Entries Tagged 'Service Tax' ↓

Leviability of service tax on toll fee

Circular No. 152/3 /2012-ST, Dated- 22 February, 2012

Subject: Toll in the nature of ‘user charge’ or ‘access fee’ paid by roads users – regarding.

A representation has been received by the Board, seeking clarification regarding leviability of service tax on toll fee (hereinafter referred as ‘toll’) paid by users, for using the roads. The representation has been examined.

2. Service tax is not leviable on toll paid by the users of roads, including those roads constructed by a Special Purpose Vehicle (SPV) created under an agreement between National Highway Authority of India (NHAI) or a State Authority and the concessionaire (Public Private Partnership Model, Build-Own/Operate-Transfer arrangement). ‘Tolls’ is a matter enumerated (serial number 59) in List-II (State List), in the Seventh Schedule of the Constitution of India and the same is not covered by any of the taxable services at present. Tolls collected under the PPP model by the SPV is collection on own account and not on behalf of the person who has made the land available for construction of the road.

3. However, if the SPV engages an independent entity to collect toll from users on its behalf and a part of toll collection is retained by that independent entity as commission or is compensated in any other manner, service tax liability arises on such commission or charges, under the Business Auxiliary Service [section 65(105) (zzb) read with section 65(19) of the Finance Act, 1994].

4. Further, an SPV formed as a result of agreement between NHAI or State Authority and the concessionaire under the BOT arrangement, cannot be considered as an agent of the NHAI. Renting, leasing or licensing of vacant land by the NHAI or State Authority to an SPV for construction of road and such construction do not attract service tax.

5. This Circular may be communicated to the field formations and service tax assessees, through Public Notice/ Trade Notice. Hindi version to follow.

(Samar Nanda)
Under Secretary, TRU

Documents required for Registration of Service Tax

 

F. No. 137/120/2011 – Service Tax

Government of India Ministry of Finance Department of Revenue (Central Board of Excise & Customs)

New Delhi dated the 13th December 2011

ORDER NO. 2 /2011 – Service Tax

In exercise of the powers conferred by Rule 4(1A) of the Service Tax Rules 1994, Central Board of Excise and Customs hereby specifies the following documents that are required to be submitted by the person who has made an application for registration under Rule 4(1) of the Rules ibid:

(a) Copy of Permanent Account Number (PAN)

(b) Proof of Residence

(c) Constitution of the Applicant.

(d) Power of Attorney in respect of authorised person (s).

2. It is further stated that the above documents must be submitted to the concerned authority within a period of 15 days from the date of filing of the application for registration. Failure to do so would lead to rejection of the registration application.

3. It is also clarified that the time limit of seven days from date of receipt of application or intimation under Rule 4(5A), within which the registration is to be granted by the Superintendent of Central Excise or Service Tax, as referred to in Rule 4(5) shall be reckoned from the date the application for registration is complete in all respects.

(Deepankar Aron) Director (Service Tax)

 

For more detail visit our website: http://www.mukeshraj.com/service-tax.html

Service Tax on Sale of SIM Cards

The disputes over the chargeability of Service Tax or Vat on the sale of SIM Cards have come to an end by virtue of the judgment by “Honorable Supreme court in case of Idea Mobile Communication Ltd. versus C.C.E & C., Cochin”.
Earlier, the Department of Sales Tax, State of Kerala, claims the activation charges as part of the sale consideration of SIM cards on the grounds that activation is nothing but a value addition to the goods and thus levied sales tax on activation charges. However, the Department of Central Excise, Ernakulum observed that a mere SIM Card without the activation is of no use and held that the appellant is liable to pay service tax on the value of SIM cards also.
Later on, the Honorable Kerala High Court in its judgment concluded that, Service Tax shall be payable on the value of SIM Cards in as much SIM cards has no intrinsic sale value and it is supplied to the customer for providing mobile services. Further, on remanding back the matter by the Honorable Supreme Court, the Assessing Authorities under the Kerala General Sales Tax also dropped the proceeding after conceding the position that SIM cards has no intrinsic sale value an it is supplied to the customer for providing the telephone services which finally & practically put an end to the matter and signifies the conclusion of the matter under dispute.
The position in law is therefore clear that the amount received by the Cellular Telephone Company from its subscriber towards SIM Cards will form part of the Taxable Value for the levy of Service Tax in as much SIM Cards are never sold as goods independent from service provided and considered as part & parcel of the services provided and dominant position is not to sell the material.
Finally, the “Honorable Supreme Court” affirmed the finding and reasoning in the judgment and order passed by the “Honorable Kerala High Court regarding the leviability of service tax on the value of SIM Cards sold by the Service provider”.
Further, it is also established that payment of Sales Tax whether wrongly or in order would not absolve assessee from the responsibility of the payment of Service Tax. Hence, Service Tax shall be levied on the value of SIM cards.

For more detail visit our website: http://www.mukeshraj.com/service-tax.html

DUE DATE OF FILING SERVICE TAX RETURN EXTENDED FROM 25-10-2011 TO 26-12-2011

F. No. 137/99/2011 – Service Tax
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
***
New Delhi dated the 20th October 2011

ORDER NO. 1 /2011 – Service Tax

In exercise of the powers conferred by Rule 7(4) of the Service Tax Rules 1994 read with notification No. 48/2011-Service Tax dated 19th October 2011, Central Board of Excise and Customs hereby extends the date of submission of half yearly return for the period April 2011 to September 2011 from 25th October 2011 to 26th December 2011.

This is being done in view of the fact that the e-filing of service tax returns for all class of service tax assesses has been made mandatory for the first time vide notification no. 43/2011- Service Tax dated 25.8.11, as such leaving less time for the trade to adjust to the requirement of e-filing.

 

Director (Service Tax)
CBEC, New Delhi

Service Tax on fees charged for issuance of Country of Origin Certificate

Government has authorized Chambers of Commerce, Export Promotion Councils (EPC), some Trade Associations to issue Country of Origin Certificate i.e. COOC. It is useful document in Import-Export Trade. This certificate indicates that the goods, which are being exported, are actually manufactured in a specific country mentioned therein. This certificate is generally used by exporters/importers for getting various benefits.

Generally, exporter has to make an application to the Chamber or any authorised agency for issuance of COOC, in the prescribed form, along with a copy of commercial invoice and other documents and pays the prescribed fees. On the basis and verification of the information provided in the application for COOC and the supporting documents with reference to the goods sought to be exported, the Chamber or the authorised agency issues a COOC. Now CBEC vide Circular No. 145/14/ 2011 – ST dated 19th August 2011 has clarified that in cases COOC has been issued with reference to national character of the goods upon examination of the origin of their composition, service tax is applicable on fees charged by chamber etc for issuance of COOC under “Technical Inspection and Certification Agency Service”.

Further the circular also clarify that Service Tax paid on ‘Technical Inspection and Certification’ of export goods is eligible for refund under Notification 17/2009-ST dated 7thJuly, 2009.

Procedure of Filling Service Tax Return Electronically

W.e.f. 1.10.2011, all the assessees are mandatorily required to file their return electronically irrespective of amount of service tax they have paid during the previous F/Y, in terms of Notification No. 43/2011-ST dated 25.08.2011. For this, one has to follow the procedure as follows:-
(A) Get Registered with ACES
1. Fill the “ACES DECLARATION FORM” available on the website www.servicetaxdelhi.gov.in and deposit it with the concerned Range Superintendent;
2. Please ensure to fill email-id correctly in the form because T-PIN and password will be communicated by the department to this email-id only;
3. After receiving the T-PIN and Password, visit the website www.aces.gov.in and Click on the service tax button provided on the left side of ACES Homepage to login;
4. Enter the T-PIN and password to log into the system. For first time login, ACES will mandatorily prompt for changing the password;
5. Set the new password. It is to note that user id (called as T-PIN) once selected can never be changed, even during the course of first time login;
6. For second and every subsequent login into ACES, take the note of this user-id and Password as set above
” IT IS IMPORTANT TO NOTE THAT ALL THE ASSESSEE WHO ARE NOT REGISTERED WITH ACES SHOULD GET THEMSELVES REGISTERED WITH ACES WELL IN ADVANCE, TO AVIOD LAST DAYS RUSH AND FILE THE RETUN WITHIN TIME.
(B) How to fill the Return Electronically
There are two methods of filling the return electronically, namely:
1. Online filling of data in service tax return and then submit it.
2. Offline filling of data using excel utility and then upload it.
(1) Online Filing of data in Service Tax Return and Submit it
i. Login into ACES by entering the user-id and password. Home page of the assessee will appear;
ii. Under ‘RET’ Main menu, click on the ‘fill’ option of ‘fill ST-3’ sub-menu i.e. RET Menu Fill ST-3 Fill.
iii. A page will appear listing the Premises code and Address of the registered premises of the assesssee. Premises code will appear as hyperlink. Click on the hyperlink to prepare the ST-3 Return;
iv. After filling the return correctly, Click on the ‘SAVE’ Button appearing on last page and confirmation page of ST-3 will appear;
v. To Amend, Click on the ‘Modify’ button or ‘Save’ to store the Return in the database;
vi. To submit the ST-3 Return to the department, press “SUBMIT” button. Confirmation will appear for successful submission of ST-3 Return displaying the Unique No. for such Return;
vii. Return saved in ACES can be amended before submission by the assessee by clicking on the “Amend ST-3” button under “Fill ST-3” sub-menu.
viii. In the same way, Return after submission can be revised once in 90 days by clicking on the “Revise ST-3” option of “Fill ST-3” submenu.
(2) Offline filling of data using excel utility and then upload it;
i. Click on the ‘Download’ button provided on the left side of ACES Homepage and download excel utility by clicking on the hyperlink “Download ST3 Return Excel Utility”;
ii. Use the excel utility to prepare ST-3 return and click on “Validate & Submit” button on the last page to generate XML file;
iii. The XML file will be saved in the same folder where the download utility is saved by the user;
iv. To upload the ST-3 Return, login into ACES by entering the user-id and password. Click on “Upload File” option of “e-filing” submenu under “RET” Main Menu;
i.e. RET Main Menu e-filing Upload file
v. Click the “Save” button to save the return in the database of the assessee; Else click on “SUBMIT” button to file the return;
vi. Confirmation will appear for successful uploading of Return without any Unique No.;
vii. After uploading, click on “View Status” option of “e-filing” submenu under “RET” Menu to view status of Return. A return will be considered as filed only when its status is shown as ‘FILED’ which should be appeared on or before the last due date of 25th April/25th October, as the case may be, for treating the return ‘filed on time’.
(3) THE ASSESSEES CAN ALSO ‘VIEW’, ‘SAVE’ AND ‘PRINT’ THEIR FIELD ST-3 RETURN AT ANY TIME BY CLICKING ON THE BUTTON ‘VIEW ST-3’ UNDER ‘RET’ MENU AFTER SUUCESSFUL LOGIN INTO ACES.

Point of Taxation in Service Tax

One major change made in service tax effective from 01-04-2011 is the introduction of Point of Taxation Rules, 2011 to (a) introduce the provisions relating to payment of service tax on accrual basis instead of receipt basis and (b) to specify date relevant for determining rate of service tax.

So far the provision was that service tax was payable on receipt basis i.e. on receipt of payment of the invoice or bill from the customer or receipt of advance, whichever is earlier. Now w.e.f.  01-04-2011, service tax will be payable on billing basis and not on ‘receipt of payment’ basis i.e. on accrual basis and not cash basis (option has been granted to assessee to continue payment on receipt basis upto 30-06-2011, if they so desire).

Scenario Relevant Rule First event Subsequent event Point of Taxation
Normal Situation (not covered under rule 4 to 9) 3(a) Issue of invoice Completion of service or receipt of payment Time of invoice
3(a) Completion of service Issue invoice within 14 days Time of Invoice
Proviso to 3(a) Completion of service Invoice not issued within 14 days Date of completion of service
3(b) and explanation to rule 3 Receipt of payment or advance Invoice or completion of service Time of receipt of payment
Taxable Service provided before change in effective rate of service tax 4(a)(i) Invoice issued and payment received after the change in effective rate N.A. Date of receipt of payment or date of issuance of invoice, whichever is earlier
4(a)(ii) Invoice issued prior to change in effective rate Payment received after change in effective rate of tax Date of issue of invoice
4(a)(iii) Payment received before change in effective rate of tax Invoice issued after change in effective rate of tax Date of receipt of payment
Taxable Service provided after change in effective rate of service tax 4(b)(i) Invoice issued prior to change in effective rate Payment received after change in effective rate of tax Date of receipt of payment
4(b)(ii) Invoice issued and payment received prior to change in effective rate Taxable Service provided Date of receipt of payment or date of issuance of invoice, whichever is earlier  
4(b)(iii) Payment received before change in effective rate of tax Invoice issued after change in effective rate Date of issuing of Invoice  
New service brought under tax net 5(a) Invoice issued and payment received before service became taxable N.A. No Service tax payable  
5(b) Payment received before service became taxable Issue invoice within 14 days of provision of service No Service tax is payable  
3(a) Service provided before tax became effective Invoice within 14 days and payment received after tax became effective No service tax is payable  
Continuous supply of service (applicable separately to each event as specified in contract) 6(a) Issue of Invoice Completion of service or receipt of advance payment Time of Invoice  
6(a) Completion of service Invoice issued within 14 days Time of Invoice  
Proviso to 6(a) Completion of service Invoice not issued within 14 days Date of completion of service  
6(b) and explanation 2 to rule 6 Receipt of payment or advance Invoice or completion of service Time of receipt of payment  
Export of Service 7(a) Completion of service Payment received within the period specified by RBI Date of receipt of payment  
7 (a) and first proviso to rule 7 Completion of service Payment not received within the period specified by the RBI As per rule 3,4,5,6 or 8 (as applicable) Interest will be payable.  
Service where tax payable by recipient of service under reverse charge 7(b) Receipt of Service Payment made to service provider in advance or within six months of date of invoice or service provider Date of payment  
7 (b) and second proviso to rule 7 Receipt of Service Payment not made to service provider in advance or within six months of date of invoice or service provider As per rule 3,4,5,6 or 8 (as applicable) Interest will be payable.  
Professional and firms providing specified taxable service 7 (c) Invoice, completion of service or receipt of payment in any sequence   Date of receipt of payment  
Service Provided from associate enterprises when service provider outside India Third proviso to rule 7 Date of credit in books of account of person receiving service Date of making payment Date of credit in books of account of person receiving service  
Third proviso to rule 7 Date of making payment Date of credit in books of account of person receiving service Date of making payment  
Intellectual property service, where consideration not ascertainable at the time of service 8 Receipt of payment or benefit is received by service provider Invoice issued by the service provider Receipt of payment or benefit is received by service provider  
8 Invoice issued by the service provider Receipt of payment or benefit is received by service provider Invoice issued by the service provider  
Service completed on or before 30-06-2011 9 Issue of Invoice Receipt of payment Issue of invoice or date of receipt of payment  

 

 

HIGHLIGHTS OF UNION BUDGET – 2011-12

  1. The basic exemption limit in the case of individuals increased from Rs.1.60 lacs to Rs.1.80 lacs. However, there is no increase in basic exemption limit in the case of Resident Women who is below 60 years at any time during the previous year.
  2. The qualifying age limit for senior citizens has been lowered from 65 years to 60 years and  increased the current exemption limit under two categories
  3. Category -1 – Age of Individual – 60 years or more but less than 80 years at any time during the previous year. The basic exemption limit is increased from Rs.2.40 lacs to Rs.2.50 lacs
  4. Category – 2 –   Age of Individual beyond 80 years or more at any time during the previous year. The basic exemption limit is Rs.5.00 lacs.
  5. In the case of domestic companies the surcharge has been reduced from Rs.7.5% to 5%
  6. In the companies other than domestic companies the surcharge has been reduced from 2.5% to 2%
  7. The definition of charitable purpose u/s 2 (15) includes “the advancement of any other object of general public utility”. The monetary limit in respect of such activities has been enhanced from Rs.10.00 lacs Rs.25.00 lacs.
  8. The amount paid by an assessee as an employer by way of contribution towards pension scheme, as referred to in sec 80CCD(2) on account of an employee to the extent it doesn’t exceed 10% of the salary of employee in the previous year, shall be allowed as a deduction u/s 36 in computing the income under the head profit and gains of business or profession.
  9. The Indian company which receives foreign dividend from foreign subsidiary company such dividend is taxable at the 15% as against 30% plus applicable surcharge.
  10. The rate of MAT is increased to 18.5% from the existing rate of 18% of such book profit.
  11. Minimum Alternative Tax has been introduced for Limited Liability Partnership (LLP) in line with MAT on companies with effect from the Assessment Year 2012 – 2013.
  12. The Government  exempts assessees having no other income other than salary from furnishing the return of income by notification. The proposed amendment shall be effective from 1st June, 2011.
  13. It is proposed to omit the requirement of quoting of Documentary Identification Number in notices / order / correspondences issued by Income tax department.
  14. The SEZ developers are required to pay dividend distribution tax on dividends declared / distributed on or after 1st June, 2011.
  15. The deduction u/s 80CCF to investment in notified long term infrastructure bonds extended for the A.Y. 2012-13 also.
  16. Liaison offices of a company will be required to file Annual Information in the prescribed form with in the 60 days from the end of the financial year.
  17. The tax holiday for power sector has been extended for further period of one year i.e. upto 31.03.2012.

SERVICE TAX

 

  1. The following two new services have been proposed
    1. Services by air conditioned restaurants having licence to serve liquor; and
    2. short term accommodation hotels / inns / clubs / guest houses etc.

 

  1. The monetary limit for adjustment of excess service tax paid is increased from Rs. 1.00 lacs to Rs.2.00 lacs.
  2. The penalty for delayed payment of service tax u/s 76 has been reduced from 2% to 1% per month or Rs.100 per day whichever is higher.
  3. The maximum penalty reduced to 50% of the tax.
  4. The rate of interest is reduced by 3% for assesses with turnover of upto 60 lacs.
  5. The maximum penalty for delay in filing of return increased from Rs.2,000 to Rs.20,000

Courtesy: CA. Naveen ND Gupta

 

Announcement of New USA Branch of MRC

We are delighted to inform you that Mukesh Raj & Co. (MRC) has inagurated its first foreign branch office at New Jersey, United States Of America. The new foreign office address is:

MRC (Chartered Accountants) 85, Forest Drive, Apartment C Springfield,

New Jersey – 07081, United States of America (USA)

We would concentrate to provide services in relation to US taxation and Accounting. We would be happy to assist you and your team members to provide our professional and IRS services from our USA office.

Warm Regards MRC Team

Service tax on on-going works contracts entered into prior to 01.06.2007

Circular No. 128/10/2010-ST, dated 24-8-2010

It has been brought to the notice of the Board that the following confusions/disputes prevail with respect to long term works contracts which were entered into prior to 01.06.2007 (when the taxable service, namely, Works contract came into effect) and were continued beyond that date:

(i)             While prior to the said date services like Construction; Erection, commissioning or installation; Repair services were classifiable under respective taxable services even if they were in the nature of works contract, whether the classification of these activities would undergo a change?

(ii)            Whether in such cases of continuing contracts, the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007 under Notification No. 32/2007-ST dated 22/05/2007 would be applicable?

2.         The matter has been examined.  As regards the classification, with effect from 01.06.2007 when the new service ‘Works Contract’ service was made effective, classification of aforesaid services would undergo a change in case of long term contracts even though part of the service was classified under the respective taxable service prior to 01.06.2007.   This is because ‘works contract’ describes the nature of the activity more specifically and, therefore, as per the provisions of section 65A of the Finance Act, 1994, it would be the appropriate classification for the part of the service provided after that date.

3.         As regards applicability of composition scheme, the material fact would be whether such a contract satisfies rule 3 (3) of the Works Contract (Composition Scheme for payment of Service Tax) Rules, 2007.  This provision casts an obligation for exercising an option to choose the scheme prior to payment of service tax in respect of a particular works contract.  Once such an option is made, it is applicable for the entire contract and cannot be altered.   Therefore, in case a contract where the provision of service commenced prior to 01.06.2007 and any payment of service tax was made under the respective taxable service before 01.06.2007, the said condition under rule 3(3) was not satisfied and thus no portion of that contract would be eligible for composition scheme.   On the other hand, even if the provision of service commenced before 01.06.2007 but no payment of service tax was made till the taxpayer opted for the composition scheme after its coming into effect from 01.06.2007, such contracts would be eligible for opting of the composition scheme.

4.         The Board’s previous Circular No. 98/1/2008-ST dated 04.01.2008 and the ratio of judgement of the High Court of Andhra Pradesh in the matter of M/s. Nagarjuna Construction Company Limited vs. Government of India (Writ Petition No. 6558/2008, dated 7-6-2010) are in line with the above interpretation.

5.         Trade Notice/Public Notice may be issued accordingly.