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Class-sybbi

3.1 Fill the Form ST-1 in duplicate. (Form ST-1 is available on the departmental website ( www.cbec.gov.in ) Enclose photocopy of PAN card and proof of address to be registered. 3.2 Copy of PAN card is necessary as a PAN based code (Service Tax Code) is allotted to every assessee. 3.3 These forms are required to be submitted to the jurisdictional Central Excise office ( in case of six Service Tax Commissionerates, to the jurisdictional Division office. There are separate service tax commissionerates in Mumbai, Chennai, Delhi, Kolkata, Bangalore and Ahmedabad as mentioned in the previous chapter). 3.4 A person liable to pay service tax should file an application for registration within thirty days from the date on which the service tax on particular taxable service comes into effect or within thirty days from the commencement of his activity. (Refer Rule 4 (1) of Service Tax Rules, 1994) 3.5 (i) (ii) Where a person, liable for paying service tax on a taxable service, provides such service from more than one premises receives such service in more than one premises or offices; or,

or

offices;

or

iii) is having more than one premises or offices, which are engaged in relation to such service in any other manner, making such person liable for paying service tax, and has centralised billing system or centralised accounting system in respect of such service, and such centralised billing or centralised accounting systems are located in one or more premises, he may, at his option, register such premises or offices from where centralised billing or centralised accounting systems are located. 3.5.1 The registration under sub-rule (2), shall be granted by the Commissioner of Central Excise in whose jurisdiction the premises or offices, from where centralised billing or accounting is done, are located: Provided that nothing contained in this sub-rule shall have any effect on the registration granted to the premises or offices having such centralised billing or centralised accounting systems, prior to the 2nd day of November, 2006. 3.6 A single registration is sufficient even when an assessee is providing more than one taxable services. However, he has to mention all the services being provided by him in the application for registration and the field office shall make suitable entries/endorsements in the registration certificate. (Refer Rule 4 (4) of Service Tax Rules, 1994) 3.7 An assessee should get the registration certificate (registration number) within 7 days from the date of submission of form S.T.1, under normal circumstances. (Refer Rule 4 (5) of Service Tax Rules, 1994) 3.8 A fresh registration is required to be obtained in case of transfer of business to another person. (Refer Rule 4 (6) of Service Tax Rules, 1994) 3.9 Any registered assessee when ceases to provide the taxable service shall surrender the registration certificate immediately

It is a pertinent question in the context of taxation of services as to when a service is said to be provided so that it becomes taxable at that point of time. A service provider may consider a particular service being provided at a particular point of time whereas the revenue may have different opinion leading to conflict of opinion. Currently the service tax is required to be paid as and when the payment for the service is received. It includes taxation on advance payment also though the service for which advance is received is yet to be provided. However, this provision may seem to be simple and straight forward, but still under certain situations there is lack of clarity and certainty in the matter of levy and collection of service tax. Further, the provision of taxing a service on receipt basis is at odds with regime in force in Central Excise and VAT laws implemented by the states. With a view to bring more clarity as to the point of time when a service need to be taxed, draft point of taxation rules were earlier circulated for public comments. Now, a step has been put forward on the auspicious occasion of budget session to notify Point of Taxation Rules, 2011 through issuing Notification No. 18/2011ST, dated 1-3-2011. It is provided that these Rules shall be effective from 1-4-2011 and therefore, nothing contained in the present rules shall be applicable in case of invoices issued prior to 1-4-2011.

Due dates to file return: ST-3 Return is required to be filed twice in a financial year half yearly. Return for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively. If a person fails to furnish the ST-3 Return within the due date [25th October and 25th April every year] he shall be liable to penalty which may extend to an amount not exceeding one thousand rupees (Section 77 of the Act) Mandatory Penalty for Late filing of ST-3 Return under Rule 7C of Service Tax Rules, 1994 Sl. No. 1 2 Period of Delay from the prescribed date 15 days Beyond 15 days but not later than 30 days Beyond 30 days Penalty Rs.500/Rs.1000/-

Rs.1000/- plus Rs. 100/- for every day from the thirty first day till the date of furnishing the said return

INDIRECT TAXES
Service Tax
CA. sunil m. lala

A] CLASSIFICATION OF SERVICE Airport Service 1. The assessee owning and managing airport covered under definition of Airport Authority had collected user fee at flat rate of Rs. 500 from outgoing international passengers and not from passengers arriving from foreign destinations. The High Court observed that, the purpose of user fee was to augment revenue as per decision of Board of Directors and not for any specific service rendered to outgoing international passengers and held that, user fee collected only from one category of passengers at flat rate could not be considered as service charge liable to service tax under Airport service. CCE vs. Cochin International Airport Ltd. 2009 (16) STR 401 (Ker.) Banking & Other Financial Services 2. The Commissioner (A) in this case observed that, the appellant being co-operative credit society was not a banking organization and was not governed by RBI Act. Non-banking financial company should have previous approval of Central Government, however no such approval was required in present case. It was held that, demand of service tax, interest and penalties under Banking and Other Financial services was not sustainable. In Re: Jankalyan Nagari Sahakari Patsanstha Ltd. 2009 (15) STR 603 (Commr. Appl.) 3. The High Court held that Service tax is levied on services and not on sale or purchase of goods. Service tax is on services and not on service provider. The Petitioners in this case rendered services and collected charges @ 1% on hire purchase and lease transactions and such service is liable to service tax under Banking and Other Financial services. Tax on sale of goods involved in sale does not mean that no service tax can be levied on service aspect. Policy of tax in its effectuation may bring some hardship in some individual cases but that is inevitable so long as law represents a process of abstraction from the generality of cases and reflects the highest common factor. Madras Hire Purchase Association vs. UOI 2009 (16) STR 3 (Mad) Business Auxiliary Service 4. The appellant rendered free service to customers in respect of Light Commercial Vehicles (transport vehicles) purchased during the warranty period. The Tribunal held that, such services were not liable to service tax under Business Auxiliary Services and expenses reimbursed by manufacturer in respect of free services were also not liable under Authorised Service Station in view of Boards Circular No. 87/05/2006-ST dated 6-11-2006. Focuz Motors vs. CCEC& ST(A), Cochin 2009 (16) STR 42 (Tri-Bang.)

5. The Tribunal in this case held that, definition of manufacture under Section 2(f) of CEA, 1944 is an inclusive definition and electricity is manufactured goods therefore, production of electricity was not liable to service tax under Business Auxiliary service. NTPC Sail Power Co. Pvt. Ltd. vs. CCE, Bolpur 2009 (16) STR 206 (Tri-Kolkatta.) Commercial Training or Coaching Services 6. The appellant in this case collected Mess charges providing food to trainees. The Tribunal held that, nexus between amount collected and service rendered was required and Mess charges could not be considered as receipt for rendering Commercial Training or Coaching Service. It was further held that larger period was not invocable as show cause notice was issued based on audit objections. Aditya College of Competitive Exam. vs. CCE, Visakhapatnam 2009 (16) STR 154 (Tri-Bang.) Intellectual Property Service 7. Appellant, a manufacturer of medicines under an agreement with a Swiss Company received knowhow in the form of information, data, drawing, secret formula etc. under its own brand name in India and paid royalty for a period of 10 years or more for the know-how. Service tax was demanded on royalty payment paid as receiver of intellectual property service. After persuing the agreement and show cause notice, the Tribunal accepted the contention of the appellant that there was no finding as to receipt of know-how continuously. Payment whether made lump sum or on deferred basis for know-how received in 1990 could not determine the liability of service tax as no service was provided during the disputed period and allowed the appeal. Since the appeal was allowed on this short ground, other aspects of the applicable date for reverse charge etc. were not gone into. Modi Mundipharma P. Ltd. vs. CCE, Meerut 2009 (15) STR 713 (Tri.-Del.) Maintenance or Repair Service 8. The AAR held that, re-rubberisation of used rollers of printing machine amounts to repair or reconditioning of goods and was covered under Management, Maintenance or Repair Service. Service tax liability will arose if reconditioning of old rollers undertaken under orders placed or instructions given by customer and re-rubberising charges collected. And, it was further held that, fundamental requirement for attracting charging section 66 of FA, 1994 is provision of service by one person to another and it should answer description and definition of taxable service falling within clause (105) of section 65. In Re: Print Top Rubber Industries 2009 (15) STR 572 (AAR) Management Consultancy Service 9. The Commissioner (A) held that, activity of liaisoning work between a sister concern and its clients viz. co-ordinating collection of purchase orders/payments/cheques, accounts reconciliations etc. did not amount to rendering of advice/consultancy and the same did not fall in definition of management consultants service. In Re: Shanatala Marketing Services 2009 (15) STR 577 (Commr. Appl.) Outdoor Catering Service

10. The appellant was engaged in preparing and serving food in customers premises. All the facilities relating to maintenance of canteen including furniture, utensils, gas and electricity was provided by the customer. The Tribunal held that, activity of the appellant did not fall under Outdoor Catering Service as appellant was engaged merely to prepare and serve food items in companys premises. Rajeev Kumar Gupta us. CCE, Jaipur 2009 (16) STR 26 (Tri-Del) Rent-a-Cab Service 11. The appellant provided vehicles with driver for specific journey to specific destination. Revenue sought to tax them under Rent-a-Cab Service. The Tribunal held that, vehicle was used for fixed destinations by client and not covered under Rent-a-Cab Service. CCE, Rohtak vs. Miglani Taxi Service 2009 (15) STR 559 (Tri-Bang.) Security Agency Service 12. The Tribunal held that, activity of scare the birds in airport area by periodical firing at specified places is preventive measure in maintaining airport as per the norms to avoid accident by bird hit and such activity is not covered under Security Agency Service. Ex-Servicemen Industrial Guards Pvt. Ltd. vs.CCE, Thiruvananthapuram 2009 (16) STR 421 (Tri-Bang.) Stock Brokers Service 13. The Tribunal held that, department has already clarified that service tax was not payable on fees charged to the depositories and recovered from customers on actual basis and fixed charges collected by the appellant also represent actual charges paid to depositories, hence not liable to service tax.

The salient features of levy of service tax are: 1. Scope: It is leviable on taxable services provided or to be provided by a service provider. The services to be provided in future are taxed only if payment in its respect is received in advance. Two separate persons required Payment to employees not covered: For charge of service tax, it is necessary that the service provider and service recipient should be two separate persons acting on principal to principal basis. Services provided by an employee to his employer are not covered service tax and, therefore, salaries or allowances paid to them cannot be charged to service tax. 2. Rate: It is leviable @ 12% of the value of taxable services. Education Cess @ 2% and Secondary and Higher Education Cess @ 1 % are chargeable on the amount of service tax, thus, making the effective rate of service tax at 12.36% of the value of taxable service. 3. Taxable services: Service tax is leviable only on the taxable services. Taxable services mean the services taxable under section 65(105) of the Finance Act, 1994. 4. Value: For the levy of the service tax, the value shall be computed in accordance with section 67 read with Service Tax (Determination of Value) Rules, 2006. 5. Free services not taxable : No service tax is leviable upon the services provided free of cost. 6. Payment of service tax : The person providing the service (i.e. the service provider) has to pay service tax in such manner and within such period as is prescribed in the Service Tax Rules, 1994. The service tax is to be paid only on the receipt of payment towards the value of taxable services. 7. Procedures: Provisions have been made for registration, assessment including self assessment, rectifications, revisions, appeals and penalties on the service provider. 8. CENVAT credit: The credit of service tax and excise duty across goods and services is allowable in accordance with the CENVAT Credit Rules, 2004. Accordingly, output service provider (i.e. provider of any taxable service) can avail credit not only of the service tax paid on any input service consumed for rendering any output service but also of the excise duty paid on any inputs and capital goods used for rendering output service. CENVAT credit so availed can be utilized for payment of service tax on taxable output service. 9. Services provided by an unincorporated association/body to its members also taxable [Explanation to Sec. 65] : Taxable service includes any taxable service provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration. Hence, the services (falling under any category of taxable service) provided or to be provided by any unincorporated association/body to member thereof shall be liable to service tax. This provision is an exception to the principle of mutuality. 10. Performance of statutory activities/duties, not service: An activity performed by a sovereign /public authority under provisions of law does not constitute provision of taxable service to a person and, therefore, no service tax is leviable on such entities. 11. Import/Export of services: While import of services is chargeable to tax u/s 66A, the export of services has been made exempt from tax. Import/export provisions are discussed separately.