collected in such cases are not to be treated as consideration for the purpose of service tax levy.
    However, if a sovereign / public authority provides a service, which is not in the nature of statutory activity and the same is undertaken for a consideration (not a statutory fee), then in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service.
    999.02 / 01.07.07
    Department of Posts provides a number of services. What is the status of those services for the purpose of levy of service tax?
    Following services provided by Department of Posts are not leviable to service tax.
    · Basic mail services known as postal services such as post card, inland letter, book post, registered post provided exclusively by the Department of Posts to meet the universal postal obligations.
    · Transfer of money through money orders, operation of savings accounts, issue of postal orders, pension payments and other similar services which are of the nature of banking and other financial services.
    Department of Posts also provides a number of services used predominantly for business or commerce which are also provided by other commercial organizations. Services such as courier services (Speed Post) Insurance Services (Postal Life Insurance), Agency or intermediary services on commission basis (distribution of mutual funds, bonds, passport applications, collection of telephone and electricity bills) fall under the category of services where Department of Posts is in competition with other similar service providers. Such category of services are liable to service tax under appropriate taxable services.
    (G.G.Pai)
    Under Secretary (Tax Research Unit)
    ANNEXURE I
    Three digit Code
    Taxable Service / Others
    001
    Stock broker [Section (105)(a)]
    002
    Telecom Service [Section (105)(zzzx)]
    003
    General insurance [Section (105)(d)]
    004
    Advertising agency [Section (105)(e)]
    005
    Courier agency [Section (105)(f)]
    006
    Consulting engineer [Section (105)(g)]
    007
    Custom house agent [Section (105)(h)]
    008
    Steamer agent [Section (105)(i)]
    009
    Clearing and forwarding agent [Section (105)(j)]
    010
    Manpower recruitment agent [Section (105)(k)]
    011
    Air travel agent [Section (105)(l)]
    012
    Mandap keeper [Section (105)(m)]
    013
    Tour operator [Section (105)(n)]
    014
    Rent-a-cab scheme operator [Section (105)(o)]
    015
    Architect [Section (105)(p)]
    016
    Interior decorator [Section (105)(q)]
    017
    Management or Business consultant [Section (105)(r)]
    018
    Chartered accountant [Section (105)(s)]
    019
    Cost accountant [Section (105)(t)]
    020
    Company secretary [Section (105)(u)]
    021
    Real estate agent [Section (105)(v)]
    022
    Security agency [Section (105)(w)]
    023
    Credit rating agency [Section (105)(x)]
    024
    Market research agency [Section (105)(y)]
    025
    Underwriter [Section (105)(z)]
    026
    Scientific or technical consultancy [Section (105)(za)]
    027
    Photography [Section (105)(zb)]
    028
    Convention [Section (105)(zc)]
    029
    On-line information and database access or retrieval [Section (105)(zh)]
    030
    Video tape production [Section (105)(zi)]
    031
    Sound recording [Section (105)(zj)]
    032
    Broadcasting agency or organization [Section (105)(zk)]
    033
    Insurance auxiliary services concerning general insurance business [Section (105)(zl)]
    034
    Banking and other financial services [Section (105)(zm)]
    035
    Port [Section (105)(zn)]
    036
    Authorized service station [Section (105)(zo)]
    037
    Beauty treatment [Section (105)(zq)]
    038
    Cargo handling [Section (105)(zr)]
    039
    Cable operator [Section (105)(zs)]
    040
    Dry cleaning [Section (105)(zt)]
    041
    Event management [Section (105)(zu)]
    042
    Fashion designing [Section (105)(zv)]
    043
    Health club and fitness [Section (105)(zw)]
    044
    Life insurance in relation to risk cover [Section (105)(zx)]
    045
    Insurance auxiliary services concerning life insurance business [Section (105)(zy)]
    046
    Rail travel agent [Section (105)(zz)]
    047
    Storage and warehousing [Section (105)(zza)]
    048
    Business auxiliary service [Section (105)(zzb)]
    049
    Commercial coaching or training [Section (105)(zzc)]
    050
    Erection, commissioning or installation [Section (105)(zzd)]
    051
    Franchise [Section (105)(zze)]
    052
    Internet café [Section (105)(zzf)]
    053
    Management, maintenance or repair [Section (105)(zzg)]
    054
    Technical testing and analysis [Section (105)(zzh)]
    055
    Technical inspection and certification [Section (105)(zzi)]
    056
    Foreign exchange broker [Section (105)(zzk)]
    057
    Other port [Section (105)(zzl)]
    058
    Airport [Section (105)(zzm)]
    059
    Transport of goods by aircraft [Section (105)(zzn)]
    060
    Business exhibition [Section (105)(zzo)]
    061
    Transport of goods by road [Section (105)(zzp)]
    062
    Commercial or industrial construction [Section (105)(zzq)]
    063
    Intellectual property [Section (105)(zzr)]
    064
    Opinion poll [Section (105)(zzs)]
    065
    Outdoor caterer [Section (105)(zzt)]
    066
    Programme producer [Section (105)(zzu)]
    067
    Survey and exploration of mineral [Section (105)(zzv)]
    068
    Pandal or shamiana [Section (105)(zzw)]
    069
    Travel agent [Section (105)(zzx)]
    070
    Forward contract [Section (105)(zzy)]
    071
    Transport of goods other than water through pipeline or other conduit [Section (105)(zzz)]
    072
    Site formation and clearance, excavation and earthmoving and demolition and such other activities [Section (105)(zzza)]
    073
    Dredging [Section (105)(zzzb)]
    074
    Survey and map-making [Section (105)(zzzc)]
    075
    Cleaning activity [Section (105)(zzzd)]
    076
    Club or association [Section (105)(zzze)]
    077
    Packaging activity [Section (105)(zzzf)]
    078
    Mailing list compilation and mailing [Section (105)(zzzg)]
    079
    Construction of complex [Section (105)(zzzh)]
    080
    Registrar to an issue [Section (105)(zzzi)]
    081
    Share transfer agent [Section (105)(zzzj)]
    082
    Automated teller machine operations, maintenance or management [Section (105)(zzzk)]
    083
    Recovery agent [Section (105)(zzzl)]
    084
    Sale of space or time for advertisement [Section (105)(zzzm)]
    085
    Sponsorship [Section (105)(zzzn)]
    086
    Transport of passenger embarking in India for international journey by air [Section (105)(zzzo)]
    087
    Transport of goods in containers by rail [Section (105)(zzzp)]
    088
    Support services of business or commerce [Section (105)(zzzq)]
    089
    Auctioneers [Section (105)(zzzr)]
    090
    Public relations [Section (105)(zzzs)]
    091
    Ship management [Section (105)(zzzt)]
    092
    Internet telephony [Section (105)(zzzu)]
    093
    Transport by cruise ship [Section (105)(zzzv)]
    094
    Credit card, debit card, charge card or other payment card [Section (105)(zzzw)]
    095
    Mining [Section (105)(zzzy)]
    096
    Renting of immovable property [Section (105)(zzzz )]
    097
    Services involved in the execution of works contract [Section (105)(zzzza)]
    098
    Development and supply of content [Section (105)(zzzzb)]
    099
    Asset management service by individuals [Section (105)(zzzzc)]
    100
    Design services [Section (105)(zzzzd)]
    996
    Services provided from outside India and received in India
    997
    Export of Services
    998
    Valuation of taxable services
    999
    Miscellaneous

    ****
    CBEC solicits views, comments and suggestions on the draft circulars, particularly suggestion for inclusion of any additional issues in the proposed circulars, from the trade and industry associations, departmental officers and others. The views, comments and suggestions may be sent so as to reach CBEC on or before 29th June, 2007.

    Comments and suggestions on the draft circulars -

    (i) on technical issues may be sent to Shri Girdhar G. Pai, Under Secretary (TRU), CBEC, Room No.146-G, North Block, New Delhi. Fax No. 011-23093037. E-mail: tru.finmin@gmail.com
    (ii) on the procedural issues may be sent to Shri G.D. Lohani, OSD (Service Tax), CBEC, North Block, New Delhi. Fax No. 011-23092275. E-mail: geebeetru@rediffmail.com / gdlohani@gmail.com



  4. #24
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    Thumbs up Service Tax - Circulars - Year 2007- TRADE NOTICE NO.- 05/2007-08, dated - 13-07-2007- Interim accounting arrangement for e-Payment collection-reg.

    Service Tax


    Circular/Instructions/Trade Notices
    Interim accounting arrangement for e-Payment collection-reg.


    OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE:DELHI-I

    C.R.BUILDING : I.P. ESTATE : NEW DELHI


    C.No. IV(16) 118/CE/TECH/D-I/2007/

    Dated 13.07.07


    TRADE NOTICE NO.- 05/2007-08

    Subject:- Interim accounting arrangement for e-Payment collection-reg.

    All the members of trade and industry are informed that the Controller General of Accounts, Central Board of Excise and Customs, has approved Allahabad Bank and Central Bank of India for the collection of indirect taxes through electronic mode. The following interim accounting arrangement for e-Payments in respect of these banks has been proposed:-

    1. (a)These banks will be allowed to accept e-payment for all Central Excise and Service Tax Commissinerates without the restriction of Commissionerate-wise authorization.

    (b) However, for physical collection of CBEC revenue, these banks will follow the existing restriction of authorised Commissionerates.

    (c) For all authorised Commissionerates, these banks through their "existing Focal Point Branches" will collate all physical payments and e-Payments for preparing the scroll. These FPBs will act as receiving branch and FPB for e-Payment collections. The Scrolling will be Commissionerate-wise and Major Head-wise.

    (d) Collection through e-Payment mode for other Commissionerates that are not covered for physical collection will be collated at a branch in Delhi ( Such CBS branch will be identified by each bank) for scrolling. The branch so identified will prepare hard copies of challan ( 4 copies ). The distribution and usage of stamped and receipted Challans is as under:

    Challan Copy
    To Whom
    Purpose/ Use
    One
    Concerned Pay & Accounts Office (along with the scroll)
    Detailed Accounting & reconciliation
    Two
    Taxpayer (at mailing address)
    Tax Return & record
    One
    Designated Divisional Officer of the concerned Commissionerate
    Reconciliation with Tax Return


    The scrolling will be Commissionerate-wise and Major Head-wise.

    (e) Reporting to bank's link cell and fund settlement with Reserve Bank of India will be as per the existing procedure(Commissionerate-wise and Major Head-wise)

    (f) The mailing address of concerned Commissionerates against each Commissionerate Code and mailing address of Pay and Accounts officers against each Commissionerate Code will be provided to the concerned bank to enable correct distribution of stamped and receipted Challans as above.

    2. The above proposed procedure will allow revenue reconciliation and bank reconciliation without any deviation from the existing procedure till the Electronic Accounting Solution is put in place and stabilized.

    3. All trade associations are requested to give wide publicity to the contents of this Trade Notice amongst their members/constituents.


    (PRAVEEN JAIN)
    COMMISSIONER

    Copy to all as per mailing list.
    Authority:Pr.Chief Controller of Account,CBEC,letter no. Coord-II/6-5/e-Payment/07/77 dt.4.6.07 and even no. 104 dt.18.6.07.




  5. #25
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    Thumbs up Service Tax -Circulars - Year 2007 -TRADE NOTICE NO.-06/2007, Dated -16.07.07- Central Public Information Officer(CPIO) under the Right to Information

    Service Tax


    Circular/Instructions/Trade Notices


    OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE:DELHI-I

    C.R.BUILDING : I.P.ESTATE : NEW DELHI


    C.No. IV(16)213/CE/TECH/D-I/2005

    Dated 16.07.07

    TRADE NOTICE NO.- 06/2007

    The public in general is hereby informed that Sh. Praveen Jain has joined as Commissioner of Central Excise, Delhi-1. He will, therefore, henceforth work as Central Public Information Officer(CPIO) under the Right to Information Act, 2005.

    2. As required under Section 4(2) of the RTI Act, 2005, an updated list of the Appellate Authority, Central Public Information Officer and Central Assisstant Public Information Officers of Central Excise Commissionerate, Delhi-I is published as under for information of the public:-

    SL.NO.
    Designation
    Name(Sh./Smt.)
    Office Address
    (1) Phone no.
    (2) E-mail address.
    (3) Fax no.
    1.
    Appellate Authority
    Chitra Gouri Lal, Chief Commissioner
    Chief Commissioner of Central Excise, C.R.Building, I.P.Estate, New Delhi.
    (1) 23370852
    (2) ccdelhi@excise.nic.in
    (3) 23370360
    2.
    CPIO
    Praveen Jain, Commissioner
    Commissioner of Central Excise, C.R.Building, I.P.Estate, New Delhi.
    (1) 23378637
    (2) cexdelhi@excise.nic.net
    (3) 23370648
    3.
    CAPIO
    L.K.Chopra, Asstt.Commissioner
    Central Excise Division-I, 8, DeepshikhaBuilding, IInd Floor, Rajendra Place, New Delhi.
    (1) 25742981
    (2) cexd0401@excise.nic.in.
    (3) 25742688
    4.
    CAPIO
    Gautam Banerjee, Asstt.Commissioner
    Central Excise Division-II, 4, Shopping Centre, Milan Complex, Karampura, New Delhi.
    (1) 25414414
    (2) cexd0414@excise.nic.in
    (3) 25168125
    5.
    CAPIO
    P.T.Pongener, Deputy Commissioner
    Central Excise Division-III,403,GagandeepBuilding, Rajendra Place,
    New Delhi.
    (1) 25810301
    (2) cexd0403@excise.nic.in
    (3) 25823489
    6.
    CAPIO
    K.K.Girdhar, Asstt.Commissioner
    Central Excise Division-IV, 12, DeepshikhaBuilding, Rajendra Place, New Delhi.
    (1) 25822302
    (2) cexd0415@excise.nic.in
    (3) 25823571


    3. This trade notice supercedes trade notice no. 07/2006 dated 01.08.06 and 09/2006 dated 12.09.06 issued by this office.

    4. Contents of this Trade Notice may please be brought to the notice of all concerned.
    Copy to all as per mailing list.


    (PRAVEEN JAIN)
    COMMISSIONER(CPIO)


  6. #26
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    Thumbs up Service Tax - Circulars - Year 2007 - Circular No.-96/7/2007-ST ,dated -23-08-2007- Clarification on technical issues relating to taxation of services

    Service Tax


    Circular/Instructions/Trade Notices



    Clarification on technical issues relating to taxation of services under the Finance Act, 1994 - Regarding.


    Circular No.- 96/7/2007-ST

    New Delhi, the 23rd August, 2007

    F.No.354/28/2007-TRU


    Government of India

    Ministry of Finance

    Department of Revenue

    Tax Research Unit

    Sub: Clarification on technical issues relating to taxation of services under the Finance Act, 1994 - Regarding.
    Attached Files Attached Files

  7. #27
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    Thumbs up Service Tax - Circulars - Year 2007 - Circular No.- 97/8/2007, dated - 23-08-2007 - Procedural issues in Service Tax-circular-reg.

    Service Tax


    Circular/Instructions/Trade Notices


    Procedural issues in Service Tax-circular-reg.


    Circular No.- 97/8/2007

    New Delhi, the 23rd August, 2007


    F. No. 137/85/2007-CX.4

    Government of India

    Ministry of Finance


    Department of Revenue

    (Central Board of Excise and Customs)

    Subject:- Procedural issues in Service Tax-circular-reg.


    Since the inception of the levy of service tax vide Chapter V of the Finance Act, 1994 (hereinafter called the Act) and rules made thereunder from time to time, a number of circulars/clarifications/instructions have been issued, for clarifying the scope of statutory provisions; providing legal interpretation of the provisions of the Act, the rules and the notifications; and clarifying as well as prescribing the procedures to be followed for administration of service tax. Over a period of time, there have been significant changes in law and procedures relating to service tax. While certain circulars/clarifications/ instructions have become redundant and anachronistic, new issues have arisen on account of changes in law and procedure. This circular aims to consolidate the procedural issues relating to service tax, including those relating to availment and utilization of CENVAT credit. This circular supersedesall previouscirculars/clarifications/instructions issued on these subjects. It is, however, clarified that this circular is intended only to clarify the scope of the Act and the rules, and therefore, in the event of any inadvertent inconsistency or contradiction between this circular and the provisions of the Act or the rules, the latter shall prevail.

    2. Registration:
    2.1 As per the provisions of section 69 of the Act and rule 4 of the Service Tax Rules, 1994 (hereinafter called the Rules), every person providing a taxable service and liable to pay service tax is required to register with the Central Excise / Service Tax department (hereinafter called the department). Further, in a few cases liability to pay service tax has been shifted to the service receiver or other specified person, in terms of section 68(2) of the Act.
    These cases are: -

    (i) insurer in case of service provided by insurance agent;
    (ii) person making payment of freight in such cases where a goods transport agency provides taxable service to a specified consignor and consignee;
    (iii) asset management company or mutual fund, in case of service provided by a distributor to them;
    (iv) where the service is provided to a person in India by any person from a country other than India; and
    (v) body corporate or a firm located in India receiving sponsorship service.
    In all these cases, the person liable to pay service tax shall be obliged to register with the department.

    2.2 The turnover limit, i.e., the aggregate value of taxable service for threshold based exemption is, currently, Rs. 8 lakh in a year. However, a person availing of this exemption is required (under section 69 of the Act, read with notification no.26/2005-ST) to register with the department on achieving a turnover of Rs 7 lakh in a financial year in respect of all taxable services provided by him. The expression "aggregate value not exceeding the threshold value of Rs 8 lakh" has been defined in notification No. 6/2005-ST.

    2.3 An 'input service distributor' is an office or establishment of a manufacturer of excisable goods or provider of taxable service. It receives tax paid invoices/bills of input services procured (on which CENVAT credits can be taken) and distributes such credits to its units providing taxable services or manufacturing excisable goods. The distribution of credit is subject to the conditions that,- (a) the credit distributed against an eligible document shall not exceed the amount of service tax paid thereon, and (b) credit of service tax attributable to services used in a unit either exclusively manufacturing exempted goods or exclusively providing exempted services shall not be distributed. An input service distributor is required (under section 69 of the Act, read with notification no.26/2005-ST) to take a separate registration.

    2.4 Application for registration is required to be made in Form ST-1 to the jurisdictional superintendent of Central Excise/Service tax within 30 days of levy of service tax on such service or, in case of an existing taxable service, within 30 days of the commencement of provision of such service. A person providing more than one taxable service is required to take only one single registration. He should indicate all taxable services provided by him in Form ST-1.

    2.5 Any person liable to pay service tax, who,-
    (a) provides taxable service from more than one premises;
    (b) receives taxable services in more than one premises; or
    (c) has more than one premises engaged in relation to such taxable service,
    may seek centralised registration, provided he does centralised billing or maintains centralised accounting in respect of such taxable services in a premises. In certain cases the centralization can be at the zonal/regional level. In such case, each of such offices is to be registered individually. Such registrations are to be granted by the jurisdictional Commissioner where such offices/establishments are located.

    2.6 The registration certificate will be granted by the department, in Form ST-2, within seven days of filing of an application complete and properly filled up. In case registration certificate is not issued within seven days, the registration is deemed to have been granted. Registration No., also known as 'Service Tax Code (STC)' is a fifteen digit PAN based number. First 10 digits of this number are the same as the PAN of such person. Next two digits are 'ST'. Next three digits are serial numbers indicating the number of registrations taken by the service taxpayer against a common PAN. In addition to PAN, another number, namely, 'premises code' is also given (mentioned at Sl. No. 5 of the Form ST-2). This number indicates the code of the jurisdictional Commissionerate, division, range and Sl. No. within the range. This number is issued for easy identification of location of registration of the service taxpayer.

    2.7 In case an existing registrant wishes to add any new premises to the centralized registration or wishes to add new taxable services in his registration certificate or amend it as regards any other details, he may provide such details to the jurisdictional Superintendent in Form ST-1, indicating only the amendment/rectification required to be made in the registration certificate, along with a copy of the original registration certificate. In case the changes relate to deletion of any premises or taxable service, the registrant may file an intimation on plain paper along with copy of the registration certificate.

    3. Payment of service tax:

    3.1 In terms of rule 6 of the Rules read with section 68 of the Act, the service tax is required to be paid on monthly basis by all service taxpayers, other than individuals or proprietary/partnership concerns who are required to pay service tax on quarterly basis. Service tax liability for a particular month or quarter is to be discharged on the payments towards the value of taxable service received during that month or quarter, as the case may be. It is to be deposited by the 5th day of the month following the month or quarter for which service tax is paid. However, for the month/quarter ending March, the payment is required to be made by the 31st March itself by all taxpayers.

    3.2 e-payment of service tax: The service tax can be paid electronically. For this, the service taxpayer should have an account in any branch of the designated banks. For availing of the facility of e-payment, the service taxpayer shall obtain a user-ID and password from the designated bank in which he has the account. For e-payment, the service taxpayer should log on to the web-site of the bank with his user-ID and password. He should then choose the option of e-payment of service tax. On choosing this option, the service taxpayer would be guided to the e-payment portal wherein he would fill the challan for payment of service tax and would authorize payment of service tax by way of debit to his account. Thereafter, a copy of the acknowledgement would be generated for the records of the service taxpayer. Subsequently, the bank would generate copies of challan and send a copy each to the Pay and Accounts Officer (PAO) and the department.

    4. Mandatory e-payment of service tax

    4.1 The e-payment of service tax has been made mandatory w.e.f . 1.10.2006, (vide sub-rule (2) of rule 6 of the Rules), for all assessees who have paid (in cash plus through CENVAT Credit) a service tax amounting to Rs. 50 lakh or more in the preceding financial year or in the current financial year. The latter type of service taxpayers shall make any further payment of service tax in cash (i.e. other than through credit), only through e-payment.
    4.2 In case a taxpayer faces any procedural problems, he may contact the jurisdictional service tax/ central excise office or the jurisdictional Commissioner, who would advise and extend all possible help to the taxpayers to comply with the requirement of mandatory e-payment. At the same time, such taxpayers should expeditiously complete the procedural formalities required at their end for availing of internet banking facility from designated banks and complying with this requirement.
    4.3 For a person providing taxable service from more than one premises and where each of such premises has been separately registered with the department, the criterion of Rs 50 lakh would apply to each of the registered premises individually in view of its separate legal identity. The same procedure would apply to a person paying service tax on taxable services received by him. However, in case of a Large Taxpayer (those taxpayers associated with LTU), the cumulative service tax paid by all registered premises will be taken into account for working out the of service tax amount of Rs 50 lakh. Similarly, if a person providing taxable service also receives taxable services on which he is liable to pay service tax and has a single registered premises, the service tax amount of Rs 50 lakh would be the total amount of service tax paid by him.

    5. Issuance of invoices, bills, challans, consignment notes and other documents:

    5.1 In terms of the provisions of rules 4A and 4B of the Rules, every taxable service provider is required to issue a document (i.e. invoice, bill or challan) within 14 days from either the date of completion of provision of service or receipt of any service charges (whichever is earlier). Such document should be serially numbered and should contain the name, address of the service provider and the service receiver, description, classification and value of service provided and service tax payable thereon. For complying with the requirements of CENVAT Credit Rules, (i.e., to facilitate availment of credit by the recipient of taxable service), the amount of 'education cess' and 'secondary and higher education cess' should be shown separately on the invoice. Further, STC no./registration no. of the service provider should also be mentioned on the invoice for this purpose.
    5.2 An input service distributor is also required to issue such a document in favour of the recipient of the credit sodistributed. This document should also be serially numbered and should give the details of the invoices under which the taxable service has been received and the name, address and registration no. of the input service distributor as well as of the recipient of the credit. The amount of credit distributed shall also be mentioned.
    5.3 For service providers providing 'banking & other financial services', certain relaxations are available. For such service providers, the invoice need not be serially numbered. They are also exempted from mentioning the address of the service receiver. Similar dispensation is available for input service distributors of such type of service providers.
    5.4 For providers of taxable service of transport of goods by road (i.e. goods transport agency) the invoice/bill/challan should, in addition to the general information required (i.e. as mentioned in para 5.1), also contain the consignment note number, date and gross weight of the consignment.
    5.5 Rule 4B of the Rules prescribes that the goods transport agency shall issue a consignment note, which would be serially numbered and would contain the names of the consignor and consignee, the vehicle registration number, details of goods transported, details of place of origin and destination, and the person (consignor / consignee/goods transport agency) liable to pay service tax. In case of less container load (LCL) cargo, where the goods transport agent is not aware of the vehicle registration number at the time when he receives the goods and issues consignment note, he may mention the non-availability of vehicle registration number on the copy issued to the consignor. However, after he comes to know about the vehicle registration number, he should mention the same, consignment note-wise, in the records maintained by him and produce the same in case of verification. Similarly, in case of trans-shipment of goods en-route (i.e. where the goods covered under a consignment note are shifted from one vehicle to another), the records of registration numbers of the vehicles carrying such goods under a consignment note must be recorded as soon as the said information is available to the goods transport agent. These procedural relaxations are provided for such special cases only and, in all other cases, mention of vehicle registration number on the consignment note, at the time of its issue would continue to remain a mandatory requirement.

    6. Service tax return

    6.1The service tax return is required to be filed under Section 70 of the Act read with rule 7 of the Rules, by 'any person liable to pay the service tax'. This return is required to be filed on a half yearly basis, in Form ST-3. For the periods from April to September and October to March, it must be filed by the 25th October and the 25th April respectively. Further, 'Input Service Distributor' is also required to file this return. Persons who are not liable to pay service tax (because of an exemption including turnover based exemption), are not required to file ST-3 return.

    6.2 A single service tax return should be filed (in Form ST-3) in respect of all taxable services provided by an assessee. Detailed instructions for filling the return are given in the return form itself.
    6.3 e-filing of return- The service tax return can be filed electronically after logging into the website www.servicetaxefiling.com. For this purpose, the assessee shall obtain user-ID and log-in password from the department. A simple application may be made to the jurisdictional Central Excise Officer, giving details of STC no., and an 'e-mail ID'. The department would communicate the 'User ID', and 'password' along with technical details required for accessing the relevant site and the procedure for making entries and other guidance as may be necessary to the taxpayer by e-mail. While filing the return electronically, the service taxpayer must file details as contained in Form ST-3 and that of duty paying challans. On submission of the completed return, a key number and an acknowledgement would be generated by the system along with a copy of Form ST-3 and Challan, which could be printed by the service taxpayer for his records. In case of any difficulty faced in e-filing, the service taxpayer may send an e-mail to the address specified by the Commissioner, explaining the difficulties and if a reply is not received within two days, he may send an e-mail to saps@excise.nic.in
    6.4 Delay in filing of return: The return is required to be filed by the stipulated date as mentioned at para 6.1 above. Delay in filing of return attracts late fee. The late fee presently prescribed vide rule 7C of the Rules, is (a) Rs 500 for delay upto 15 days; (b) Rs 1000 for delay between 15 days and 30 days; and (c) Rs 1000 plus Rs 100 per day beyond 30 days, till the filing of return, not exceeding Rs 2000/-. To avoid late fee, the taxpayer must ensure timely filing of return. In case of returns filed late, the appropriate late fees should be paid at the time of filing the return, without waiting for any communication or notice from the department. Mere non-submission of evidence of payment of late fee along with the return is, however, not a ground for refusal to allow filing of the return.
    6.5 Filing of revised return: Rule 7B of the Rules prescribes that an assessee can submit a revised return within 60 days of filing of original return to rectify any mistake or omission. It may be noted that in such cases where an assessee files a revised return, the limitation period for initiating any action for demanding the service tax not paid/ short paid/ not levied/short levied would be computed from the date of filing of revised return.

    7 Assessment

    7.1 Normally, under self assessment scheme, the service taxpayer assesses his tax liability himself and pays the same. However, if a service taxpayer is not in a position to determine the service tax liability, say, for the reason that valuation or classification of taxable service or issue of admissibility of an exemption notification cannot be determined (or any such other reason) at the time of filing the return, he may opt for assessment of service tax on provisional basis after obtaining an order from the jurisdictional Deputy Commissioner/ Assistant Commissioner. The assessment shall be made in terms of the said order and would continue to be provisional till the issue is finalized. Upon finalization, there may be additional tax liability or refund. In such cases, the taxpayer would have to either pay the differential amount of tax with interest or claim refund, as the case may be.

    8. CENVAT Credit

    8.1 With effect from 10.9.2004, under CENVAT Credit Rules, 2004, CENVAT Credit across goods and services has been allowed. This circular deals only with certain commonly raised issues relating to certain provisions of these rules that relate to service tax credit. The following are the issues which have been examined in this circular,-
    (a) ISSUE: Whether a manufacturer or taxable service provider having credit balance in his account can utilize that credit for payment of service tax on goods transport by road, as a consignor or as a consignee?
    COMMENTS: In terms of rule 3 (4) of the Rules, CENVAT credit can be utilized for the following payments:
    (a) any duty of excise payable on any final product;
    (b) …………………………………………..
    (c) …………………………………………..
    (d) service tax on any output service
    In terms of the CENVAT Credit Rules, 'output service' means any taxable service provided by the provider of taxable service to the service receiver. Further, the definition of 'provider of taxable service' includes a person liable to pay service tax. Therefore, reading the two definitions in conjunction, it is clear that, to form 'output service', taxable service has to be actually provided by the 'provider of taxable service'. Even if due to a legal fiction, a consignor or a consignee qualifies to fall under the definition of 'a person liable to pay service tax' (and consequently a 'provider of taxable service'), it cannot be said that he has actually provided any taxable service. The service provided by a Goods Transport Agent (GTA) for which the consignor or the consignee is made liable to pay service tax does not become an 'output service' for such consignor or the consignee. Therefore, the service tax payable by the consignor or consignee on transportation of goods by road cannot be paid through credit accumulated by such consignor or consignee. For example, a manufacturer of steel sheets procures duty paid steel ingots as input and avails CENVAT credit of the excise duty paid on ingots. He clears his finished goods, i.e., steel sheets on payment of excise duty and sends the same to his customer, engaging the service of a goods transport agency. In this case, he pays service tax on service received by him for transportation of the goods. However, the input credit taken on steel ingots cannot be used for payment of service tax applicable to goods transport agency. The reason is that the such manufacturer ( consignor) is not the service provider. The transport service is being provided by the 'goods transport agency' and the excise assessee pays the service tax only for the reason that the liability for payment of service tax has been shifted to the service receiver. Accordingly, the consignor or the consignee has to be pay service tax in cash on goods transport by road service.
    (b) ISSUE: Whether a consignee can take credit of the amount paid as service tax either by himself (as consignee) or by the consignor or by the Goods Transport Agency?

    COMMENTS: As per Rule 3 of the CENVAT Rules, 2004, CENVAT Credit of, inter alia, service tax leviable and paid on any 'input services' can be taken. The rule does not distinguish as to who (i.e. the GTA, the consignor or the consignee himself) has paid the aforesaid tax. The only condition required to be satisfied is that the consignee must be a manufacturer of excisable goods or a provider of taxable service and the service must be in the nature of 'input service' for such activity. In case of inward transportation of inputs or capital goods, such service (being specifically mentioned under the definition of 'input service') would qualify to be called as 'input service' and, thus, the service tax paid (by any of the persons mentioned above) on it would be eligible as credit to the receiver if he is either a manufacturer of excisable goods or a provider of taxable service.
    (c) ISSUE: Up to what stage a manufacturer/consignor can take credit on the service tax paid on goods transport by road?

    COMMENTS: This issue has been examined in great detail by the CESTAT in the case of M/s Gujarat Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (006) STR 0249 Tri-D]. In this case, CESTAT has made the following observations:-
    "the post sale transport of manufactured goods is not an input for the manufacturer/consignor. The two clauses in the definition of 'input services' take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal. The two clauses, the one dealing with general provision and other dealing with a specific item, are not to be read disjunctively so as to bring about conflict to defeat the laws' scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions".
    Similarly, in the case of M/s Ultratech Cements Ltd vs CCE Bhavnagar 2007-TOIL-429-CESTAT-AHM, it was held that after the final products are cleared from the place of removal, there will be no scope of subsequent use of service to be treated as input. The above observations and views explain the scope of the relevant provisions clearly, correctly and in accordance with the legal provisions. In conclusion, a manufacturer / consignor can take credit on the service tax paid on outward transport of goods up to the place of removal and not beyond that.
    8.2 In this connection, the phrase 'place of removal' needs determination taking into account the facts of an individual case and the applicable provisions. The phrase 'place of removal' has not been defined in CENVAT Credit Rules. In terms of sub-rule (t) of rule 2 of the said rules, if any words or expressions are used in the CENVAT Credit Rules, 2004 and are not defined therein but are defined in the Central Excise Act, 1944 or the Finance Act, 1994, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase 'place of removal' is defined under section 4 of the Central Excise Act, 1944. It states that,-

    "place of removal" means-

    (i) a factory or any other place or premises of production or manufacture of the excisable goods ;
    (ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty ;
    (iii) a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;
    from where such goods are removed."
    It is, therefore, clear that for a manufacturer /consignor, the eligibility to avail credit of the service tax paid on the transportation during removal of excisable goods would depend upon the place of removal as per the definition. In case of a factory gate sale, sale from a non-duty paid warehouse, or from a duty paid depot (from where the excisable goods are sold, after their clearance from the factory), the determination of the 'place of removal' does not pose much problem. However, there may be situations where the manufacturer /consignor may claim that the sale has taken place at the destination point because in terms of the sale contract /agreement (i) the ownership of goods and the property in the goods remained with the seller of the goods till the delivery of the goods in acceptable condition to the purchaser at his door step; (ii) the seller bore the risk of loss of or damage to the goods during transit to the destination; and (iii) the freight charges were an integral part of the price of goods. In such cases, the credit of the service tax paid on the transportation up to such place of sale would be admissible if it can be established by the claimant of such credit that the sale and the transfer of property in goods (in terms of the definition as under section 2 of the Central Excise Act, 1944 as also in terms of the provisions under the Sale of Goods Act, 1930) occurred at the said place.
    8.3 A doubt has been raised regarding admissibility of CENVAT credit on service tax paid in respect of mobile phones. In the Service Tax Credit Rules, 2002, it was prescribed that credit of service tax was admissible only on telephone connection installed in the business premises. A clarification to this effect was also issued vide circular No. 59/8/2003-ST, dated 20.6.2003, in the context of the Service Tax Credit Rules, 2002. However, in the CENVAT Credit Rules, 2004 no such condition has been prescribed. Therefore, w.e.f. 10.9.2004, credit of service tax paid in respect of mobile telephone service is admissible, provided the mobile phone is used for providing output service or used in or in relation to manufacture of finished goods.
    8.4 Input service distributor is an office or premises of the manufacturer or taxable service provider which receives bills/invoices etc., of input services. The input service distributor can distribute the eligible credit to any unit of the manufacturer or any premises/office of taxable service provider.

    9 Delay in payment of service tax

    9.1 Delay in payment of service tax, including a part thereof, attracts simple interest in terms of section 75 of the Act. The rate of interest is as prescribed from time to time, in accordance with this section. At present, the rate of interest is 13% per annum (notification No. 26/2004-ST, dated 10.9.2004). Further, failure to pay service tax also attracts a penalty under Section 76 of the Act, which shall not be less than Rs 200 for every day during which such failure continues or at the rate of 2% of such tax per month, which ever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax. However, such penalty would not exceed the service tax payable.

    10 Any amount recovered by any person as service tax

    10.1 Any amount collected by a person as service tax from any other person, even if it was not permissible in terms of the service tax law, is required to be deposited with the Central Government. In other words, no amount collected as service tax shall be retained by the person who has collected such amount. Any delay in depositing such amount attracts simple interest at the rate prescribed under section 73 B of the Act. At present, the rate of interest is 13% per annum (notification No. 8/2006-ST, dated 19.4.2006).

    11 Audit

    11.1 The selective audit of service taxpayers and other assessees like input service distributors, may be done by the jurisdictional central excise officer (authorized for the purpose) or by an audit party deputed by the Comptroller and Auditor General of India. Rule 5 of the Rules makes it mandatory for every assessee to make available the records, on demand, for inspection and examination to such authorized person/audit party.

    12. Adjudication of cases

    12.1 Section 73 of the Act deals with adjudication of cases of short-levy or non-levy of service tax or service tax short paid or not paid or erroneously refunded. For quick settlement of disputes, this section prescribes that (i) in other cases involving fraud, collusions, wilful misstatement and suppression of facts etc., the dispute could be settled by making payment of the service tax amount specified in the notice along with interest and penalty equal to 25% of service tax amount, within thirty days of issue of show cause notice; (ii) and in any other case the person chargeable to service tax, or to whom service tax has been erroneously refunded, may make payment suo moto along with interest, as applicable, and, consequently no Show Cause Notice will be served in respect of the amount so paid.

    12.2 Section 83A confers powers on the Central Excise Officer for adjudging a penalty under the provisions of the said Act or the rules made there under. Board has specified monetary limits for adjudication of cases under section 83A of the said Act vide notification No. 30/2005- Service Tax dated 10th August, 2005. The monetary limits are as follows:

    S.No
    Central Excise Officer
    Amount of service tax or CENVAT credit specified in a notice for the purpose of adjudication under section 83A
    (1)
    (2)
    (3)
    (1).
    Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise
    Not exceeding Rs. 5 lakh
    (2).
    Joint Commissioner of Central Excise
    Above Rs. 5 lakh but not exceeding Rs. 20 lakh
    (3).
    Additional Commissioner of Central Excise
    Above Rs. 20 lakh but not exceeding Rs. 50 lakh
    (4).
    Commissioner of Central Excise
    Without limit.
    The monetary limits specified in the above tables for adjudication of service tax cases are irrespective of whether or not such cases involve fraud, collusion, wilful mis-statement, suppression of facts or contravention of any of the provisions of the Act or the rules made thereunder with an intent to evade payment of service tax and whether or not extended period has been invoked. Cases not involving non-payment of service tax or mis-utilization of CENVAT credit are to be adjudicated by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise.

    12.3 Where different cases involving the same issue are due to be adjudicated in a Commissionerate, all such cases may be adjudicated by the Central Excise Officer competent to decide the case where the service tax or CENVAT credit involved is of the highest amount.
    12.4 For cases where the appellate authority remands the case for de-novo adjudication, specifically mentioning the authority that has to adjudicate the case, then such authority specified in the said appellate order should adjudicate such cases. Where the appellate authority does not specifically mention any adjudicating authority, it should be decided by the authority competent in terms of the monetary limits mentioned in para 12.1.
    12.5 Central Board of Excise & Customs (CBEC) has directed that in respect of demands for an amount upto one thousand rupees towards short payment/non-payment of service tax, if the service provider, on the default being pointed out, pays the service tax along with interest within a period of one month of the default in payment, the penalty should be waived, taking recourse to the provisions under section 80 of the Act. In other cases, i.e. where amount of service tax involved is over Rs one thousand, penal action prescribed under sections 76, 77 and 79 would be attracted.

    13 Revision of orders:

    13.1 The adjudication order passed by the officers subordinate to the Commissioner of Service Tax can be revised by the Commissioner after causing such inquiry as he deems fit, in terms of section 84 of the Act. The limitation period for issuing such revisional order is two years from the date on which the original order was passed. However, any issue against which an appeal has been filed by the service taxpayer before Commissioner (Appeals) cannot be revised. Thus, if an order deals with several issues and the party files an appeal only in respect of a few issues, the Commissioner may pass revisional order in respect of only such remaining issues against which an appeal has not been filed by the party. The principles of natural justice shall be followed while passing an order in revision.

    14 Appeal provisions

    14.1 A service taxpayer aggrieved by any order passed by an adjudicating authority lower than the Commissioner, may file an appeal before the Commissioner (Appeals). Such appeal shall be filed within three months of the communication of the original order to the party. An appeal against an order of the Commissioner, including an order in revision, and against an order of the Commissioner (Appeals) lies with the Appellate Tribunal (CESTAT).

    15. Other frequently asked question on procedural issues

    15.1 For other frequently asked questions on procedural issues, the information available on web-site www.cbec.gov.in (FAQ in Service Tax) may be referred to.
    16. Trade and field formations may be informed accordingly.
    17. Hindi version will follow.

    Yours faithfully,
    (Gautam Bhattacharya)
    Commissioner (Service Tax)
    [F. No. 137/85/2007-CX.4]


  8. #28
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    Thumbs up Service Tax - Circulars - Year 2007 - CORRIGENDUM - dated - 29-08-2007 - Corrigendum to circular No. 93/4/2007-ST dated 10.5.07 – reg

    Service Tax


    Circular/Instructions/Trade Notices

    Corrigendum to circular No. 93/4/2007-ST dated 10.5.07 - reg

    CORRIGENDUM

    Dated : August 29,2007

    Subject:- Corrigendum to circular No. 93/4/2007-ST dated 10.5.07 - reg

    Please refer to circular No. 93/4/07-ST dated 10.5.07. This circular was issued to withdraw certain circulars/clarification /instruction, which were previously issued with some objectives, but which had since then lost their relevance or had become anachronistic due to change in law, procedure etc.

    02. In this circular, in the Table, in the entry against Sl.No. 15, the circular 'F. No B.43/7/97-TRU dated 11.07.1997' has been mentioned instead of " F. No. B.43/1/97-TRU dated 06.06.1997 "due to an inadvertent error. Therefore, entry against said Sl.No. 15 may be read as " F. No. B. 43/1/97-TRU dated 06.06.1997 ".

    03. Trade and field formations may be informed accordingly.

    04. Hindi version will follow.

    F.No.137/151/2007- CX.4(Pt.)

    (Gautam Bhattacharya)
    Commissioner (Service Tax)



  9. #29
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    Thumbs up Service Tax - Circulars - Year 2007 - Dy. No. 294/Com.(S.T.)/2007 - dated - 03-09-2007 - Delay in granting Registration Certificate — Instructions

    Service Tax


    Circular/Instructions/Trade Notices

    Delay in granting Registration Certificate — Instructions

    Subject :- Issue of Registration Certificate - Reg.

    Instances have come to the notice of the Board, that in some cases, there are inordinate delays in grant of Service tax registration to new service taxpayers, after submission of completed application in form ST-1 by them. In many cases, such service providers are asked to furnish information, which are not required as per the Service tax application form. They are also asked to submit documents like income tax returns, copies of contract, balance sheets, etc. which is not required to be done.

    2. In this regard, I am directed to state that Board has taken a serious view of the matter. The information required for grant of registration is already prescribed in the ST-1 format. Therefore, no additional information or document N is required for granting registration. Delay in grant of registration not only affects the business of the taxpayer adversely, but also dissuades the potential T taxpayers from taking registration and complying with the Service tax laws. In case, it is felt that certain verification needs to be conducted to check the bona fides of the taxpayer, the san can be done on ex-post -facto basis, without delaying the process of grant of registration.

    3. It is, therefore, requested that it should be ensured that in no case, grant of registration should be delayed beyond the prescribed time and that appropriate action should be taken against the officers causing such delays.
    [Source: C.B.E. & C. Letter Dy. No. 294/Com.(S.T.)/2007, dated 3-9 -2007]




  10. #30
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    Thumbs up Service Tax - Circulars - Year 2007 - TRADE NOTICE NO. 20/ST/2007 - dated - 13-09-2007 - Mandatory e-Payment of Service Tax by large taxpayers

    Service Tax


    Circular/Instructions/Trade Notices

    Mandatory e-Payment of Service Tax by large taxpayers - Interim accounting arrangement for e-Payment collection


    TRADE NOTICE NO.- 20/ST/2007, DATED 13-9-2007,

    ISSUED BY OFFICE OF THE COMMISSIONER OF SERVICE TAX, NEW DELHI


    All the Trade and other concerned are hereby informed that as an interim accounting arrangement for e-Payment collection and nomination of e-FPB at Delhi, the RBI has authorized the following branches of Allahabad Bank and Central Bank of India to accept e-Payment collection for e-Payment receipts of other Commissionerates that are not authorized for physical collection:—

    S. No.
    Name of the Bank
    Name & Address of Focal Point branch of the Bank along with its BSR Code No.
    1.
    Allahabad Bank
    Allahabad Bank, Parliament Street Branch, 17, Sansad Marg, New Delhi- 110001 (BSR Code No. 0210163).
    2.
    Central Bank of India
    Central Bank of India, Janpath Branch, Post Box No. 244,70 New Delhi-I 10001 (BSR Code No. 0280318)

    All trade associations are requested to give wide publicity to the contents of this Trade Notice amongst their members/ constituents.




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