The book contains an overview of service tax initially which would provide the reader with a bird’s eye view of service tax. The reader i...
The book contains an overview of service tax initially which would provide the reader with a bird’s eye view of service tax. The reader is advised to go through the same before proceeding onto the subsequent chapters. This book also contains some of the important procedures which would be useful to the assessee in complying with the legal provisions of service tax.
The authors have tried their best to make this online book as complete as possible but where the readers have any doubt regarding the subject matter are advised to refer a more comprehensive publication regarding the same or seek expert opinion.
The chapters in this book have been arranged in such a way as to give the reader a fairly good idea as to the provisions of law. The authors would also welcome valuable suggestions from the readers, which would help us in ensuring a better offering next time around. For any comments or feedback please write to mhiregange@gmail.com, rajesh@hiregange.com or sudhir@hiregange.com
OVERVIEW OF SERVICE TAX................................................................................. 10
Constitutional validity and concepts............................................................................. 10
Levy and collection....................................................................................................... 13
Concept of Classification.............................................................................................. 13
Registration ................................................................................................................... 14
Concept of consideration and valuation........................................................................ 15
Payment of service tax.................................................................................................. 15
Payment of Interest ....................................................................................................... 17
CENVAT Credit scheme .............................................................................................. 17
Export of Services......................................................................................................... 18
Filing of returns............................................................................................................. 18
Assessment.................................................................................................................... 19
Provisions as to recovery .............................................................................................. 20
Provisions pertaining to penalty.................................................................................... 21
Collecting amounts representing service tax ................................................................ 21
Provisions pertaining to Appeals .................................................................................. 21
SERVICE TAX - LEVY................................................................................................. 23
Levy and charge of service tax ..................................................................................... 23
What is Service? ........................................................................................................... 23
Classification of Service ............................................................................................... 25
DECLARED SERVICE ................................................................................................. 27
1. Renting of Immovable Property................................................................................ 28
2. Construction of Complex.......................................................................................... 29
3. Temporary transfer or permitting the use or enjoyment of any intellectual property
right ............................................................................................................................... 31
4. Development etc of IT software ............................................................................... 32
5. Non Compete Fee ..................................................................................................... 34
6. Transfer of goods by way of hiring, leasing, licensing or in any such manner without
transfer of right to use such goods ................................................................................ 34
7. Delivery of goods on hire-purchase or any system of payment by installments ...... 36
8. Service portion in execution of Works Contracts ..................................................... 37
9. Supply of Food or other articles of Human Consumption....................................... 38
NEGATIVE LIST........................................................................................................... 42
1. Services provided by Government or Local authority:............................................. 42
2. Services provided by Reserve Bank of India............................................................ 44
3. Services by a Foreign Diplomatic Mission Located in India.................................... 44
4. Services relating to agriculture ................................................................................. 44
5. Trading of Goods ...................................................................................................... 46
6. Processes amounting to Manufacture or Production of Goods................................. 47
7. Selling of Space or Time Slots for Advertisements other than Advertisements
Broadcast by Radio or Television................................................................................. 48
8. Access to a Road or a Bridge on Payment of Toll Charges...................................... 51
9. Betting, Gambling or Lottery.................................................................................... 51
10. Entry to Entertainment Events and access to Amusement Facilities...................... 52
11.Transmission or Distribution of Electricity ............................................................. 54
12. Specified services relating to Education ................................................................. 54
13. Services by way of Renting of residential dwelling for use as residence............... 56
14. Financial Sector ...................................................................................................... 57
15. Service relating to Transportation of Passengers.................................................... 58
16. Service relating to Transportation of Goods........................................................... 59
17. Funeral, Burial, Crematorium or Mortuary services including transportation of the
deceased ........................................................................................................................ 60
Break of Cenvat Chain.................................................................................................. 60
CLASSIFICATION OF SERVICE............................................................................... 61
Relevance of the concept of classification.................................................................... 61
Possible ramifications where the assessee gets the classification wrong ..................... 64
Pointers for practice ...................................................................................................... 66
EXEMPTIONS INCLUDING MEGA EXEMPTION................................................ 67
Mega Exemption Notification....................................................................................... 67
Small Service Provider Exemption............................................................................... 89
Abatements ................................................................................................................... 91
Pointers for practice ...................................................................................................... 94
Other exemptions .......................................................................................................... 95
PLACE OF PROVISION OF SERVICE RULES, 2012 ............................................. 97
Rule 14: Order of application of rules .......................................................................... 98
Rule 13: Powers to notify description of services or circumstances for certain purposes
....................................................................................................................................... 99
Rule 12: Place of Provision of services provided on board a conveyance ................... 99
Rule 10: Place of Provision of goods transportation services..................................... 100
Rule 9: Place of Provision of Specified services ........................................................ 100
Rule 8: Place of Provision of services where provider and receiver are located in
taxable territory........................................................................................................... 103
Rule 7- Part performance of a service at different locations ...................................... 104
Rule 6: Place of Provision of Services relating to events ........................................... 105
Rule 5: Place of provision of services relating to immovable property...................... 105
Rule 4: Place of provision of performance based services ......................................... 106
Rule 3: General Residuary rule................................................................................... 107
Conclusion: ................................................................................................................. 107
REVERSE CHARGE & JOINT CHARGE MECHANISM .................................... 108
Introduction................................................................................................................. 108
No Charging section w.e.f.1.7.12 on reverse charge .................................................. 108
What is reverse charge? .............................................................................................. 108
What is Joint Charge Mechanism? ............................................................................. 109
What is covered under Reverse Charge? .................................................................... 109
What is covered under Joint Charge? ......................................................................... 111
Other relevant aspects ................................................................................................. 113
Important point to be considered ................................................................................ 114
Conclusion .................................................................................................................. 114
CENVAT CREDITS AND PAYMENTS.................................................................... 115
Introduction................................................................................................................. 115
Concept of Input ......................................................................................................... 117
Concept of Output service .......................................................................................... 118
Concept of Capital goods............................................................................................ 119
Concept of Input Service ............................................................................................ 120
Exempted Service means ............................................................................................ 123
Duties/taxes which can be considered for set off or availing credits.......................... 124
Utilization of the credits.............................................................................................. 124
When inputs/capital goods are removed outside the premises ................................... 125
When inputs/capital goods are written off fully ......................................................... 126
Restriction in case of capital goods ............................................................................ 126
Cenvat Credits – Refund for exporter of service ........................................................ 128
Rule 6 – Reversal of Cenvat Credit ............................................................................ 129
Documentation work to be done ................................................................................. 132
Concept of input service distributor............................................................................ 134
Payment of service tax................................................................................................ 135
Recovery of cenvat credit wrongly taken or erroneously refunded............................ 136
Confiscation and penalty in case of wrong availment of Cenvat Credits ................... 136
Pointers for Practice.................................................................................................... 137
VALUATION UNDER SERVICE TAX..................................................................... 139
What is the main basis for valuation? ......................................................................... 139
Can the Central Excise Officer question the valuation? ............................................. 140
Whether the gross amount charged for the service would include charges reimbursed
by the service receiver?............................................................................................... 141
Are there any other specific inclusions and exclusions with regard to amount charged
for specific services?................................................................................................... 143
Where during the course of providing service, there is transfer of property in goods,
what would be the value?............................................................................................ 144
Value of service portion in the execution of works contract ...................................... 144
Determination of value of the service in relation to money changing........................ 146
Pointers for practice .................................................................................................... 148
IMPORT AND EXPORT OF SERVICES ................................................................. 149
Import of Services....................................................................................................... 149
Pointers for practice .................................................................................................... 156
DEMAND, APPEALS, RECOVERY AND PENALTIES ........................................ 156
Demand & Adjudication:............................................................................................ 156
Appeals ....................................................................................................................... 162
Penalties ...................................................................................................................... 167
REFUNDS AND REBATES ........................................................................................ 170
Introduction:................................................................................................................ 173
Refund under Section 11B of Central Excise Act, 1944: ........................................... 173
Refund of Cenvat Credit under Rule 5 of CCR 2004. ................................................ 174
Procedure for filing the refund claim.......................................................................... 176
Procedure for refund of credits u/r 5 of CCR 2004 prior to the 01.04.2012............... 177
Refund Under Notification No 41/2012-ST dated 29.06.2012 w.e.f 1.7.2012........... 179
Procedure for claiming Rebate.................................................................................... 179
How does the scheme of rebate work? ....................................................................... 186
Rebate of the service tax on taxable services exported............................................... 186
Rebate of the service tax on input services or duty on inputs..................................... 188
PROCEDURES WITH REGARD TO REGISTRATION ....................................... 191
When does the service provider require registration under Service Tax? .................. 191
What is the procedure for registration?....................................................................... 191
How is centralized registration different?................................................................... 193
How to make amendments with regard to changes in particulars?............................. 193
Service Tax Registration Number............................................................................... 194
Premise code ............................................................................................................... 194
PROCEDURE WITH REGARD TO INVOICING .................................................. 195
How to raise a proper invoice? ................................................................................... 195
RECORD KEEPING.................................................................................................... 197
PAYMENT OF SERVICE TAX.................................................................................. 200
Determination of Point of Taxation ............................................................................ 200
How to pay service tax?.............................................................................................. 204
SERVICE TAX RETURNS ......................................................................................... 206
How to file the service tax return?.............................................................................. 206
What is the procedure to file the returns online? ........................................................ 207
SERVICE TAX AUDITS BY PROFESSIONALS .................................................... 209
What is required of the auditor?.................................................................................. 209
Pointers for practice .................................................................................................... 213
FREQUENT ERRORS COMMITTED IN SERVICE TAX.................................... 219
OTHER MISCELLANEOUS ASPECTS IN SERVICE TAX ................................. 221
Interest and penalty calculations................................................................................. 221
Provisions as to penalty .............................................................................................. 222
Searching of premises by authorized officers............................................................. 223
Other recovery provisions........................................................................................... 223
Liability under Act to be First Charge ........................................................................ 224
Offence and penalties.................................................................................................. 224
Application of the provisions of the Central Excise Act 1944 ................................... 224
SOME OF THE IMPORTANT COMMON SERVICES ......................................... 226
Renting of Immovable Property Services ................................................................... 226
Management, Maintenance or Repair Services .......................................................... 228
Information Technology Software Services ............................................................... 229
Goods Transport Agency Services.............................................................................. 231
Works contract service................................................................................................ 232
Supply of tangible goods for use service .................................................................... 239
Construction of complexes ......................................................................................... 243
Business Auxiliary Service ......................................................................................... 248
Support services of business or commerce ................................................................. 250
Sale of goods............................................................................................................... 254
Interior decorator ........................................................................................................ 254
Renting of cabs ........................................................................................................... 255
Tour operator’s service ............................................................................................... 256
Commercial training or coaching................................................................................ 258
Management or business consultant’s services........................................................... 262
Composite services ..................................................................................................... 263
Health Service............................................................................................................. 264
Legal Consultancy service .......................................................................................... 265
Brand Promotion service............................................................................................. 266
BIBLIOGRAPHY/REFERENCES/ ACKNOWLEDGEMENTS............................ 268
APPENDIX.................................................................................................................... 269
Excellent book Sir...Great Efforts. Hats off to you and your team. It covers almost everything about service tax including important case laws.
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