GST FAQs 2017-05-04T15:37:10+00:00
Can assessee contest against the Audit observations? 2016-10-28T16:56:29+00:00

Yes, if assessee did not agreed with any objection made in final audit report, he may contest against the same by sending detailed representation to the Additional Commissioner or Joint Commissioner, as the case may be, of the circle.

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Can assessee rectify any error notice by the audit team? 2016-10-28T17:02:10+00:00

Yes, assessee can voluntarily rectify any error or omission noticed by the audit team and pay tax and interest thereon.

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Can assessee ask for postponement of audit? 2016-10-28T17:03:40+00:00

 Yes, but only In genuine cases on production of proper evidence, the competent authority may consider the request for postponement. Since the audit programme is drafted months in advance, postponements are not encouraged by the department.

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How much time is allowed to assessee for production of records? 2016-10-28T17:10:14+00:00

Since intimation of audit is given 15 days prior to the date of commencement of audit, therefore assessee should keep ready all records on or before the visit of audit team.

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Do any records or documents prescribed by the department, which are to be produce by assessee? 2016-10-28T17:13:50+00:00

No, there are no prescribed by the department, normally records maintained by the assessees are requested for scrutiny. These may include, financial statements, invoices, ledgers, bank statements, Cenvat credit documents, accounting policies, statutory returns etc.

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If any assessee is registered under Central Excise as well as under Service Tax, whether two separate audits are conducted? 2016-10-28T17:15:49+00:00

No, If any assessee is registered under Central Excise as well as under Service Tax, Simultaneous Audit for Central Excise and Service Tax would be conducted.

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What is the duration of the Audit? 2016-10-28T17:17:53+00:00

Duration of audit shall depend on quantum of the record to be scrutinized and period covered for audit, however in any case audit should be completed within 10 days from the commencement of audit.

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What is the minimum notice period required for conducting audit? 2016-10-28T17:19:07+00:00

Department should give notice at least 15 days prior to the date of commencement of audit.

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What is the criteria for selection of assessee for Service Tax Audit? 2016-10-28T17:20:20+00:00

Vide Circular No. 995/2/2015-Cx dated 27.2.2015, provides the detailed criteria for selection of assessee for audit. In order, assessee are divided into three categories namely, Large, Medium and Small units, based on their past experience in detection of non-compliance and recovery of duty through audits, and from each category, Audit Commisionerate randomly select the assessee for audit.

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If I file my assessment is done every year, then what is the need of conducting audit? 2016-10-28T17:21:18+00:00

The returns filed with the department are based on self-assessment. For evaluating The correctness of the assessment and payment of taxes, and application of statute, periodical Audits conducted by the department.

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Who Conducts the Audit? 2016-10-28T17:22:00+00:00

The Central Excise officers posted in Commissionerate of Audit, can conducts Audit, which include Assistant / Deputy Commissioner, Joint / Additional Commissioner or Joint Director (Cost).

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What is Service Tax Audit? 2016-10-28T17:22:50+00:00

Audit is a verification of financial accounts and other records particularly records relating to provision of service provided  by the assessees to ascertain that duties of Service Tax are correctly assessed and paid.

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Can I claim refund of SBC and KKC paid on input services? 2017-04-06T10:49:06+00:00

Yes, suitable amendments have been made to various notifications / provisions allowing refund of SBC. Similar notifications are expected in relation to KKC also.

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I do not have any output liability being a trader but I have paid Service Tax under reverse charge on services received from advocate. Can I take refund of such amount? 2016-10-28T17:25:26+00:00

No, other than the situations specified in the chapter, no refund is admissible in other cases.

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What is time limit upto which refund is received by the assessee? 2016-10-28T17:26:49+00:00

Normally, If any duty or tax ordered to be refunded under Section 11B(2) of Central Excise Act, 1944, to any applicant, is received by the assessee within 3 months from the date of receipt of such application.

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What is time limit for claiming refund of Service Tax? 2016-10-28T17:27:36+00:00

As per section 11B of the Central Excise Act, 1944 which is applicable to service tax also, an assessee can claim the refund within 1 year from the date of such excess payments.

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What is the procedure for claiming refund? 2016-10-28T17:28:24+00:00

If self adjustment for excess payment of service tax is not possible, then assessee can apply in Form-R in triplicate with the jurisdictional Assistant or Deputy Commissioner of Central Excise, for refund of such excess payment under Section 11B of the Central Excise Act.

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If assessee paid the service tax in excess, then can assessee make the adjustment of service tax liability in his own? 2017-04-06T10:49:06+00:00

Yes, assessee can  make the adjustment of service tax liability in his own, if he paid the service tax in excess in the following cases:-

  • If the assessee paid service tax on the taxable services, which is not so provided by him, either wholly or partially, then assessee may adjust the excess service tax so paid by him against his service tax liability for the subsequent period, provided the assessee has refund the amount received towards the value of taxable service and the service tax thereon or issued the credit note for the the value of service so not provided, to the person from whom it was received.

[Sub-rule(3) of Rule 6 of the Service Tax Rules, 1994,]

  • If the assesses paid in excess than the actual amount required, for any particular month or quarter as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be.

[Sub-rule (4A) of Rule 6 of the Service Tax Rules, 1994,]

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Under which circumstances refund can claimed? 2016-10-28T17:30:49+00:00

In the following certain cases refund can be claimed:-

  • If service tax paid in excess due to any reason
  • Refund of Cenvat Credit in case of export of services
  • Refund of service tax paid on certain specified services (notified in Notification No 41/2012 dated 29/07/2012) used for export of services and goods as the case may be
  • Rebate of the whole of the service tax and cess paid on all input services used in providing the exported services.
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Can an Appeal be filed against the order / decision of the CESTAT? 2016-10-28T17:31:40+00:00

Yes, as per Section 35G of the Central Excise Act,1944, The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court.

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How much fees is required to deposited by the assessee for filing an appeal with CESTAT? 2017-04-06T10:49:10+00:00

Sub-section (6) of Section 86, of the Finance Act,1994, prescribe the fees to be deposited by assessee, is as follows:-

(a)

where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is five lakh rupees or less, one thousand rupees;

(b)

where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than five lakh rupees but not exceeding fifty lakh rupees, five thousand rupees;

(c)

where the amount of service tax and interest demanded and penalty levied by any Central Excise Officer in the case to which the appeal relates is more than fifty lakh rupees, ten thousand rupees

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What is the time limit and procedure for filing appeal CESTAT? 2016-10-28T17:33:55+00:00

The Appeal should be filed within three months of the date of receipt of the order sought to be appealed against, with CESTAT. It should be filed in Form ST-5 (quadruplicate) and such appeal should accompanied by a copy of Order against which appeal is filed, along with the prescribed fee.

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Can assessee file appeal against the order or decision of the Commissioner of Central Excise or Commissioner of Central Excise (Appeals)? 2016-10-28T17:35:05+00:00

Yes, assessee can file appeal against the order of the Commissioner of Central Excise or Commissioner of Central Excise (Appeals), before the Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”). The Appeal should be filed within three months of the date of receipt of the order sought to be appealed against.

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Under what circumstances the time limit of three months for fling the appeal before the Commissioner (Appeals) can be extended? 2016-10-28T17:36:13+00:00

As per Proviso to Section 85(3) of the Finance Act,1994, the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months.

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What is the time limit for filing appeal with Commissioner of Central Excise (Appeals)? 2016-10-28T17:37:09+00:00

The aggrieved party should file appeal within 3 months from the date of receipt of the order or decision, whereas Department/Central Excise Commissioner can file an appeal within 4 month from the date of receipt of order sought to be appealed by the committee of Chief Commissioner.

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What is the procedure for filing the appeal Commissioner of Central Excise (Appeals)? 2016-10-28T17:38:00+00:00

Any assessee aggrieved by order or decision of the Adjudicating authority, may file an Appeal before the Commissioner of Central Excise (Appeals) in Form ST-4 (duplicate) and such appeal should accompanied by a copy of Order against which appeal is filed.

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Who should be approached when an assessee is aggrieved by an order or decision of the Adjudicating authority subordinate to the Commissioner of Central Excise in respect of Service Tax? 2016-10-28T17:39:45+00:00

If any, assessee aggrieved by order or decision of the Adjudicating authority subordinate to the Commissioner of Central Excise in respect of Service Tax, may file an Appeal before the Commissioner of Central Excise (Appeals).

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Can Central Excise Officer rectify the order by enhancing the liability of the assessee? 2016-10-28T17:41:23+00:00

As per Sub-section (4) of Section 74 of the Finance Act,1994, The Central Excise Officer can rectify the order by enhancing the liability of the assessee or reducing a refund, after serving a notice of his intention to do so and allowed a reasonable opportunity of being heard to the assessee.

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When Central Excise Officer can ratify mistake? 2016-10-28T17:42:21+00:00

If there is any mistake in the order which is apparent from the records, and such mistake is noticed by the Central Excise Officer who passed the order, or  such mistake is brought into the notice of the Central Excise Officer by the assessee, the Central Excise Officer may make an amendment.

[Sub-section (3) of Section 74 of the Finance Act,1994]

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What is the time limit for passing the rectification order? 2016-10-28T17:43:03+00:00

As per Sub-section (1) of Section 74 of the Finance Act1994, the Central Excise Officer who passed any order under the provisions of this Chapter may, within two years from the date on which such order was passed, can amend or rectify the order.

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Whether order under Appeal or Revision can be rectified? 2016-10-28T17:43:56+00:00

Yes, if the order is decided by way of appeal or revision by the Central Excise Officer, can be also rectified by the Central Excise Officer, only in relation to those matters which has not been decided in such revision or appeal.

[Sub-section (2) of Section 74 of the Finance Act,1994]

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Which authority is empowered to rectify mistake? 2016-10-28T17:44:41+00:00

As per Section 74 of the Finance Act,1994, the Central Excise Officer passed the order under the provision of this chapter, the Central Excise Officer has the power to rectify the mistake which are apparent from the records. However if the order is decided by way of appeal or revision by the Central Excise Officer, can be also rectified by the Central Excise Officer, only in relation to those matters which has not been decided in such revision or appeal.

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Which mistakes can be rectified? 2016-10-28T17:45:48+00:00

As assessment order can be rectified only in respect of those mistakes which are apparent from the records.  It may be a mistake either of law or of fact.

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Do I need to get my assessment every year? 2016-10-28T17:46:37+00:00

No, you do not need to get your assessment every year.  Assessment is done every year on self assessment basis and in case of scrutiny of return only, further information shall be called by the officer from the assessee.

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When Central Excise officer can make best judgement assessment? 2017-04-06T10:49:10+00:00

Central Excise officer can make best judgement assessment, If any person, liable to pay service tax,—

(a)

fails to furnish the return under section 70 of the Act, or

(b)

having made a return, fails to assess the tax in accordance with the provisions of this Chapter or rules made thereunder,

However, before making best judgement order, the Central Excise Officer, may gather such information which he deems necessary, and after giving the person an opportunity of being heard, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment

[Section 72 of the Finance Act, 1994]

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When can assessee do provisional assessment? What is the procedure to be followed for provisional assessment? 2016-10-28T17:49:00+00:00

If an assessee is unable to calculate the actual amount of service tax payable by him for any particular month or quarter as the case may be , he may opt for provisional assessment of service tax. For which assessee is required to make a written request to the Assisstant Commissioner of Central Excise or Deputy Commissioner of Central Excise as the case may be, for payment of service tax on provisional basis. Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise as the case may be, may allow payment of service tax on provisional basis. In such a case assessee shall file a statement giving details of the difference between the service tax deposited and the service tax liable to be paid by him for such month or quarter as the case may be, Form ST-3A.

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Can the Central Excise Officer re-assess the Service Tax liability? 2016-10-28T17:49:53+00:00

Yes. The Central Excise Officers authorized in this regard, can scrutinize all the relevant records and check as to whether the Service tax liability was properly discharged. Whenever the  Central Excise Officers has doubt on self assessment made by the assessee, Central Excise officer re-assess the service tax liability, subject to various limit as notified by Circular No. 13/12/2010-ST, date 20-09-2010.

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Normally who is responsible to make assessment under service tax? 2017-04-06T10:49:10+00:00

Normally, every person who is liable to pay service tax is responsible to make assessment of the service tax payable by him and furnish the half yearly return in the prescribed form ST-3 or ST-3A as the case may be, and Such assessment required to be made by the assessee himself.

[Sub-section (1)of Section 70 of the Finance  Act,1994]

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What does Assessment mean? 2016-10-28T17:53:25+00:00

Assessment is the computation of tax liability. Assessment includes self assessment of services tax by the assessee, reassessment, provisional assessment, best judgement assessment and any order of assessment in which the tax assessed is nil; determination of the interest on the tax assessed or re-assessed.

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Can director, manager or officer of the company also liable for penalty, if company contravene any provision of the Act or rules made there under? 2016-10-29T11:51:16+00:00

Yes, as per Section 78A of the Finance Act, 1994, if company contravene any provision of the Act or rules made there under, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contravention, shall be liable to a penalty which may extend to one lakh rupees.

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Who can opt for VCES? 2017-04-06T10:49:10+00:00

Any person can avail the benefit under the scheme with respect to the tax dues for which: No notice or an order of determination under Section 72 or 73 or 73A of the Act has been issued or made before the 1st March, 2013:, Service tax return has been submitted for any period declaring the incorrect tax liability then declaration can be filled for that period; Notice has been issued covering a particular liability or period then declaration can be filled for any other liability or period; If any notice or an order is issued after 01st March, 2013, then benefit under this scheme can be availed.

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What is service tax Voluntary Compliance Encouragement Scheme 2013? 2016-10-29T11:55:52+00:00

Voluntary Compliance Encouragement Scheme (VCES) is a amnesty scheme introduced vide Chapter VI of the Finance Bill, 2013, to encourage voluntary compliance by defaulter of service tax. This scheme promise one time amnesty by way of wavier of interest and penalty, immunity from prosecution to stop filers, non filers and non registrants.

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Department impose the penalty on Mr. A, without giving any opportunity to assessee, can department to do so? 2016-10-29T11:57:31+00:00

No, Department can not impose penalty without giving opportunity to the assessee. Because assessee ha basic right before a penalty is imposed on him. Therefore such penalty is not not tenable in law.

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Under which circumstances the penalty imposed for non-payment or short payment of service tax, can be reduced? 2016-10-29T11:58:26+00:00

As per the proviso of Section 76 of the Finance Act,1994, if the asessee pay the service tax and interest thereon, within a period of thirty days of—

– the date of service of notice under sub-section (1) of section 73, no penalty shall be payable and proceedings in respect of such service tax and interest shall be deemed to have been concluded;

– the date of receipt of the order of the Central Excise Officer determining the amount of service tax under sub-section (2) of section 73, the penalty payable shall be twenty-five per cent of the penalty imposed in that order, only if such reduced penalty is also paid within such period.

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I have not deposited my tax from past 1 year, should I need to pay penalty? 2016-10-29T11:59:39+00:00

If the assessee fails to deposit service tax, without the intention to evade payment of service tax, and assessee had been served a notice, then assessee is liable to penalty in addition to service tax and interest thereon, which may extend to 10% of the tax not deposited by the assessee.

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If assessee deposited entire tax along with interest, will assessee still required to pay penalty? 2016-10-29T12:00:38+00:00

In a case where the amount of service tax payable has been self-assessed in the return furnished, not been paid either in full or part, and subsequently assessee pays the tax along with the interest, then in that case assessee is not required to pay penalty.

[Sub-clause (1B) of Sub-section 1 of the Section 73 of the Finance Act, 1994, Inserted by the Finance Act, 2015, with effect from. 14-5-2015]

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Under which circumstances penalty may be waive off? 2016-10-29T12:01:30+00:00

No penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure. [Section 80 of the Finance Act, 1994]

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What are the penal provisions for suppression of value of taxable service? 2017-04-06T10:49:10+00:00

Where any service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, by reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person who has been served notice under the proviso to sub-section (1) of section 73 shall, in addition to the service tax and interest specified in the notice, be also liable to pay a penalty which shall be equal to hundred per cent of the amount of such service tax.

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Is assessee requires to round off tax in each invoice? 2016-10-29T12:03:36+00:00

No, as per 37D of the Central Excise act, which is also applicable to service tax, requires rounding up of tax while making monthly/quarterly payment to government, there is  nothing in this section which requires rounding up of tax in each invoice.

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What is the time limit for which records should be preserved by the assessee? 2016-10-29T12:04:40+00:00

Assessee should preserve all the records and document related to service tax, for at least five years immediately after the financial year to which such records pertain.

[Sub-rule (3) of Rule 5 of the Service Tax Rules, 1995,]

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Is assessee required to issue separate invoice if he receive excess payment then the amount mentioned in the invoice? 2016-10-29T12:05:34+00:00

As per the Proviso of Rule 4A (1) of the Service Tax Rule,1994, if the assessee receives an amount more than Rs. 1000 in excess of the amount indicated in the invoice, then assessee should issue separate invoice.

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Is it mandatory to sign invoices using digital signature in case invoice are issued using computer system? 2016-10-29T12:06:52+00:00

Yes, as per Rule 4C of the Service Tax Rules,1994,every shall authenticate invoices using digital signature, if invoice are issued using computer system.

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Can assessee maintain records electronically? 2016-10-29T12:09:31+00:00

As per Rule 5, of the service Tax Rules,1994, the “Records” include the computerized data maintain by the assessee, and records may be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature [amended by, Service Tax (Amendment) Rules, 2015, with effect from 1-3-2015].

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Whether the assessee should separately indicate the Service Tax charged from the client, in the Bill/ Invoice/ Challan? 2017-04-06T10:49:10+00:00

As per Section 12A of the Central Excise Act, 1994,which is also applicable to service tax

[Section 83, of the Finance Act, 1994], it is mandatory for every assessee to indicate  the amount of service tax in the Bills / Invoices / Challans raised on the clients.

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Is there any prescribed format for the Invoice/Bill/ Challan? And what are the legal requirements that have to be complied by the assessee for issuing the invoice? 2016-10-29T12:11:33+00:00

Neither the Finance Act, 1994, nor the Service Tax Rules, 1994, has prescribed any specific format for issue of an invoice, a bill, or challan. However as per Rule 4A of the Service Tax Rules, 1994, the Invoice/Bill/Challan should contain specific information.

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Is every assessee is required to issue invoice and the time period upto which invoice should be issued? 2016-10-29T12:13:07+00:00

Every assessee should issue an invoice, a bill or challan within 30 days from the date of completion of service or receipt of any payment.

[Sub-rule (1) of Rule 4A, of the Service Tax Rules, 1994]

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What are the statutory registers or records that are required to be maintained by the assessee? 2017-04-06T10:49:10+00:00

Finance Act, 1994, does not required any specific records that are required to be maintained by the assessee. However, as per sub–rule (1) of Rule 5 of the Service Tax Rules, 1994, the records maintained by the assessee in accordance with the various laws in force from time to time shall be acceptable under service tax. Assessee should furnish the details of all accounts maintained by him, at the time of filing the ST-3 Return for the first time, to the Superintendent of Central Excise.

[Sub-rule(2) of Rule 5 of the Service Tax Rules, 1994]

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Mr A. file the return after the due date, and after that he notice mistake in return, can he revise the return? 2016-10-29T12:15:31+00:00

Yes, Mr A. can revise the return within 90 days from the date of submission of return even though such return is a belated return because there is no provision which restrict any assessee from revision of belated return.

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What is the procedure for e-filing? 2016-10-29T12:16:23+00:00

Following procedure should be followed for e-filling:-

–  File of an application to the jurisdictional Assistant / Deputy Commissioner of Service Tax, specifying 15-digit PAN based registration number (STP Code), Valid e-mail address  so that the Department can send them their User ID and password to help them file their Return.

–  Log on to the Service Tax e-filing home page by typing the address (http://servicetaxefiling.nic.in in the address bar of the browser.)

–  Upon entering the Service Tax code, user ID and password, you will be permitted to access the e-filing facility.

–  Follow the instructions given therein for filing the Returns electronically

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What should assessee do, if he notice any mistake after 90 days from the date of submission of such return? 2017-04-06T10:49:10+00:00

Assessee can not revise any return after 90 days from the date of submission of return. Therefore, if any mistake noticed by assessee then he should pay balance amount, if any, along with interest by GAR-7 challan and inform the department suitably. If assessee paid excess amount by mistake then he is required to file application for refund, but he can not adjust such excess payment on his own.

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Can an assessee revised his return, if yes then what is time period within which return can be revise? 2016-10-29T12:29:26+00:00

Yes, if assessee found any mistake or omission in the return previously filed by him, then he may revise the return within 90 days from the date of submission of such return. The revised return shall be filled in Form ST-3 only.

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What is the penalty that may be imposed on assessee, in case of non filling or late filling of service tax return? 2016-10-29T12:30:08+00:00

If a assessee fails to file the ST-3 Return by the due date [25th October and 25th April], he shall be liable to penalty under Rule 7C of the Service Tax Rules, 1994, which is as under :-

Period of delay from the due date                                          Penalty

15 days                                                                                                  Rs.500

Beyond 15 days but not later than 30 days                                   Rs. 1000

Beyond 30 days                                                                                  Rs.1000 plus Rs. 100 for every day from

31st day (not exceeding Rs. 20,000)

If the assessee file the annual return [referred in sub-rule (3A) of rule 7 of the Service Tax Rules, 1994]  after the due date, then the assessee shallbe liable to pay penalty at the rate of one hundred rupees per day for the period of delay in filing of such return, subject to a maximum of twenty thousand rupees. [Sub-Rule (2) of Rule 7C, of the Service Tax Rules, 1994, inserted by Service Tax (Amendment) Rules, 2016, w.e.f. 1-4-2016]

 

 

 

 

 

 

 

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Is the assessee is required to file multiple service tax return if he provides two or more taxable services? 2016-10-29T12:30:58+00:00

No, assessee can file a single return in Form ST-3 or Form ST-3A, as the case may be, mentioning therein all the taxable services provided by him.

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If any assessee did not provide or received any taxable services and not received or paid any payment, in that case also he is still liable to file service tax return? 2017-04-06T10:49:10+00:00

Service tax return should be filled by every person who is registered under service tax or liable to registered under service tax. Therefore every assessee should file service tax return within the prescribed time limit, irrespective of the fact that assesse whether or not provided or received any taxable services or paid or received any payment.

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Is it mandatory for all assessee to file service tax return electronically? 2016-10-29T12:32:50+00:00

Yes, as per Notification No 43/2011 dated 25-8-2011, provides that with effect from 1st October 2011 every assessee is required to file service tax return electronically.

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What are the due dates of filling of service tax return? 2016-10-29T12:33:25+00:00

Service tax return shall be filed on half yearly basis, and return should be submitted within 25days from the end of the respective half year, i.e, return for the half year ended on 30th September shall   be filled till 25th October, and return for the half year ended on 31st March shall be filled till 25th April.

Further every assessee shall submit an annual return for the financial year to which the return relates, in such form and manner as may be specified in the notification in the Official Gazette by the Central Board of Excise and Customs, by the 30th day of November of the succeeding financial year.  [Sub-Rule(3A) of Rule 7 of the service Tax Rules, 1994, inserted by Service Tax (Amendment) Rules, 2016, w.e.f. 1-4-2016]

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Who is required to file service tax return and in which Form service tax return can be filled? 2017-04-06T10:49:10+00:00

Service tax return shall be filled by every person who is registered or liable to register under service tax (including Input service distributor).  Service tax return shall file in Form ST-3, if assessee  is making provisional assessment under Sub-rule (4) of Rule 6 of the Service Tax Rules, 1994., then such assessee should file return in Form ST-3A.

[Section 70 of the Finance Act,1994]
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ABC Ltd. has paid Service Tax of its Mumbai Branch under Service Tax code of its Delhi branch. What is the process of rectification? 2016-10-29T12:35:09+00:00

There is no process to rectify this error. Either such tax can be carried forward and adjusted against future liability under Rule 6(4A) of Service Tax Rules, 1994 or assessee can apply for refund of such excess tax.

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Mr. Shyam has paid Service Tax under wrong accounting code. What is the process of rectification? 2016-10-29T12:36:50+00:00

As per trade notice issued by various Commissionerates (eg Trade Notice No. 1/2014-15 dt. 5.8.2014 – Bhopal Commissionerate) it has been clarified that in such cases the assessee should inform the Dy/ Asstt. Commissioner (Techincal-Service Tax) in writing along with paid challan and correct details.

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Mr. Ram provides the services 15th May,2016, he issued invoice on 28th May,2016 and received payment on 15th June, 2016, in that case also he is still liable for payment of Krishi Kalayan Cess? 2016-10-29T12:36:45+00:00

As per Rule 5 of Point of Taxation Rules,2011, where a service is taxed for the first time, then:-

(a)  no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;

(b)  no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within fourteen days of the date when the service is taxed for the first time.

The above rule has been made applicable in case of new levies as well.  Therefore, completion of service shall not determine applicability of  Krishi Kalayan Cess. If the  invoice is issued before 31st May, 2016 and payment received on or after 1st June,2016, such service shall be subject to  Krishi Kalayan Cess, accordingly Mr. Ram is liable for payment of Krishi Kalayan Cess.

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Define taxability of Swachh Bharat Cess? 2016-10-29T12:37:43+00:00

Swachh Bharat Cess @ 0.5% leviable with effect from 15-11-2015 on all taxable services vide service tax notification 21/2015 dated 06-11-2015. It was proposed in budget 2015-16 that Swachh Bharat Cess will be levied @2%. However currently government start imposing this cess @0.5% vide notification no. 22/2015-service tax.

It is also provided that Swachh Bharat Cess shall not be leviable on those services which are exempt from service tax by mega exemption notification and negative list.

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What are the penal consequences to be faced by the assessee, if the Service Tax is not paid or paid late? 2016-06-25T14:21:24+00:00

If assessee fails to pay or late paid (not the case of tax evasion), service tax, then he shall pay  in addition to such tax, interest which may vary from 10% per annum to 24% per annum, as notified by Central Government.

At present, rate of interest is 18% per annum,(with effect from 14th May,2016). A rebate of 3% is available in case of assessee whose total turnover is less than sixty lakh Rupee.  Further, a higher rate of 24% is provided for assessee who has collected service tax but not deposit such taxes.

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Is service tax is to be paid on the gross value of taxable services or on the value receive by the assessee after deduction of TDS? 2016-10-29T12:38:34+00:00

Assessee should charge the service tax on the gross value of services provided by him. Income tax deducted at source is includible in the value of invoice amount. Therefore, service Tax is payable on the gross amount including the amount of Income Tax deducted at source also.

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Can assessee pay service tax in advance? 2016-10-29T12:39:45+00:00

Yes, assessee can pay service in advance to the credit of the central government and adjust the amount so paid against the service tax which he is liable to pay for the subsequent period. Provided that the assessee shall:-

The assessee intimate the details of the amount of service tax paid in advance to the jurisdictional superintendent of Central Excise within a period of 15 days from the date of such payment and  indicate the details of the advance payment made, and its adjustment, if any in the subsequent return to be filed under section 70 of the Act.

[Sub-rule (1A) of Rule 6, of the Service Tax Rules, 1994]

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Can assessee pay service tax on provisional basis? 2016-10-29T12:40:37+00:00

Yes, an assessee can opt for payment of service tax on provisional basis, if he is unable to calculate the actual amount of Service Tax payable by him for any particular month or quarter, as the case may be, he may request in writing (along with the reason) to the Assistant / Deputy Commissioner of Central Excise.

[sub–rule (4) of Rule 6 of the Service Tax Rules, 1994]

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In case service tax is paid by cheque, which date will be treated as date of payment? 2016-10-29T12:41:57+00:00

The date when cheque is presented in the bank (designated by the Central Board of Excise & Customs) for this purpose shall be deemed to be the date on which service tax has been paid subject to realization of that cheque.

[Sub-rule (2A) of Rule 6, of the Service Tax Rules, 1994]

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What are the last dates for payment of service tax? 2017-04-06T10:49:10+00:00

In case of assessee is Individual, Proprietors, Partnership Firms (Including Limited Liability Partnership Firm), Hindu Undivided Family and One Person Company

Service tax is to be paid on quarterly basis. And service tax shall be paid before the 5th of the month immediately following the respective quarter, in case of e-payment payment should be made before the 6th of the month immediately following the respective quarter. However, payment for the quarter ending on 31st march, is required to be made by 31st March itself.

In case of others

 In case of person other than those specified above, service tax is to be paid on monthly basis. And service tax shall be paid before the 5th of the following month, in case of e-payment payment should be made before the 6th of the month immediately following the respective month. However, payment for the month of march is required to be made by 31st March itself.

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When E-payment of Service Tax mandatory? 2016-10-29T12:43:52+00:00

Every assessee shall pay service tax electronically, unless the Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be, having jurisdiction, may for reasons to be recorded in writing, allow the assessee to deposit the service tax by any mode other than internet banking.

[vide Notification no. 9/2014-ST, dated 11th July,2014 w.e.f. 1st Oct.2014]

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How can an assessee pay service tax? 2016-10-29T12:44:39+00:00

In the following ways an assessee can pay the service tax:-

– Assessee can deposit the service tax  at the specified branches of the designated banks through using GAR-7 challan. It is also clarified that a single GAR-7 challan can be used by the service provider, providing multiple taxable services, for paying service tax on all services.

– Alternatively, an assessee can pay service tax electronically, using e-payment facility.

(It is important to note that with effect from 1st Oct. 2014, all assessee are mandatorily required to deposit service tax electronically)

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Can I access ACES once I have surrendered my registration? 2016-10-29T12:45:49+00:00

No, once registration is surrendered, you will not be allowed to access ACES application.

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Can assessee amend registration offline? 2016-10-29T12:46:55+00:00

No, as a process, government has prescribed the online method as the only way to amend your registration certificate.

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Can I add/delete services in my registration certificate? 2017-04-06T10:49:10+00:00

Yes, you can do by amending your registration Certificate. You have to select the requisite categories from the search list on ACES in Service Tax amendment and can add it.  If you want to delete any selected services, then you can delete them by selecting its check box and then press the delete button.

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What are the details I should have for filling registration application? 2016-10-29T12:49:45+00:00

Some of the details (along with applicable proof) one should have for filling registration application:-

–          PAN

–          Details of authorized signatories and all partners/directors/trustees etc.

–          Details of account numbers

–          Details of registration number under Companies Act, Sales Tax Act, IE code etc.

–          Details of output services provided/ input services received on which service tax is to be paid

–          Address of the premises for which registration is sought

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I am already registered with Service Tax department. do I have to register with ACES again? 2017-04-06T10:49:10+00:00

In case of old existing Assessee registration database would have been migrated from present system  database to ACES. Thus, your existing PAN based registration number will remain the same.

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What is ACES? 2017-04-06T10:49:10+00:00

The Central Board of Excise and Customs has developed a new software application called Automation of Central Excise and Service Tax (ACES), which aims at improving tax-payer services, transparency, accountability and efficiency in the indirect tax administration in India. ACES encompasses the entire gamut of Central Excise and Service Tax processes, registration, returns, accounting and reconciliation, refunds, dispute resolution, audit, provisional assessment, exports, claims, intimations and permissions.

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How should I surrender my registration? 2016-10-29T14:00:57+00:00

The assessee should surrender his registration certificate in Form ST-2 to the concerned Superintendent of Central Excise.

[Rule 4(7) of the Service Tax Rule, 1994].

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What is the Penalty may be imposed on assessee in case of non registration? 2016-10-29T14:06:55+00:00

Every assessee who is liable to pay service tax or required to take registration, fails to take registration in accordance with the provisions of section 69 or rules made under this Chapter shall be liable to a penalty which may extend to ten thousand Rupees.

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What should be done by the assessee, if he ceases to provide taxable service? 2016-10-29T14:14:17+00:00

The assessee should surrender his registration certificate in Form ST-2 to the concerned Superintendent of Central Excise.

[Rule 4(7) of the Service Tax Rule, 1994].

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What procedure is to be followed by the assessee if he starts providing any taxable service which is not mentioned in the registration certificate? 2016-10-29T14:16:14+00:00

If assessee starts providing any taxable service which is not mentioned in the registration certificate, then assessee should inform the concerned  Superintendent of Central Excise within 30 days, from the day from which assessee start providing such taxable services.

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Is separate registration is required for each services, if assessee provides one or more services? 2016-10-29T14:20:15+00:00

As per sub-rule (4) of rule 4 of the Service Tax Rules, 1994, in case assessee provides two or more taxable services, then assessee is required to make single application, mentioning therein all taxable services provided by him, to the concerned Superintendent of Central Excise.

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If I am also receiving service on which I have to pay service tax under reverse charge, do I need separate registration? 2016-10-29T14:22:28+00:00

No, I am providing taxable services and also receive services on which I have to pay service tax, then there is no need of separate registration. I can make single application, mentioning all taxable services provided by me and services received by me, on which I have to pay service tax.

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If I have two or more branches in different states, can I take centralized registration, if yes then what are the provisions for centralized registration? 2016-10-29T14:24:07+00:00

Yes, if I have two or more branches located in different state, then I may apply for centralized registration, provided that I have centralized accounting or centralized billing system, for such branch from where centralized billing or centralized accounting systems are located.

Superintendent of Central Excise, in whose jurisdiction such branch where centralized account or billing exists, is empowered to grant centralized registration.

[Rule 5 of Service Tax Rules, 1994]

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Time period taken by the Superintendent of Central Excise for issuance Registration Certificate? 2016-10-29T14:42:55+00:00

The Superintendent of Central Excise Should issue Registration certificate within a period of seven days from the date of receipt of application in Form ST-1 along with all relevant details and documents. In case the registration certificate is not issued within seven days, then the registration applied shall be deemed to have been granted.

[Rule 4(5) of the STR, 1994].

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How to register under service tax? 2016-10-29T14:45:02+00:00

An assessee (service provider or service receiver or “Input Service Distributor‟) who is required to get registered, shall register himself with the aces software on selecting the service tax portal from the website www.aces.gov.in to become an ACES user. After the registration on aces software, assessee is required to file Form ST-1 on www.aces.gov.in

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What is the definition of “Person” mentioned in the definition of taxable service ? 2017-04-06T10:49:10+00:00

The word “Person” shall include

–          an individual

–          a Hindu undivided family

–          a company

–          a society

–          a limited liability partnership

–          a firm

–          an association of person or body of individuals, whether incorporated or not,

–          Government

–          a local authority

–          every artificial judicial person, not falling within any preceding subclasses;

–         

[Sub-clause (47), clause (B), of section section 65 of the Finance Act, 1994]
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What procedure is to be followed by the assessee if there is any change in the information or details furnished by him in Form ST-1? 2016-10-29T14:48:51+00:00

If there is any change in the information or details provided by him in Form ST-1, then assessee should inform the concerned  Superintendent of Central Excise within 30 days, from the date of such changes.

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When a person should obtain registration? 2017-04-06T10:49:10+00:00

A person should obtain registration when:-

  • A person starts providing a taxable service, he shall make application for registration within 30 days from the date from which he starts providng taxable services.

[sub-rule (1) of Rule 4 of Service Tax Rules, 1994].

  • In case service tax is extended to a new service, an existing service provider must register himself, unless he is eligible for exemption under any other notification, within a period of 30 days from the date of new levy

[sub-rule ( 5A) of Rule 4 of the Service Tax Rules, 1994].

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What is the meaning of an ‘assessee’ in relation to Service Tax? 2017-04-06T10:49:11+00:00

As per the sub-section (7) of Section 65 of the Finance Act, 1994 (Chapter V) “assessee‟ means a person liable to pay Service Tax and includes his agent.

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Who is required to obtain registration under service tax? 2017-04-06T10:49:11+00:00

Following persons are required to obtain registration under service tax laws as per the procedures prescribed in Rule 4 of Service Tax Rules, 1994:-

  1. Service Provider:- An assessee who has provided a taxable service of value exceeding Rs. 9 lakhs, in the preceding financial year, is required to register with the Central Excise or Service Tax office having jurisdiction over the premises or office of such service provider.
  2. Service Receiver:- If he is liable to pay service tax, he should obtain registration number under service tax.
  3. The ‘Input Service Distributors’ are also required to register them as per Notification. No.26/2005-ST dated 07.06.2005 as amended.
  4. Notified by Central Government:- Section 69(2) of the Act, empowered the Central Government to notify any person or class of person to apply for registration.
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In case contract is given for customized development of software and the customized software so developed is delivered to the client on media like a CD then would the transaction fall in this declared entry or would it be covered by the TCS Judgment? 2017-04-06T10:49:11+00:00

In such a case although the software is finally delivered in the form of goods, since the contract is essentially for design and development of software it would fall in the declared list entry. Such a transaction would be in the nature of composite transaction involving an element of provision of service, in as much as the contract is for design and development of software and also an element of transfer of title in goods, in as much as the property in CD containing the developed software is transferred to the client. However, the CD remains only a media to transmit or deliver the outcome of which is essentially and pre-dominantly a contract of service. Therefore, such a transaction would not be excluded from the ambit of the definition of ‘service’ as the transaction does not involve ‘only’ transfer of title in goods and dominant nature of the transaction is that of provision of service.

In the case of Integra Micro Software Services (P.) Ltd. Commissioner of Service Tax, Bangalore

[2012] 22 taxmann.com 132 (Bang. – CESTAT), it was held that Development of software through modification and upgradation of same based on shortcomings pointed out by clients, would prima facie, be covered under ‘Information Technology software service’.
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Would providing a license to use pre-packaged software be a taxable service? 2017-04-06T10:49:11+00:00

The following position of law needs to be appreciated to determine whether a license to use pre-packaged software would be goods-

  • As held by the Hon’ble Supreme Court in the case of Tata Consultancy Services v. State of Andhra Pradesh
    [2002(178) ELT22(SC)] ] pre-packaged software or canned software or shrink wrapped software put on a media like is goods. Relevant portion of para 24 of the judgment is reproduced below-

“A software programme may consist of various commands which enable the computer to perform a designated task. The copyright in that programme may remain with the originator of the programme. But the moment copies are made and marketed, it becomes goods, which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become “goods”. We see no difference between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing the intellectual property and not the media i.e. the paper or cassette or disc or CD. Thus a transaction sale of computer software is clearly a sale of “goods” within the meaning of the term as defined in the said Act. The term “all materials, articles and commodities” includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transmitted, transferred, delivered, stored, possessed etc. The software programmes have all these attributes.”

Therefore, in case a pre-packaged or canned software or shrink wrapped software is sold then the transaction would be in the nature of sale of goods and no service tax would be leviable.

  • The judgement of the Supreme Court in Tata Consultancy Service case is applicable in case the pre-packaged software is put on a media before sale. In such a case the transaction will go out of the ambit of definition of service as it would be an activity involving only a transfer of title in goods.
  • As per the definition of ‘service’ as contained in clause (44) of section 65(B) only those transactions are outside the ambit of service which constitute only a transfer of title in goods or such transfers which are deemed to be a sale within the meaning of Clause 29(A) of article 366 of the Constitution. The relevant category of deemed sale is transfer of right to use goods contained in sub-clause (d) of clause (29A) of the Constitution.
  • ‘Transfer of right to use goods’ is deemed to be a sale under Article 366(29A) of the Constitution of India and transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods is a declared service under clause (f) of section 66E.
  • Transfer of right to use goods is a well-recognized constitutional and legal concept. Every transfer of goods on lease, license or hiring basis does not result in transfer of right to use goods.
  • A license to use software which does not involve the transfer of ‘right to use’ would neither be a transfer of title in goods nor a deemed sale of goods. Such an activity would fall in the ambit of definition of ‘service’ and also in the declared service category specified in clause (f) of section 66E.
  • Therefore, if a pre-packaged or canned software is not sold but is transferred under a license to use such software, the terms and conditions of the license to use such software would have to be seen to come to the conclusion as to whether the license to use packaged software involves transfer of ‘right to use’ such software in the sense the phrase has been used in sub-clause (d) of article 366(29A) of the Constitution.
  • In case a license to use pre-packaged software imposes restrictions on the usage of such licenses, which interfere with the free enjoyment of the software, then such license would not result in transfer of right to use the software within the meaning of Clause 29(A) of Article 366 of the Constitution. Every condition imposed in this regard will not make it liable to service tax. The condition should be such as restraints the right to free enjoyment on the same lines as a person who has otherwise purchased goods is able to have. Any restriction of this kind on transfer of software so licensed would tantamount to such a restraint.
  • Whether the license to use software is in the paper form or in electronic form makes no material difference to the transaction.
  • However, the manner in which software is transferred makes material difference to the nature of transaction. If the software is put on the media like computer disks or even embedded on a computer before the sale the same would be treated as goods. If software or any programme contained is delivered online or is down loaded on the internet the same would not be treated as goods as software as the judgment of the Supreme Court in Tata Consultancy Service case is applicable only in case the pre-packaged software is put on a media before sale.
  • Delivery of content online would also not amount to a transaction in goods as the content has not been put on a media before sale. Delivery of content online for consideration would, therefore, amount to provision of service.
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Would providing advice, consultancy and assistance on matters relating to information technology software be chargeable to service tax? 2017-04-06T10:49:11+00:00

These services may not be covered under the declared list entry relating to information technology software. However, such activities when carried out by a person for another for consideration would fall within the definition of service and, hence, chargeable to service tax if other requirements of taxability are satisfied.

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Is on site development of software covered in this entry? 2016-10-29T15:01:05+00:00

Yes. On site development of software is covered under the category of development of information technology software.

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Would sale of pre-packaged or canned software be included in this entry? 2016-10-29T15:02:23+00:00

No. Such services are not covered under the negative list entry. H

No, it is a settled position of law that pre-packaged or canned software which is put on a media is in the nature of goods [Supreme Court judgment in case of Tata Consultancy Services Vs State of Andhra Pradesh [2002(178) E.L.T. 22(SC) refers]. Sale of pre-packaged or canned software is, therefore, in the nature of sale of goods and is not covered in this entry.

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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 are taxable? 2016-10-29T15:04:24+00:00

Yes. Service tax is liable on services provided by such institutions in relation to campus recruitment as such services are not covered in the negative list.

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Are placement services provided to educational institutions for securing job placements for the students covered in this negative list entry? 2016-10-29T15:06:29+00:00

No. Such services do not fall in the category of exempt services provided to educational institutions.

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Are services of conducting admission tests for admission to colleges exempt? 2016-10-29T15:07:55+00:00

Yes in case the educational institutions are providing qualification recognized by law for the time being in force.

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Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry? 2016-10-29T15:09:58+00:00

No. To be covered in the negative list a course should be recognized by an Indian law.

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Structure meant for Educational Establishment 2017-04-06T10:49:11+00:00

As per Notification No 25/2012 dated 20.06.2012 Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a structure meant predominantly for use as an educational establishment.

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If a course in a college leads to dual qualification only one of which is recognized by law would the service provided by the college by way of such education be covered in this entry? 2016-10-29T15:13:22+00:00

Provision of dual qualifications is in the nature of two separate services as the curriculum and fees for each of such qualifications are prescribed separately. Service in respect of each qualification would, therefore, be assessed separately. If an artificial bundle of service is created by clubbing two courses together, only one of which leads to a qualification recognized by law, then by application of the rule of determination of taxability of a service which is not bundled in the ordinary course of business contained in section 66F of the Act it is liable to be treated as a course which attracts the highest liability of service tax. However incidental auxiliary courses provided by way of hobby classes or extra-curricular activities in furtherance of overall well being will be an example of naturally bundled course. One relevant consideration in such cases will be the amount of extra billing being done for the unrecognized component viz-a-viz the recognized course.

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Are services provided to educational institutions also covered in this entry? 2016-10-29T15:14:16+00:00

No. Such services are not covered under the negative list entry. However certain services provided to educational institutions are separately exempted under the mega–notification. These are services provided to or by an educational institution in respect of education exempted from service tax, by way of,-

(a) auxiliary educational services; or

(b) renting of immovable property

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Services provided by boarding schools? 2016-10-29T15:15:37+00:00

Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.

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What is the meaning of ‘education as a part of curriculum for obtaining a qualification recognized by law’? 2016-10-29T15:17:53+00:00

It means that only such educational services are in the negative list as are related to delivery of education as ‘a part’ of the curriculum that has been prescribed for obtaining a qualification prescribed by law. It is important to understand that to be in the negative list the service should be delivered as part of curriculum. Conduct of degree courses by colleges, universities or institutions which lead grant of qualifications recognized by law would be covered. Training given by private coaching institutes would not be covered as such training does not lead to grant of a recognized qualification.

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Are private tuitions covered in the entry relating to education? 2016-10-29T15:19:42+00:00

No. However, private tutors can avail the benefit of threshold exemption.

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Are services provided by international schools giving certifications like IB also covered in this entry? 2016-10-29T15:21:19+00:00

Yes. Services by way of education up to higher secondary school or equivalent are covered in this entry.

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Are the auxiliary educational services for all educational institutions exempt? 2016-10-29T15:22:33+00:00

No. Exemption is available for services to or by educational institutions in respect of education exempted from service tax. Therefore, service tax is chargeable on such auxiliary educational services which are in respect of education chargeable to service tax.

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Are services provided to educational institutions also covered in this entry? 2016-10-29T15:23:24+00:00

No. Such services are not covered under the negative list entry. However certain services provided to educational institutions are separately exempted under the mega–notification. These are services provided to or by an educational institution in respect of education exempted from service tax, by way of,-

(a) auxiliary educational services; or

(b) renting of immovable property

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Services provided by boarding schools? 2016-10-29T15:24:53+00:00

Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.

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Structure meant for Educational Establishment 2017-04-06T10:49:11+00:00

As per Notification No 25/2012 dated 20.06.2012 Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of a structure meant predominantly for use as an educational establishment.

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Are services provided to educational institutions also covered in this entry? 2016-10-29T15:28:39+00:00

No. Such services are not covered under the negative list entry. However certain services provided to educational institutions are separately exempted under the mega–notification. These are services provided to or by an educational institution in respect of education exempted from service tax, by way of,-

(a) auxiliary educational services; or

(b) renting of immovable property

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What is the tax liability of a registered charity on their activities? 2017-04-06T10:49:11+00:00

If a registered charity is doing any activity falling in negative list of services or otherwise exempt, he is not required to pay service tax on that activity. In case, where his activity is covered explicitly in any of the specified charitable activities at ‘a’ to ‘d’ of the answer above, he is exempt from service tax without any value limit. For charitable activities mentioned at ‘e’ of the answer above, he is exempt up to a value of twenty five lakh rupees in a financial year if the total value of such services had not exceeded twenty five lakh rupees during the preceding financial year. However, if his activity is not for general public as defined in the notification, he is not eligible for exemption and required to pay service tax on such activities.

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I am a registered charity. How do I know that activities provided by me are charitable activities? 2017-04-06T10:49:11+00:00

You are doing charitable activities if you are registered with income tax authorities for this purpose under section 12AA the Income-tax Act, 1961 and carry out one or more of the specified charitable activities. Following are the specified charitable activities:—

(a) public health by way of —

(I) care or counselling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(II) public awareness of preventive health, family planning or prevention of HIV infection;

(b) advancement of religion;

(c) advancement of educational programmes or skill development relating to,-

(I) abandoned, orphaned or homeless children;

(II) physically or mentally abused and traumatized persons;

(III) prisoners; or

(IV) persons over the age of 65 years residing in a rural area;

(d) preservation of environment including watershed, forests and wildlife; or

(e) advancement of any other object of general public utility up to a value of twenty five lakh rupees in a financial year subject to the condition that total value of such activities had not exceeded twenty five lakh rupees during the preceding financial year.

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Would leasing of vacant land with a green house or a storage shed meant for agricultural produce be covered in the negative list? 2016-10-29T15:34:20+00:00

Yes. In terms of the specified services relating to agriculture ‘leasing’ of vacant land with or without structure incidental to its use’ is covered in the negative list. Therefore, if vacant land has a structure like storage shed or a green house built on it which is incidental to its use for agriculture then its lease would be covered under the negative list entry.

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Would the processes of grinding, sterilizing, extraction packaging in retail packs of agricultural products, which make the agricultural products marketable in retail market, be covered in the negative list? 2017-04-06T10:49:11+00:00

No. Only such processes are covered in the negative list which makes agricultural produce marketable in the primary market.

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Would agricultural products like cereals, pulses, copra and jaggery be covered in the ambit of ‘agricultural produce’ since on these products certain amount of processing may be done by a person other than a cultivator or producer? 2017-04-06T10:49:11+00:00

‘Agricultural produce’ has been defined in clause (5) of section 65B as ‘any produce resulting from cultivation or rearing of plants, animals including all life- forms, on whicheither no further processing is done or such processing is done as is usually done bythe cultivator or producer which does not alter essential characteristics of agricultural produce but make it marketable for primary market’. The processes contemplated in thesaid definition are those as are ‘usually done by the cultivator or producer’

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Would operations like shelling of paddy or cleaning of wheat carried out outside the farm be covered in the negative list entry relating to agriculture as sub-clause (iii) of clause (d) of section 66D relating to services by way of processes carried out at an agricultural farm? 2017-04-06T10:49:11+00:00

The said sub-clause (iii) also includes ‘such like operations which do not alter the essential characteristic of agricultural produce’. Therefore, activities like the processes carried out in agricultural farm would also be covered if the same are performed outside the agricultural farm provided such processes do not alter the essential characteristics of agricultural produce but only make it marketable in the primary market. Therefore, cleaning of wheat would be covered in the negative list entry even if the same is done outside the farm. Shelling of paddy would not be covered in the negative list entry relating to agriculture as this process is never done on a farm but in a rice sheller normally located away from the farm. However, if shelling is done by way of a service i.e. on job work then the same would be covered under the exemption relating to ‘carrying out of intermediate production process as job work in relation to agriculture’.

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What are the services referred to in the negative list entry pertaining to Agricultural Produce Marketing Committee or Board? 2016-10-29T15:39:57+00:00

Agricultural Produce Marketing Committees or Boards are set up under a State Law for purpose of regulating the marketing of agricultural produce. Such marketing committees or boards have been set up in most of the States and provide a variety of support services for facilitating the marketing of agricultural produce by provision of facilities and amenities like shops, sheds, water, light, electricity, grading facilities etc. They also take measures for prevention of sale or purchase of agricultural produce below the minimum support price. APMCs collect market fees, license fees, rents etc. Services provided by such Agricultural Produce Marketing Committee or Board are covered in the negative list.

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What is the meaning of agricultural extension services? 2016-10-29T15:41:49+00:00

Agricultural extension services have also been defined in section 65B of the Act as application of scientific research and knowledge to agricultural practices through farmer education or training.

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Would leasing of vacant land with a green house or a storage shed meant for agricultural produce be covered in the negative list? 2016-10-29T15:44:11+00:00

Yes. In terms of the specified services relating to agriculture ‘leasing’ of vacant land with or without structure incidental to its use is covered in the negative list. Therefore, if vacant land has a structure like storage shed or a green house built on it which is incidental to its use for agriculture then its lease would be covered under the negative list entry.

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Would potato chips or tomato ketchup qualify as agricultural produce? 2017-04-06T10:49:11+00:00

No. In terms of the definition of agricultural produce, only such processing should be carried out as is usually done by cultivator producers which does not alter its essential characteristics but makes it marketable for primary market. Potato chips of tomato ketchup are manufactured through processes which alter the essential characteristic of farm produce (potatoes and tomatoes in this case).

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Would plantation crops like rubber, tea or coffee be also covered under agricultural produce? 2016-10-29T15:48:16+00:00

Yes. Such plantation crops are also covered under agricultural produce.

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What is the meaning of agricultural produce? 2017-04-06T10:49:11+00:00

Agricultural produce has also been defined in section 65B of the Act which means any produce of agriculture on which either no processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. It also includes specified processes in the definition like tending, pruning, grading, sorting etc. which may be carried out at the farm or elsewhere as long as they do not alter the essential characteristics.

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Are activities like breeding of fish (pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry included in the definition of agriculture? 2016-10-29T15:50:59+00:00

Yes. These activities are included in the definition of agriculture.

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What is the meaning of ‘agriculture’? 2016-10-29T15:51:57+00:00

‘Agriculture’ has been defined in the Act as cultivation of plants and rearing or breeding of animals and other species of life forms for foods, fibre, fuel, raw materials or other similar products but does not include rearing of horses.

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What treatment is to be provided for Cenvat credit on Supplementary invoices? 2016-10-29T16:01:18+00:00

When the supplier raises supplementary invoice for the differential duty, the Cenvat Credit equal to differential duty can be availed at that point of time.

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I had taken Cenvat Credit in time but had to reverse the same on account of non payment to vendor within 3 months, can I take this Cenvat Credit if I make payment to vendor after one year? 2016-10-29T16:02:33+00:00

Yes, on payment to vendor, Cenvat credit be taken back.

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I had taken Cenvat Credit in time but had to reverse the same on account of non payment to vendor within 3 months, can I take this Cenvat Credit if I make payment to vendor after one year? 2016-10-29T16:03:26+00:00

Yes, on payment to vendor, Cenvat credit be taken back.

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My Service provider has wrongly mentioned taxable category as IT Services in place of management consultancy services on invoice for which he was registered. Can I avail the Credit on such invoice? 2016-10-29T16:04:33+00:00

Yes, Cenvat credit is available on document/invoice issued by service provider where taxable category was wrongly mentioned service as IT service instead of Management Consultancy Service [Adecco Flexione Workforce Solutions P. Ltd. – 2015 (40) S.T.R. 564 (Tri. – Bang.)]

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Can any manufacturer / service provider claim Cenvat credit of duty paid on inputs on which duty has been paid at reduced rates under Notification No. 1/2011-CE or 12/2012-CE by the seller unit? 2016-10-29T16:05:39+00:00

Yes, Cenvat Credit is available except the Cenvat credit on goods as appearing against entry number 67 (coal) and 128 (All goods, other than those which are clearly not to be used as fertilisers) in the above notification is not available to the buyer of the goods.

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Will contract manufacturer be required to make reversal of Cenvat credit if he clears goods at reduced rate? 2016-10-29T16:06:46+00:00

If the said excisable goods are manufactured from inputs or capital goods on which appropriate duty of excise leviable under the First Schedule to the Excise Tariff Act or additional duty of customs under section 3 of the Customs Tariff Act, 1975 (51 of 1975) has been paid and no credit of such excise duty or additional duty of customs on inputs or capital goods has been taken by the manufacturer of such goods (and not the buyer of such goods) under rule 3 or rule 13 of the CENVAT Credit Rules, 2004. However, no reversal of Cenvat credit in respect of Input services (including common input services) is required by such contract manufacturer.

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Mr. Z is in the process of construction of shopping complex, during the construction some units were sold on part payment. Can Mr. Z claim abetment under Notification No. 26/2012? 2016-10-29T16:11:26+00:00

Yes, Mr. Z can claim abatement under Notification No. 26/2012 dated 20th June,2012. As per the said notification exemption to part of the value of services of construction of complex, building, civil structure, or part thereof, intending for sale to buyer, except the entire consideration is received after issuance of completion certificate by competent authority. In the given case consideration is received before issuance of completion certificate, therefore he can claim abatement.          

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Mr. S runs a radio taxi, is any abatement under service tax available to him? 2016-10-29T16:12:36+00:00

Notification No. 26/2012, provides that 60% abatement is available for the consideration received towards provision of service provided by the radio tax. Thus, Mr. S is eligible for 60% abatement.

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Mr. K having 10 cars with seating capacity of 5 person in each car, was given on hire to XY Ltd. for Rs. 5Lakh per annum. Is consideration received by Mr. K is liable for payment of service tax? 2016-10-29T16:13:30+00:00

Yes, services provided by way of transportation of passenger in contract carriage is liable for service tax, however abatement upto the extent of 60% is available towards the consideration received for provision of such service. 

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Mr. P receive Rs. 1lakh from Mr. I for booking hotel in Delhi, which include cost of accommodation. On how much amount Mr. P should charge service tax? 2016-10-29T16:17:31+00:00

Abatement has been granted to the extent of 90% of the consideration towards the provision services by a tour operator in relation arranging accommodation. Therefore, Mr. P should charge service tax on Rs.10,000.

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Mr. R organize a tour for employees YZ limited, and consideration of Rs. 20 Lakhs received by Mr. R includes cost of accommodation, transportation and meal. On how much amount Mr. R should charge service tax? 2016-10-29T16:27:45+00:00

As per Notification No. 26/2012, abatement has been granted to the extent of 70% of the consideration towards the provision services by a tour operator in relation to package tour. Therefore, Mr. R should charge service tax Rs.6 lakhs. 

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Mr. R a tour operator receive commission of Rs. 5 lakhs towards arranging accommodation for employees of XY Ltd. in Mumbai. How much abatement is available to Mr. R? 2016-10-29T16:30:02+00:00

As per Notification No. 26/2012, if consideration is received only for arranging accommodation and does not include cost of accommodation then no abatement is available as the amount consists of only consideration for agent services provided.

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Mr. L provides catering services without supply of foods and drinks in marriage functions. Is any abatement is available to Mr. K? 2016-10-29T16:31:26+00:00

No abatement is available in case of outdoor catering service, where foods and drinks are not supplied as part of catering service and whole of the amount shall be subject to service tax.  

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Mr. K provides catering services along with supply of foods and drinks in marriage functions. Is any abatement is available to Mr. K? 2016-10-29T16:32:22+00:00

Yes, abatement of 40% is available to Mr. K, of the total amount charged for catering services provided by him. 

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Mr. R owner of a restaurant, offer foods and drinks to Mr. K and charge Rs1000 as service charges and Rs.10,000 for foods and drinks ordered by him. Is any abatement is available to him and if yes then on which amount he should charge service tax? 2016-10-29T16:33:33+00:00

Yes, as per Rule 2C of the Service Tax (Determination of Value) Rules,2006, an abatement of 60% of the total amount charged, including charges for foods and drinks, and service charges, is available on services provided by way of supply of foods and any other articles of human consumption at a restaurant. Therefore, Mr. R should charge service tax on Rs.4400 (40% of 11000). 

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Mr. M gives equipments to manufacturer, on monthly equated lease rental under hire purchase agreement. How much abatement available to Mr. M? 2016-10-29T16:34:51+00:00

Service tax shall be levied on the finance charges recovered in equated monthly installment. In the absence of separate charges towards the services, as per Notification No. 26/2012, service tax shall be calculated on 10% of value of finance lease. Therefore, 90% abatement on lease rental is available to Mr. M.

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Mr. K own a guest house and let out guest house for accommodation to tourist, should Mr.K charge service tax on entire rent received or any abatement is available to him? 2016-10-29T16:36:47+00:00

As per Notification No. 26/2012, abatement has been granted to the extent of 40% of the consideration towards the provision of service by way of renting in hotels, inn, guest house etc. Therefore, Mr. K can charge service tax on 60% of the consideration received provided Mr. K cannot claim Cenvat credit of duty on inputs or capital goods used for providing such services.

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Mr. A receive commission towards services provided in relation to chit fund business. Is any abatement is available on commission received by Mr. A? 2016-10-29T16:38:27+00:00

Yes, abatement of 30% is available to Mr. A. The abatement has been reintroduced with effect from 1st April, 2016.

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Mr. Y provides the services of processing of textiles on job work basis, is this service liable to service tax? 2016-10-29T16:59:23+00:00

No, service by way of job work in relation to processing of textiles, are exempted under service tax.

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Mr. J provides the services of cutting and polishing of diamond on job work basis, is this service liable to service tax? 2016-11-02T14:23:57+00:00

No, service by way of job work in relation to cutting and polishing of diamond and gemstones, are exempted under service tax.

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XYZ Limited receives job work of printing design on textiles. Is this service liable to service tax? 2016-11-02T14:22:18+00:00

No, service by way of job work in relation printing is exempted from payment of service tax.  

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Mr. S is a author of XYZ novel and receive royalty, is such royalty is liable for service tax? 2016-11-02T14:20:43+00:00

No, service by way of allowing to enjoy copyright, including copyright of publications, is not liable for service tax. Hence, royalty received by Mr. S is not liable for service tax. 

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Mr. J provides placement services to ABC College, is such services exempted under service tax? 2016-11-02T14:19:16+00:00

No, placement service is not related to education, therefore services provided by placement agency is not exempted from payment of service tax.

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ABC School also provides sports classes and receive Rs. 5000 per student per month. Is receipt of such fees is liable for service tax? 2016-11-02T14:17:31+00:00

No, any service provided by education institute, to student as part of education (here physical education)  are exempt from payment of service tax.  Therefore, receipts of fees for sports classes are not liable for service tax. 

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PQR Academy, provides coaching for IIT exams, should PQR Academy charge service tax on fees received by them? 2016-11-02T14:15:45+00:00

Yes, as coaching institute are not covered in the definition of educational institute, therefore any services provided by them are liable to service tax. Hence PQR Academy should charge service tax on fees received by them 

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Mr. K let out his building to a coaching institute. Is such service is exempted from payment of service tax? 2016-11-02T14:26:57+00:00

No, since coaching is not provided by an educational institute, therefore any services provided by coaching institute are not exempted from service tax.  

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XY Dance Academy provides training of cultural dance. Is services provided by the academy is liable to service tax? 2016-11-02T14:31:05+00:00

Services by way of training or coaching in recreational activities relating to arts, culture or sports, exempted from payment of service tax. Therefore services provided by XY Dance Academy is not liable to service tax 

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Mr. A let out his building to ABC College. Is such service is exempted from payment of service tax? 2016-11-02T14:31:00+00:00

No, service provided by of renting of immovable property to an educational institute, is taxable. Therefore, rent received by Mr. A is liable for service tax. 

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Mr. J receive a tender of supply of mid day meals in Delhi Government school. Is such service is liable for service tax? 2016-11-02T14:32:58+00:00

No, service provided to an educational institute by way of catering, including any mid day meals scheme is exempted from payment of service tax. Therefore, a service provided by Mr. J is not liable for service tax. 

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Mr. X run a hotel, which is divided in two sections, one is having air conditioner while other one is non air conditioner. Is services provided in non-airconditioning area is also liable for payment of service tax? 2017-04-06T10:49:11+00:00

Yes, services provided in relation to serving of food and beverages by a restaurant having facility of air-conditioning part of the establishment, is liable for service tax, subject to available abatement. An abatement of 60% is however available.  

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XYZ Consultants, a partnership firm of advocates, provides legal consultancy service to Mr. K, an advocate, and receive consideration of Rs. 5Lakhs. Is consideration received by XYZ Consultants is liable for service tax? 2016-11-02T14:36:25+00:00

No, legal consultancy services provided by individual advocate of partnership of advocates, to another individual advocate of partnership of advocates, is not liable for payment of service tax. 

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Mr. J an advocate provides the service of legal consultancy to Mr. A. Is consultancy services provided by Mr. is liable for service tax? 2017-04-06T10:49:11+00:00

No, any service provided by individual advocate to any person other than the business entity is exempted from service tax liability.

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Mr. M an advocate, provide the service of legal consultancy on matter of penalty appeal in Income Tax Department, to XYZ Ltd. having turnover of Rs. 50lakhs in the preceding financial year. Is consultancy services provided by Mr. M cover under the ambit of service tax? 2016-11-02T14:39:51+00:00

Yes, any service provided by individual advocate to any business entity having turnover more than Rs. 10lakhs in the preceding financial year is liable for payment of service tax. However, service tax on such service is to be discharge by the business entity under reverse charge. 

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Mr. R provides accommodation services in his hotel, and charge Rs. 500 per day, but declared tariff of a room is Rs. 1200 per day. Is accommodation service provided by Mr. R exempted? 2016-11-02T14:44:18+00:00

No, only service by of renting of a hotel having declared tariff value is less than Rs. 1000 per day, is exempted under service tax. Therefore, service provided by Mr. R is not exempted under service tax.

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XYZ trust let out a hall in their temple for marriage function. Is such renting liable for service tax? 2016-11-02T14:45:33+00:00

No, Notification No. 25/2012 exempt renting of precincts of a religious place meant for general public. Therefore such renting is not liable for payment of service tax. 

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Mr. A, own 10 ambulance. Are services provided by Mr A exempted by Mega Exemption Notification? 2016-11-02T14:46:51+00:00

Yes, ambulance provided by private entity is now exempted. 

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Mr. R provide services to World Health Organization, is he liable for service tax? 2016-11-02T14:48:02+00:00

No, Mega Exemption Notification, specify certain International organization which are remain outside the ambit of the service tax. Therefore any service provided to World Health Organization, (specified by Mega Exemption Notification) is not chargeable to service tax.  

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Does a person providing both exempted and taxable service and reversing credit @ 7% of value of exempted service under Rule 6 of Cenvat Credit Rules, does he need to reverse the SBC also? 2016-11-02T14:49:49+00:00

As SBC is not integrated in the Cenvat Credit chain and reversal under Rule 6 is payment of amount equal to 7% of the value of exempted services, hence, reversal of SBC is not required under Rule 6 of Cenvat Credit Rules, 2004.

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How would liability be determined in case of reverse charge services where services have been received prior to 15.11.2015 but consideration paid post 15.11.2015? 2016-11-02T14:51:33+00:00

In respect of reverse charge mechanism, SBC liability is determined in accordance with Rule 7 of Point of Taxation Rules, as per which, point of taxation is the date on which consideration is paid to the service provider. Thus, SBC liability in such case will be 0.5% X Value of taxable service.

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Whether SBC would be applicable on services covered by Rule 6 of Service Tax Rules (i.e. air travel agent, life insurance premium, purchase and sale of foreign currency and services by lottery distributors/selling agents) 2017-04-06T10:49:12+00:00

Sub-rule (7D) to rule 6 has been inserted vide notification 25/2015-Service Tax, dated 12th November, 2015 so as to provide that the person liable for paying the service tax under sub-rule (7), (7A), (7B) or (7C) of rule 6 of Service Tax Rules, shall have the option to pay SBC as determined as per the following formula:-

Service Tax liability

[calculated as per sub-rule (7), (7A), (7B) or (7C)] X 0.5%/14%

The option under this sub-rule once exercised, shall apply uniformly in respect of such services and shall not be changed during a financial year under any circumstances.

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How would the tax be calculated on restaurant services covered under Service Tax (Determination of Value) Rules, 2006.? 2017-04-06T10:49:12+00:00

Swachh Bharat Cess would be calculated on the value arrived at in accordance with the Service Tax (Determination of Value) Rules, 2006. For example, the effective Swachh Bharat Cess in respect of services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, having the facility of air–conditioning or central air-heating in any part of the establishment, would be 0.5% of 40% of the total amount, i.e, 0.2% of the total amount. The cumulative service tax and Swachh Bharat Cess liability would be

[14% ST + 0.5% SBC] of 40% of the total amount, i.e., 5.8% of the total amount charged.

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How would the tax (Service Tax and SBC) be calculated on services covered under Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006.? 2016-11-02T14:56:30+00:00

The tax (Service Tax and SBC) on services covered by Rule 2A, 2B or 2C of Service Tax (Determination of Value) Rules, 2006, would be computed by multiplying the value determined in accordance with these respective rules with [14% + 0.5%]. Therefore, effective rate of Service Tax plus SBC in case of original works and other than original works under the works contract service would be 5.8% [(14% + 0.5%)*40%] and 10.15% [(14% + 0.5%)*70%] respectively. Similar, would be the tax treatment for restaurant and outdoor catering services.

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What would be the point of taxation for Swachh Bharat Cess? 2016-11-02T14:57:29+00:00

As regards Point of Taxation, since this levy has come for the first time, all services (except those services which are in the Negative List or are wholly exempt from service tax) are being subjected to SBC for the first time. SBC, therefore, is a new levy, which was not in existence earlier. Hence, rule 5 of the Point of Taxation Rules would be applicable in this case. Therefore, in cases where payment has been received and invoice is raised before the service becomes taxable, i.e. prior to 15th November, 2015, there is no lability of Swachh Bharat Cess. In cases where payment has been received before the service became taxable and invoice is raised within 14 days, i.e. upto 29th November, 2015, even then the service tax liability does not arise. Swachh Bharat Cess will be payable on services which are provided on or after 15th Nov, 2015, invoice in respect of which is issued on or after that date and payment is also received on or after that date. Swachh Bharat Cess will also be payable where service is provided on or after 15th Nov, 2015 but payment is received prior to that date and invoice in respect of such service is not issued by 29th Nov, 2015.

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Whether Cenvat Credit of the SBC is available? 2016-11-02T14:59:14+00:00

SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

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How will SBC be calculated for services where abatement is allowed? 2016-11-02T15:00:25+00:00

Taxable services, on which service tax is leviable on a certain percentage of value of taxable service, will attract SBC on the same percentage of value as provided in the notification No. 26/2012-Service Tax, dated 20th June, 2012. So, this notification would apply for SBC also in the same manner as it applies for service tax.

For example, in the case of GTA, [Service Tax + SBC]% would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%)

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How will the SBC be calculated for services under reverse charge mechanism? 2016-11-02T15:01:46+00:00

In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability has been shifted from service provider to the service recipient. As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act, 1994, is made applicable to SBC. In this context, to clarify, Government has issued notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the purpose of levy of Swachh Bharat Cess mutatis mutandis.

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Whether SBC is levied on all or selected services? 2016-11-02T15:03:45+00:00

The Central Government was empowered to impose SBC either on all or some of the taxable services. Vide notification No 22/2015-ST dated 6-11-2015, Government has notified that SBC shall be applicable on all taxable services except services which are either fully exempt from service tax under any notification issued under section 93(1) of the Finance Act, 1994 or are otherwise not leviable to service tax under section 66B of the Finance Act, 1994.

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Whether SBC is a ‘Cess’ on tax’ and we need to calculate SBC @ 0.50% on the amount of service tax like we were earlier doing for calculating Education Cess and SHE Cess? 2016-11-02T15:04:51+00:00

No, SBC is not a cess on Service Tax. SBC shall be levied @ 0.5% on the value of taxable services.

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What would be effective rate of service tax and SBC post introduction of SBC? 2016-11-02T15:05:50+00:00

Effective rate of service tax plus SBC, post introduction of SBC, would be [14% + 0.5%].

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Whether SBC would be required to be mentioned separately in invoice? 2016-11-02T15:06:38+00:00

SBC would be levied, charged, collected and paid to Government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code which would be notified shortly. SBC may be charged separately after service tax as a different line item in invoice. It can be accounted and treated similarly to Education cesses.

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How will the SBC be calculated? 2016-11-02T15:07:04+00:00

SBC would be calculated in the same way as Service tax is calculated. Therefore, SBC would be levied on the same taxable value as service tax.

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Where will the money collected under SBC go? 2016-11-02T15:08:03+00:00

Proceeds of the SBC will be credited to the Consolidated Fund of India, and the Central Government may, after due appropriation made by Parliament, utilise such sums of money of the SBC for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

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Why has SBC been imposed? 2016-06-24T18:04:38+00:00

SBC has been imposed for the purposes of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.

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Whether SBC would be leviable on exempted services and services in the negative list? 2016-11-02T15:09:00+00:00

Swachh Bharat Cess is not leviable on services which are fully exempt from service tax or those covered under the negative list of services.

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What is the date of implementation of SBC? 2016-11-02T15:09:53+00:00

The Central Government has appointed 15th day of November, 2015 as the date from which provisions of Swachh Bharat Cess will come into effect (notification No.21/2015-Service Tax, dated 6th November, 2015 refers).

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What is Swachh Bharat Cess (SBC)? 2016-06-24T18:00:33+00:00

It is a Cess which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015, called Swachh Bharat Cess, as service tax on all the taxable services at the rate of 0.5% of the value of taxable service.

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Is KKC similar to the Krishi Kalyan Surcharge? 2017-04-06T10:49:12+00:00

No, Krishi Kalyan Cess is different from the Krishi Kalyan Surcharge which is announced by the Government in the same Union Budget, 2016-17. In order to provide a stable and predictable taxation regime and reduce black money, it was announced in the budget that domestic tax payers can declare undisclosed income or such income represented in the form of any asset by paying tax at 30%, and surcharge (means an addition to the existing tax) at 7.5% and penalty at 7.5%, which is a total of 45% of the undisclosed income. Such declarants will have immunity from prosecution. The Finance Minister while declaring the above provision mentioned that Surcharge levied at 7.5% of the undisclosed income will be called as Krishi Kalyan Surcharge, to be used for agriculture and rural economy. While KKC is on Services, Krishi Kalyan Surcharge shall be levied on undisclosed income.

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Whether refund is available in case of KKC paid on specified services used in SEZ? 2016-11-02T15:14:13+00:00

Yes, Refund of KKC paid on specified services used in SEZ is available. Notification No. 30/2016-ST dated 26-05-2016 enables the SEZ unit or the developer for refund of the KKC paid on the specified services on which ab-initio exemption is admissible but not claimed.

 

 

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How does Krishi Kalyan Cess apply on ‘Works Contract Service’? 2016-11-02T15:15:18+00:00

Notification No. 28/2016-ST dated 26-05-2016 provides that the value of services shall be determined in accordance with the Service Tax (Determination of Value) Rules, 2006. Tax needs to be applied on the value so arrived at the rate of 15%. Effective rate of tax in case of original works and other than original works would be 6% (15%*40%) and 10.5% (15%*70%) respectively. Similar treatment would be accorded to restaurant and catering services as well.

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What would be the liability in case of Reverse Charge Services, where services have been received prior to 1.6.2016, but consideration paid post 1.6.2016? 2017-04-06T10:49:12+00:00

In case of reverse charge services, point of taxation as per Rule 7 of Point of Taxation Rules, would be the date on which consideration is paid to service provider. However, if the payment is not made within three months from the date of invoice, in such cases, point of taxation would be the day next to such three months.

Further, in case of “associated enterprises”, where the person providing the service is located outside India, the point of taxation shall be the date of debit in the books of account of the person receiving the service or date of making the payment whichever is earlier.

Also, Provided also that where there is change in the liability or extent of liability of a person required to pay tax as recipient of service notified under sub-section (2) of section 68 of the Act, in case service has been provided and the invoice issued before the date of such change, but payment has not been made as on such date, the point of taxation shall be the date of issuance of invoice. Hence, in such case Krishi kalyan Cess would be payable in similar manner.

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Is Krishi Kalyan Cess applicable on Reverse Charge Mechanism (RCM) service? 2016-11-02T15:17:40+00:00

Yes. Hence, KKC is payable along with service tax on the services availed and covered under reverse charge mechanism. Notification No. 27/2016-Service Tax dated 26-05-2016 provides that Notification No. 30/2012-Service Tax dated 20-06-2012, shall be applicable mutatis mutandis for the purposes of Krishi Kalyan Cess.

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In case of services covered by Abatement, what would be effective rate of tax? 2016-11-02T15:18:36+00:00

Taxable Services, on which service tax is leviable on a certain percentage of value of taxable service under Notification No.26/2012-Service Tax dated 20th June, 2012, will attract KKC on the same percentage of value of services. For eg., in case of accommodation services, Service Tax is applicable on 70% of the value of services. Similarly, KKC would be applicable on 70% value of services only. (Notification No. 28/2016-Service Tax dated 26-05-2016).

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Whether separate accounting code will be there for Krishi Kalyan Cess? 2016-11-02T15:19:16+00:00

Yes, for payment of Krishi Kalyan Cess, a separate accounting code is notified vide Circular 194/04/2016 dated 26-05-2016. These are as follows:-

  • Krishi Kalyan Cess (Minor Head)     0044-00-507
  • Tax Collection                                       00441509
  • Other Receipts                                      00441510
  • Deduct Refunds                                    00441511
  • Penalties                                                 00441512
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Whether rebate can be claimed against Krishi Kalyan Cess paid on all services, used in providing services exported in terms of rule 6A of the Service Tax Rules? 2016-11-02T15:20:18+00:00

Yes, Notification No. 29/2016-Service Tax dated 26-05-2016 allows the rebate claim of Krishi Kalyan Cess paid on all services, used in providing services exported in terms of rule 6A of the Service Tax Rules, 1994.

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Whether refund of KKC is permissible under Cenvat Credit Rules, 2004? 2016-11-02T15:21:06+00:00

Refund of this KKC shall be allowed to Exporter of Service when his output services are considered as export under Rule 6A of Service Tax Rules, 1994.

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Whether Cenvat credit of payment of KKC is permissible under Cenvat Credit Rules, 2004? 2016-11-02T15:21:55+00:00

Yes. The cenvat credit of KKC shall be available and shall be utilized only for the payment of KKC. Thus, separate accounts needs to be maintained. You can also claim the refund of KKC in service tax.

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Whether alternate rate as applicable to Service Tax under sub-rules 7, 7A, 7B, 7C of rule 6 of STR, 1994 also applies to KKC? 2016-11-02T15:24:40+00:00

Yes, the alternate rate for payment of Tax as applicable to Service Tax under sub-rules 7, 7A, 7B, 7C of rule 6 of STR, 1994 shall also apply in similar proportion to KKC. New sub-rule 7E is inserted vide Notification No. 31/2016 dated 26-05-2016 which provides for the option to pay KKC at the composition rates instead of paying at the rate specified in sub-section (2) of section 161 of the Finance Act, 2016 (28 of 2016).

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Whether KKC would be required to be mentioned separately in invoice? 2016-11-02T15:25:31+00:00

KKC would be levied, charged, collected and paid to Government independent of service tax. This needs to be charged separately on the invoice, accounted for separately in the books of account and paid separately under separate accounting code which would be notified shortly. KKC may be charged separately after service tax as a different line item in invoice. In absence, the same could be demanded by the Central Excise officer.

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How will the KKC be calculated? 2016-11-02T15:26:14+00:00

KKC would be calculated in the same way as Service tax is calculated. Therefore, SBC would be levied on the taxable value of services as is used for levy of service tax. Unlike Education Cess, KKC is not to be calculated on Service Tax but on the taxable value of the service provided.

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Where will the money collected under KKC go? 2016-11-02T15:26:48+00:00

The proceeds of the Krishi Kalyan Cess shall first be credited to the Consolidated Fund of India and the Central Government may, after due appropriation made by Parliament by law in this behalf, utilise such sums of money of the Krishi Kalyan Cess for such specified purposes.

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Why has KKC been imposed? 2016-11-02T15:27:27+00:00

KKC has been imposed for the purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.

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Whether KKC would be leviable on exempted services and services in the negative list? 2016-11-02T15:28:19+00:00

Notification No. 28/2016 dated 26-05-2016 provides that Krishi Kalyan Cess is not leviable on Services mentioned in “Negative List” and “Mega Exemption List”. Further, no KKC will be levied on the activity which is excluded from the definition of service under Section 65B(44) of the Finance Act.

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What is the date of implementation of KKC? 2016-11-02T15:28:48+00:00

The Central Government has appointed 1st day of June, 2016 as the date from which provisions of Krishi Kalyan Cess will come into effect.

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What is Krishi Kalyan Cess (KKC)? 2016-11-02T15:29:29+00:00

It is a Cess which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2016,called Krishi Kalyan Cess, as service tax on any or all of taxable services at the rate of 0.5% of the value of taxable service.

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Mr. N a tour operator provides service by way of transportation of passenger, for tourism purpose, from one state to another state. Is such service is liable to service tax? 2016-11-02T15:30:24+00:00

Yes, services provided by Mr. M liable to service tax, because only those service relating to transport of passenger in public transport which are not predominantly used for tourism are covered under negative list.

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Did the services provided by Delhi Transport Corporation by way of transport of passenger is covered under negative list? 2016-11-02T15:31:49+00:00

No, services provided stage carriage by way of transport of passenger is no longer covered under negative list. Therefore services provided by Delhi Transport Corporation is not covered under negative list.

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Is service provided by way of transport of passenger in radio taxis, covered under negative list? 2016-11-02T15:33:07+00:00

No.

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Mr. M runs a vessel between Mumbai to Gujarat for transportation of passengers. Is such services covered under negative list? 2016-11-02T15:34:04+00:00

Yes, service by way of transport of passenger in a vessel, other than than predominantly for tourism purpose, between places located in India is covered under negative list. Therefore, services provided by Mr. M covered under negative list.

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Is late payment charges, on credit card, deducted by bank is liable for service tax? 2016-11-02T15:34:40+00:00

Yes, a late payment charge collected by bank is liable for service tax.

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Y Bank also provide the service of debt collection on behalf of its customers and charge .05% Commission on amount collected by its. Is this service is covered under negative list? 2016-11-02T15:35:18+00:00

No, service provided by way of debt collection is not covered in negative list.

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Mr. Y discount bill of Rs.5 crore and bank deduct Rs.5 lakh as discounting charges, should bank charge service tax on discounting charges? 2016-11-18T15:09:44+00:00

No, because any consideration received by bank representing by way of interest or discount towards services by way of extending deposit, loan or advances, is covered under negative list. Therefore, bank should not charge service tax on discounting charges.

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X Bank Ltd. extended loan of Rs.450 crore during the current year, and received Rs.45 crore towards interest and Rs.5 crore towards loan processing fees. Did X Bank Ltd. liable to charge service tax, and if yes then on which amount? 2016-11-02T15:36:46+00:00

Yes, X Bank Ltd. is liable to charge service only on amount received towards loan processing fees, because amount received towards interest is covered under negative list.

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Is service tax is levy on charges received by bank related to credit card & debit card? 2016-11-02T15:37:35+00:00

Yes, service tax is levy on charges received by bank related to credit card & debit card. Because negative list include only services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount or inter se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers. Therefore, such service is not covered under negative, hence liable to service tax.

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Mr. L owns a residential building having 4 floors. Mr. L let out all floors to different individuals, is this service covered under negative list? 2016-11-02T15:38:23+00:00

Yes, Section 66D, includes the services by way of renting of residential dwelling used for residential purpose. Therefore, service provided by Mr. L covered under negative list.

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Mr. R owns a commercial building, which he let out for residential purpose. Should Mr. R charge service tax? 2016-11-02T15:39:11+00:00

Yes, only residential dwelling which is used for residential purpose covered under negative list. If any commercial building is let out then such service is not covered under negative list, even though the building let out for residential purpose.

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Mr. Y let out his residential building to X Ltd to be used as corporate office, is such letting service covered under negative list? 2016-11-02T15:39:55+00:00

No, only residential dwelling which is used for residential purpose covered under negative list.

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XA advertising agency provides the service of sale of space for advertisement in public places through flex board, banner etc. will such service is covered under negative list? 2016-11-02T15:41:55+00:00

No, advertisement in public places through flex board, banner etc, is not sale of space for advertisement in print media. Therefore, such service is not covered under negative list.

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Mr. E prepares advertisement design for X Limited which is published in books. Will services provided Mr. E covered under negative list? 2016-11-02T15:42:57+00:00

No, only sale of space for advertisement in print media is covered under negative list. Mr. E provides services of preparation of advertisement not selling of space in print media. Therefore, services provided Mr. E not covered under negative list

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Mr. R provides the services of sale of time for aerial advertisement, is such advertisement service liable for service tax? 2016-11-02T15:43:54+00:00

Yes, any advertisement service, other than sale of space in print media, is liable for service tax.

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M/s YZ Limited sold the time slot to Mr. V for advertisement of his shop on television, should M/s YZ limited charge service tax on invoice raised on Mr. K? 2016-11-02T15:45:15+00:00

Yes, service by way of sale of space or time slot for advertisement, except sale of space in print media,   is covered under the ambit of service tax. Therefore, M/s YZ limited should charge service tax on invoice raised on Mr. V

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M/s XYZ Limited sold the time slot to Mr. K for advertisement of his product on radio, should M/s XYZ limited charge service tax on invoice raised on Mr. K? 2016-11-02T15:46:21+00:00

Yes, service by way of sale of space or time slot for advertisement, except sale of space in print media,  is covered under the ambit of service tax. Therefore, M/s XYZ limited should charge service tax on invoice raised on Mr. K

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Mr. J provides advertisement services through personal communication with individual. Will such service is covered in negative list? 2016-11-02T15:47:54+00:00

No, selling of space for advertisements in print media is only covered under negative list, and advertisement through any other mode will be liable to service tax. Therefore, services provided by Mr. J will not covered under negative list.

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Mr. P clean some goods of Mr. R which do not amount to manufacture or production of goods, but Mr. P ignorantly pay the excise duty and did not pay service tax on such activity, will Mr. P still liable for payment of service tax and interest and penalty thereon? 2016-11-02T15:48:48+00:00

Yes, Mr. P still liable for payment of service tax and interest and penalty thereon, payment of central excise duty cannot do away with the statutory liability under separate act.  Though, he can claim refund for excise duty so paid.

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Mr. Y process some intermediate goods on behalf of Mr. X, and final product is manufactured by Mr. X using the goods processed by Mr. Y. Will the process done by Mr. Y covers under the ambit of service tax? 2016-11-02T15:49:56+00:00

No, if such process amounts to manufacture of goods then such process covered under negative list. But if such process does not amount to manufacture of goods then such process is covered under the ambit of service tax.

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Mr. P let out his vacant land to Reserve Bank of India, should Mr. P charge service tax on renting of vacant land or such service is covered under negative list? 2016-11-02T15:51:35+00:00

As per Section 66D of the Act, only services provided by Reserve Bank of India covered under negative list. Therefore any service provided to Reserve Bank of India is taxable under service tax unless such service is not exempted anywhere else. Therefore Mr. P should charge service tax.

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M/s XY Limited provides the services of curing and grading of tea leaves, will such services covered under negative list? 2016-11-02T15:52:29+00:00

Yes, tea leaves are also agricultural produce and curing and grading of tea and coffee is essential for sale in primary market. Therefore, services provided by M/s XY limited is covered under negative list.

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XYZ bank charge commission of Rs. 1,000 for preparation of demand draft from Mr. A. is this service covered under negative list? 2016-11-02T15:53:21+00:00

No, only services provided by Reserve Bank of India are covered under negative list. Any services provided by other bank are liable for service tax unless such service is not exempted anywhere else.

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Mr. X sold the paddy of behalf of Mr. X (a farmer) for commission, is the services provided by Mr. X to Mr. Y covered under negative list? 2016-11-02T15:54:23+00:00

Yes, as per Section 66D of the Act, services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce is covered under negative list.

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Mr. D own a warehouse, which is used for storage of food grains(primary product). Is the warehousing services provided by Mr. D is covered under negative list? 2016-11-02T15:55:58+00:00

Yes, the services provided for loading, unloading, packaging, storage or warehousing of agricultural produce is covered under negative list.

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Mr. B provides the services of loading and unloading of vegetables for sale in primary market. Is such service is taxable? 2016-11-02T15:57:11+00:00

No, the services provided for loading, unloading, packaging, storage or warehousing of agricultural produce is covered under negative list. Therefore, services provided by Mr. B are not in the ambit of service tax.

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Mr. A provides his vacant for flower cultivation, is such service is covered under negative list? 2016-11-02T15:57:54+00:00

Yes, flower cultivation (horticulture) is the branch of agriculture and thus renting of any land for horticulture is also covered in negative list.

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Mr. P supply tractor to farmers on rent. Is such renting is covered in negative list? 2016-11-02T15:58:28+00:00

Yes, supply of agro machinery, which includes tractors, are service relating to agriculture or agricultural produce and therefore covered in negative list.

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Mr. Y provides the vacant land for animal husbandry, is such services covered under negative list? 2016-11-02T15:59:17+00:00

Animal husbandry is agriculture related services, therefore renting of vacant land for animal husbandry is also covered in negative list.

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Mr. R provides training to farmer for organic farmer. Did the services provided by Mr. R covered under negative list? 2016-11-02T16:00:20+00:00

Yes, Section 66D of the Act; include the services relating to agricultural produce in negative list, which includes agricultural extensions (means application of scientific research and knowledge to agricultural practices through farmer education or training) services. Therefore, services provided by Mr. R covers under negative list.

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Delhi Government authorizes PQ Limited to collect toll charges on behalf of Delhi Government. Will the service provided by PQ Limited to Delhi Government covered under negative list? 2016-11-02T16:01:24+00:00

Only services provided by Government or Local Authority, other than those excluded, covered under negative list. Any services provided to Government or Local Authority covered under the ambit of service tax, unless such service is covered under any other entry. Therefore, service provided by PQ Limited to Delhi Government not covered under negative list.

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Delhi Government let out some buses to M/s XYZ ltd. Will this service covered under negative list? 2016-11-02T16:02:15+00:00

No, Section 66D exclude, “any services” provided to business entity by Government or a local authority, from negative list . Therefore, service provided by Delhi Government by letting out buses is not covered under negative list.

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