Residential Refresher Course (RRC) -Presentation i

LATUR BRANCH OF WIRC OF ICAI LATUR BRANCH OF WIRC OF ICAI

Residential Refresher Course (RRC)Residential Refresher Course (RRC)

A Presentation A Presentation OnOn

““New Regime of Service Taxation in India”New Regime of Service Taxation in India”

On by On by

Saturday, Dr. Sanjiv Saturday, Dr. Sanjiv AgarwalAgarwal

25st25st August,2012 FCA, FCS August,2012 FCA, FCS@ Goa @ Goa

© Dr. Sanjiv Agarwal© Dr. Sanjiv Agarwal

22

SESSION - ISESSION - I

PARADIGM SHIFT IN TAXATION OF PARADIGM SHIFT IN TAXATION OF

SERVICES IN INDIA – AN OVERVIEW SERVICES IN INDIA – AN OVERVIEW

&&

MAJOR CHANGES IN SERVICE TAX LAW BY MAJOR CHANGES IN SERVICE TAX LAW BY

The FINANCE ACT, 2012 - AT A GLANCE The FINANCE ACT, 2012 - AT A GLANCE

33

This presentation coversThis presentation covers• Overview of Taxation of Services in India Overview of Taxation of Services in India • Selective Approach (Positive) Selective Approach (Positive) • Shift to Comprehensive approach (Negative)Shift to Comprehensive approach (Negative)• The future approach (Proposed GST) The future approach (Proposed GST) • AbatementsAbatements• Reverse ChargeReverse Charge• Other Amendments – Place of Provision, Other Amendments – Place of Provision,

Cenvat Credit, Appeal, Revision, Settlement Cenvat Credit, Appeal, Revision, Settlement etc.etc.

44

Indian Economy – An Indian Economy – An overviewoverview

India’s economy is the 11India’s economy is the 11thth largest economy in largest economy in the world and the second fastest growing even in the world and the second fastest growing even in today’s recessiontoday’s recession

World is presently facing recession-II but Indian World is presently facing recession-II but Indian economy is still better than comparable economy is still better than comparable economies. economies.

Agriculture, services and industry are the major Agriculture, services and industry are the major sector of India an economy. Contribution of sector of India an economy. Contribution of different sectors in March, 2012 was :different sectors in March, 2012 was :

Agriculture 19%Agriculture 19% Services 59%Services 59% Industry 22%Industry 22%

to be to be

contdcontd…….…….

55

GDP CO MPO SITIO N IN MARCH, 2012

Agriculture19%

Industry22%

Service Sector59%

Brief Overview of Services / Brief Overview of Services / Service Tax Share of Service Tax Share of

Services in GDPServices in GDP

66

Share of services in GDP Share of services in GDP trackedtracked

Year Year % of GDP % of GDP 19501950 1515 19701970 3333 19801980 3636 19941994 4040 19951995 4141 20002000 4747 20052005 5353 20102010 5757 20122012 5959

In 2011-12, services have grown by 9.6 % which is In 2011-12, services have grown by 9.6 % which is more more

than GDP growth ratethan GDP growth rate

77

Growth in Tax GDP Ratio – Growth in Tax GDP Ratio – Slow but SteadySlow but Steady

Years Tax GDP ratio Years Tax GDP ratio

2003-04 2003-04 9.2% 9.2%

2007-08 11.9% 2007-08 11.9%

2009-10 9.7% 2009-10 9.7%

2010-11 2010-11 10.3% 10.3%

2011-12 2011-12 10.1% 10.1%

88

Power to Tax in IndiaPower to Tax in India

India has a two tier federal power to collect tax –India has a two tier federal power to collect tax – the Union Government, the Union Government, the State Governments the State Governments includingincluding

urban/rural local bodiesurban/rural local bodies Presently goods are liable to Vat / Excise / Presently goods are liable to Vat / Excise /

Customs duty while taxable services attract Customs duty while taxable services attract service tax. service tax.

Certain transactions subject to both - Vat and Certain transactions subject to both - Vat and Service taxService tax

Efforts to revamp the direct tax structure - New Efforts to revamp the direct tax structure - New direct tax code (Income Tax Act, 1961 & Wealth direct tax code (Income Tax Act, 1961 & Wealth Tax Act, 1957 would be scrapped) proposedTax Act, 1957 would be scrapped) proposed

Efforts to bring on a single indirect tax – GST Efforts to bring on a single indirect tax – GST proposedproposed

99

Taxonomy of Indian Taxonomy of Indian taxationtaxation

TAXATION POWERS OF UNIONTAXATION POWERS OF UNION Income Tax – Income Tax – on income, except on income, except

agricultural incomeagricultural income Excise Duty – on goods manufacturedExcise Duty – on goods manufactured Custom Duty – on importsCustom Duty – on imports Service Tax – Service Tax – on specified serviceson specified services Central Sales Tax – Central Sales Tax – on inter-state sale of goodson inter-state sale of goods Stamp Duty Stamp Duty –– on 10 specified instruments on 10 specified instruments

tto be o be contd…..contd…..

1010

Service Tax in India (The Service Tax in India (The Past)Past)

Introduced in India in 1994 as a simple, modest tax Introduced in India in 1994 as a simple, modest tax with just three services. with just three services.

Service tax – an indirect tax.Service tax – an indirect tax. Approach to Service Tax – Selective as against Approach to Service Tax – Selective as against

comprehensive one .comprehensive one . Desirable from revenue, equity and economic view Desirable from revenue, equity and economic view

point.point. Governed by Finance Act, 1994 and a dozen of Governed by Finance Act, 1994 and a dozen of

rules. rules. Legislative dependence on other laws.Legislative dependence on other laws. Scattered and heterogeneous large mass of service Scattered and heterogeneous large mass of service

providers as well as wide spectrum of services. providers as well as wide spectrum of services. Jurisdictional application.Jurisdictional application.

1111

Growth of Service TaxGrowth of Service Tax

Year No of new services Total No of services

Total collection (Rs. in crore)

1994 3 3 407

2001 - 26 2612

2005* 13 72 14199

2008 7 103 51301

2010 3 112 58000

2012 0 120 95000

2013 - All 126000 (BE)

1212


Selective Approach to Service TaxSelective Approach to Service Tax

Selective v. Comprehensive approach Selective v. Comprehensive approach Taxation by choice Taxation by choice Service not defined but taxable service defined.Service not defined but taxable service defined. > 120 taxable services [section 65(105)]> 120 taxable services [section 65(105)] Resulted in distortions / prejudice Resulted in distortions / prejudice Untapped tax potential Untapped tax potential Economically unjustified Economically unjustified

1313


Selective Approach : Some IssuesSelective Approach : Some Issues

Classification of service – disputes Classification of service – disputes Illogical definitions Illogical definitions Problem defining each taxable service Problem defining each taxable service Inefficient tax administration Inefficient tax administration Constitutional Challenges Constitutional Challenges Services / deemed Services Services / deemed Services Valuation / abatement / reverse chargeValuation / abatement / reverse charge

1414

Service Tax - TodayService Tax - Today

Shift to Comprehensive approach

W.e.f. 1 July 2012W.e.f. 1 July 2012 Finance Act, 2012 – A land mark Act to shift from Finance Act, 2012 – A land mark Act to shift from

positive to negative approach.positive to negative approach. It took 18 years to shift from selective approach to It took 18 years to shift from selective approach to

positive approach to tax servicespositive approach to tax services Section 65 (Definition of Taxable Service), 65A (Classification of Section 65 (Definition of Taxable Service), 65A (Classification of

Taxable service), 66 (Charge of Section Tax) and 66A (Charge of Taxable service), 66 (Charge of Section Tax) and 66A (Charge of Service Tax on Services received from outside India) have no Service Tax on Services received from outside India) have no application w.e.f. 01.07.2012.application w.e.f. 01.07.2012.

1515

All Services(including declared Services

(-)

Specific Exclusions

(-)

Negative List Services

Exemptions

Taxable Services

(-)

Taxation of Services by Finance Act, 2012

(=)

1616

Service Tax - TodayService Tax - Today

New system of taxation of servicesNew system of taxation of services All services to be taxed other than services All services to be taxed other than services

specified in the negative list and exempted specified in the negative list and exempted services – Section 66B.services – Section 66B.

Negative list (17 in number) specified through Negative list (17 in number) specified through statutory provisions – Section 66D.statutory provisions – Section 66D.

‘‘Service’ defined for the first time.Service’ defined for the first time. ‘‘Negative List’ and ‘declared services’ also Negative List’ and ‘declared services’ also

defined.defined.

1717

Service Tax provisions no longer Service Tax provisions no longer applicable (w.e.f. 1.7.2012)applicable (w.e.f. 1.7.2012)

Section 65 Section 65 Old definitions of Services / Taxable Old definitions of Services / Taxable Services Services

Section 65A Section 65A Classification of Services Classification of Services Section 66Section 66 Charge of Service Tax Charge of Service Tax Section 66A Section 66A Charge of Service Tax on Charge of Service Tax on

Services Services received from outside received from outside India.India.

Import of Service Rules, 2006Import of Service Rules, 2006 Export of Service Rules, 2005Export of Service Rules, 2005

1818

New Provisions in Service TaxNew Provisions in Service Tax

Section 66 BSection 66 B deals with charge of service tax deals with charge of service tax on the after Finance Act, 2012on the after Finance Act, 2012

Section 66 CSection 66 C provides for determination of provides for determination of place of provision of service.place of provision of service.

Section 66 DSection 66 D comprises of negative list of comprises of negative list of services services

Section 66 ESection 66 E comprises of the services which comprises of the services which constitute declared servicesconstitute declared services

Section 66 FSection 66 F provide principles of provide principles of interpretation interpretation of specified description of specified description of services of services or bundled servicesor bundled services

1919

The New Taxability ConceptThe New Taxability ConceptSERVICE FOR A

CONSIDERATION

E - MAGIC TEST

E: EmployeeM: MoneyA: Actionable claimG: GoodsI: Immovable propertyC: Court Fee

9 DE

CL

AR

ED

SE

RV

ICE

S

2020

Taxable of Services w.e.f. Taxable of Services w.e.f. 1.7.20121.7.2012

All services All services Taxable Taxable

[section 65B (44)][section 65B (44)] Declared services Declared services Taxable Taxable (section 66E) (section 66E) Services covered under Services covered under Not Taxable Not Taxable

negative list of services negative list of services (section 66D) (section 66D) Services exempt under Mega Services exempt under Mega Exempted Exempted Notification No. 25/2012-ST Notification No. 25/2012-ST dated 20.6.2012dated 20.6.2012 Other specified ExemptionsOther specified Exemptions Exempted Exempted

2121

Taxation of Services Post Finance Act, 2012

2222

What is ServiceWhat is Service

‘‘Service' has been defined in clause (44) of the new Service' has been defined in clause (44) of the new section 65B and means –section 65B and means –

any activityany activity

for considerationfor consideration

carried out by a person for anothercarried out by a person for another

and includes a declared service (66E)and includes a declared service (66E)

2323


Activity must be for a considerationActivity must be for a consideration Activity – includes both activity as well as non-Activity – includes both activity as well as non-

activity activity Consideration – includes both monetary and non Consideration – includes both monetary and non

monetary consideration.monetary consideration. Two persons are involved –Two persons are involved –

Service provider Service provider Service receiver Service receiver

Only services provided by one person to another Only services provided by one person to another are taxable are taxable

Person – natural as well as artificial Person – natural as well as artificial

2424


ActivityActivity Not defined in the ActNot defined in the Act In common understanding, activity includes –In common understanding, activity includes –

An act doneAn act done A work doneA work done A deed doneA deed done An operation carried outAn operation carried out Execution of an actExecution of an act Provision of a facility etc.Provision of a facility etc.

Activity could be active or passive and forbearance to actActivity could be active or passive and forbearance to act Agreeing to an obligation to refrain from an act or to tolerate an

act or a situation - listed as a declared service u/s 66E

2525


Activity for a ConsiderationActivity for a Consideration Activity should be carried out by a person Activity should be carried out by a person

for a considerationfor a consideration Activity without consideration like-Activity without consideration like-

DonationDonation GiftsGifts Free charitiesFree charitiesoutsideoutside the ambit of servicethe ambit of service

Charity for consideration would be service Charity for consideration would be service and taxable unless otherwise exemptedand taxable unless otherwise exempted

2626


Consideration (Section 67)Consideration (Section 67) Means everything received or recoverable in return for Means everything received or recoverable in return for

a provision of service provided or to be provided a provision of service provided or to be provided which includeswhich includes - -

Monetary paymentMonetary payment Non-monetary paymentNon-monetary payment Deferred considerationDeferred consideration

Under Indian Contract Act, 1872, Consideration means Under Indian Contract Act, 1872, Consideration means --

“When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does

or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is

called a consideration for the promise”

2727


ConsiderationConsideration Monetary consideration means any Monetary consideration means any

consideration in form of Money.consideration in form of Money. Includes not only cash but also cheques, Includes not only cash but also cheques,

promissory note, bill of exchange, letter of promissory note, bill of exchange, letter of credit, draft, pay order, traveler’scredit, draft, pay order, traveler’s cheques, money order, postal or electronic remittance or any such similar instrument

Non- monetary consideration- money equivalent

2828


Money- 65B (33)

"money" means legal tender, cheques, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheques, money order, postal or electronic remittance or any similar instrument but shall not include any currency that is held for its numismatic value

Actionable Claim –Section 3 of Transfer of Property Act, 1882

• Claim to unsecured debts• Claim to beneficial interest in movable property not in

possession of claimant• Right to insurance claim• Arrears of rent

2929


Tax on Money RemittanceTax on Money Remittance No service tax on foreign currency remitted to No service tax on foreign currency remitted to

India from overseas (Circular No.163 dated India from overseas (Circular No.163 dated 10.7.2012)10.7.2012)

Amount of remittance comprises moneyAmount of remittance comprises money Service excludes money transactionsService excludes money transactions Even fee for remittance is not taxable (POPS) Even fee for remittance is not taxable (POPS) Sender of money outside India bank / company Sender of money outside India bank / company

remitting located outside Indiaremitting located outside India Fee charged by Indian bank - remitter located Fee charged by Indian bank - remitter located

outside India (not taxable as per POPS)outside India (not taxable as per POPS)

3030


Person-65B(37)Person-65B(37)"person" includes,––

• an individual,• a Hindu undivided family,• a company,• a society,• a limited liability partnership,• a firm,• an association of persons or body of individuals, whether

incorporated or not,• Government,• a local authority, or• every artificial juridical person, not falling within any of the

above

3131


Government – Not definedGovernment – Not defined Section 3 (22) of General Clause Act, Section 3 (22) of General Clause Act,

18971897 Includes Central/State Government/ Includes Central/State Government/

Union TerritoryUnion Territory Actions taken in the name of Actions taken in the name of

President/ GovernorPresident/ Governor Most of services provided by Most of services provided by

government are in Negative List government are in Negative List

3232


Local AuthorityLocal Authority - Section 65B(31)- Section 65B(31) A Panchayat as referred to in clause (d) of article 243 of A Panchayat as referred to in clause (d) of article 243 of

the Constitutionthe Constitution A Municipality as referred to in clause (e) of article 243P A Municipality as referred to in clause (e) of article 243P

of the Constitutionof the Constitution A Municipal Committee and a District Board, legally A Municipal Committee and a District Board, legally

entitled to, or entrusted by the Government with, the entitled to, or entrusted by the Government with, the control or management of a municipal or local fundcontrol or management of a municipal or local fund

A Cantonment Board as defined in section 3 of the A Cantonment Board as defined in section 3 of the Cantonments Act, 2006Cantonments Act, 2006

A regional council or a district council constituted under A regional council or a district council constituted under the Sixth Schedule to the Constitutionthe Sixth Schedule to the Constitution

A development board constituted under article 371 of A development board constituted under article 371 of the Constitution, orthe Constitution, or

A regional council constituted under article 371A of the A regional council constituted under article 371A of the Constitution.Constitution.

3333


Governmental Authority (N. No. Governmental Authority (N. No. 25/2012-ST)25/2012-ST) board/ Authority / other body board/ Authority / other body established with > 90% participation established with > 90% participation of government control/ equityof government control/ equity set up by Act of Parliament or State set up by Act of Parliament or State

LegislatureLegislature to carry out any functions entrusted to to carry out any functions entrusted to

municipality u/s 243W of constitutionmunicipality u/s 243W of constitution

3434

What is Service : What is Service : ExclusionsExclusions

'Service' does not include -'Service' does not include - any activity that constitutes only a transfer in title of any activity that constitutes only a transfer in title of

goods or goods or immovable property by way of sale, gift or in any other mannerimmovable property by way of sale, gift or in any other mannera transfer, delivery or supply of goods which is deemed to be a sale of goods a transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of article 366 of the Constitutionwithin the meaning of clause (29A) of article 366 of the Constitution

a transaction only in money or actionable claima transaction only in money or actionable claim

a service provided by an employee to an employer in the course of the a service provided by an employee to an employer in the course of the employment.employment.

fees payable to a court or a tribunal set up under a law for the time being in fees payable to a court or a tribunal set up under a law for the time being in forceforce

3535


This scope shall not apply to –This scope shall not apply to –

a)a) functions performed by M.P., M.L.A., Members of functions performed by M.P., M.L.A., Members of Panchayats / Municipalities who receive any consideration Panchayats / Municipalities who receive any consideration in performing the functions of that office as such member; in performing the functions of that office as such member; oror

b)b) duties performed by any person who holds any post in duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that pursuance of the provisions of the Constitution in that capacity; orcapacity; or

c)c) duties performed by any person as a Chairperson or a duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Member or a Director in a body established by the Central Government or State Government or local authority and Government or State Government or local authority and who is not deemed as an employee before the who is not deemed as an employee before the commencement of this section.commencement of this section.

3636


It may be noted that -It may be noted that -

(a) an unincorporated association or a AOP and a member (a) an unincorporated association or a AOP and a member

thereof shall be treated as distinct persons;thereof shall be treated as distinct persons;

(b) an establishment of a person in the taxable territory and any of his (b) an establishment of a person in the taxable territory and any of his

other establishment in a non-taxable territory shall be treated as other establishment in a non-taxable territory shall be treated as

establishments of distinct persons.establishments of distinct persons.

(c)(c) A person carrying on a business through a branch or agency or A person carrying on a business through a branch or agency or

representational office in any territory shall be treated as having an representational office in any territory shall be treated as having an

establishment in that territoryestablishment in that territory

3636

3737

Taxability of Services – Then & Now

Period Taxable Non Taxable

Prior to Finance Act, 2012(upto 30.6.2012) Taxable services

specified in section 65 (105)

Import of services under reverse charge

Exempt services Service not covered

under section 65 (105) Export of services

Post Finance Act, 2012(w.e.f. 1.7.2012) All services provided in

taxable territory Declared services

Services in Negative List Exempt services Services provided in non-

taxable territory (as per POPS Rules)

3838

MAJOR CHANGES IN SERVICE TAX MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - AT LAW BY The FINANCE ACT, 2012 - AT

A GLANCEA GLANCE

Objective to widen tax baseObjective to widen tax base Service Tax law to be shorter by about 40 percent Service Tax law to be shorter by about 40 percent Effective rate of Service Tax shall be 12.36 percent w.e.f. Effective rate of Service Tax shall be 12.36 percent w.e.f.

01.04.2012 including education cesses.01.04.2012 including education cesses. Definition of ‘service’ finds place in statutory provisions Definition of ‘service’ finds place in statutory provisions All services to be taxed including a set of services called All services to be taxed including a set of services called

‘declared services’‘declared services’ Negative list of services containing 17 broad service Negative list of services containing 17 broad service

categories to be out of Service Tax ambit.categories to be out of Service Tax ambit. Withdrawing of many existing exemptions / abetments or Withdrawing of many existing exemptions / abetments or

their rationalizationtheir rationalization

3939

MAJOR CHANGES IN SERVICE TAX MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - LAW BY The FINANCE ACT, 2012 -

AT A GLANCEAT A GLANCE

Place of provision of supply rules will determine the location of service Place of provision of supply rules will determine the location of service and become be basis of taxation.and become be basis of taxation.

Withdrawal of export of service rules and import of service rules in view Withdrawal of export of service rules and import of service rules in view of place of supply of service rules coming into operation.of place of supply of service rules coming into operation.

Concept of taxable territory and non- taxable territory brought in Concept of taxable territory and non- taxable territory brought in Basis of charge of Service Tax shifted under new section 66B. Basis of charge of Service Tax shifted under new section 66B. Taxation of Service to be determined by provision of service in taxable Taxation of Service to be determined by provision of service in taxable

territory and non taxable territory.territory and non taxable territory. Classification of service criteria replaced by new section 66F on Classification of service criteria replaced by new section 66F on

interpretation principles of specified description of service or bundled interpretation principles of specified description of service or bundled services. services.

4040

MAJOR CHANGES IN SERVICE TAX LAW MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - AT A BY The FINANCE ACT, 2012 - AT A

GLANCEGLANCE

Consequent upon change in service tax rates, there is change of service Consequent upon change in service tax rates, there is change of service tax rate in composition scheme and specified rates w.e.f. 1.4.2012 tax rate in composition scheme and specified rates w.e.f. 1.4.2012 (Composition scheme withdrawn w.e.f 1.7.2012.(Composition scheme withdrawn w.e.f 1.7.2012.

Penalty wavier for arrears paid within specified time in respect of renting Penalty wavier for arrears paid within specified time in respect of renting of immovable property service.of immovable property service.

Retrospective exemption to road repairs and repairs etc of non Retrospective exemption to road repairs and repairs etc of non commercial government buildings.commercial government buildings.

Under new reverse charge mechanism, onus of paying Service Tax will be Under new reverse charge mechanism, onus of paying Service Tax will be shared by service provider and service receiver in case of specified shared by service provider and service receiver in case of specified services.services.

Service Tax on taxable services provided by service provider located in Service Tax on taxable services provided by service provider located in Jammu & Kashmir state liable under reverse charge.Jammu & Kashmir state liable under reverse charge.

to be to be contd….contd….

4141

MAJOR CHANGES IN SERVICE TAX LAW MAJOR CHANGES IN SERVICE TAX LAW BY The FINANCE ACT, 2012 - AT A BY The FINANCE ACT, 2012 - AT A

GLANCEGLANCE

Change in valuation rules in relation to works contracts and outdoor catering / Change in valuation rules in relation to works contracts and outdoor catering / supply of food.supply of food.

Provision introduced for date of determination of value of service, tax rate and Provision introduced for date of determination of value of service, tax rate and rate of exchange.rate of exchange.

Payment of Service Tax on receipt basis for all service providers being individuals Payment of Service Tax on receipt basis for all service providers being individuals / firms / LLPs, if aggregate value of taxable services in previous year does not / firms / LLPs, if aggregate value of taxable services in previous year does not exceed Rs. 50 lakh.exceed Rs. 50 lakh.

Criteria for Rs 10 lakh threshold exemption changed. Criteria for Rs 10 lakh threshold exemption changed. Time limit for appeal by assessees to Commissioner (Appeals) reduced from 3 Time limit for appeal by assessees to Commissioner (Appeals) reduced from 3

months to 2 monthsmonths to 2 months Revision Application Authority and Settlement Commission provisions made Revision Application Authority and Settlement Commission provisions made

applicable to service tax.applicable to service tax. Special Audit of Service tax assesses by CAs /CWAs . Special Audit of Service tax assesses by CAs /CWAs . New Accounting Code – 00441089 (tax), 00441090 (other receipts), 00441093 New Accounting Code – 00441089 (tax), 00441090 (other receipts), 00441093

(penalties)(penalties)

4242

Goods & Service Tax Goods & Service Tax (The Future) (The Future)

GST: A Common TaxGST: A Common Tax

onon

Goods Services

4343

GST - Journey so farGST - Journey so far

Budget 2012Budget 2012 No announcement on GST rollout date No announcement on GST rollout date GST to be implemented in consultation with the States at the earliest GST to be implemented in consultation with the States at the earliest GST network (GSTN) likely to be in place from August, 2012GST network (GSTN) likely to be in place from August, 2012 GSTN to implement common PAN based registration, return filing and GSTN to implement common PAN based registration, return filing and

processing of payments for centre and all states on a shared platform.processing of payments for centre and all states on a shared platform. Bringing closer of Service Tax and Central Excise for transition to GST Bringing closer of Service Tax and Central Excise for transition to GST Drafting of model legislation for CGST and SGST under progress.Drafting of model legislation for CGST and SGST under progress. Common forms for Service Tax and Central Excise registration and Common forms for Service Tax and Central Excise registration and

return proposed.return proposed. Place of Supply Rules, 2012 to trigger debate to assess issues that may Place of Supply Rules, 2012 to trigger debate to assess issues that may

arise in taxation of inter state services for eventual launch of GST. arise in taxation of inter state services for eventual launch of GST.

4444

The Journey – beginning The Journey – beginning of end…….of end…….

Past Present Past Present FutureFuture

National GST Dual GST ???????

…or end of beginning !!

4545

AbatementsAbatements

• Besides full exemption to 39 categories of services vide Besides full exemption to 39 categories of services vide Notification No. 25/2012-ST dated 20.06.2012Notification No. 25/2012-ST dated 20.06.2012

• Earlier there were a number of exemption notifications that Earlier there were a number of exemption notifications that prescribed the abatements for various categories of services prescribed the abatements for various categories of services (including 1/2006)(including 1/2006)

• Abatements merged into a single Notification No 26/2102 - ST Abatements merged into a single Notification No 26/2102 - ST dated 20/6/12 dated 20/6/12

• Valuation rules contain abatement for Works Contract and Valuation rules contain abatement for Works Contract and Supply of Food ServicesSupply of Food Services

4646

Specific AbatementsSpecific AbatementsSl. No.Sl. No. Description of taxable serviceDescription of taxable service Tax Percent-Tax Percent-

ageage

ConditionsConditions

1 1 Financial leasing services including Financial leasing services including

equipment leasing and hire purchase equipment leasing and hire purchase

10 10 Nil Nil

2 2 Transport of goods by rail Transport of goods by rail ( now ( now

exempt till 30.9.2012) exempt till 30.9.2012)

30 30 NilNil

3 3 Transport of passengers, with or Transport of passengers, with or

without accompanied belongings by without accompanied belongings by

rail ( now exempt till 30.9.2012) rail ( now exempt till 30.9.2012)

30 30 NilNil

4 4 Supply of food or any other article of Supply of food or any other article of

human consumption or any drink, in a human consumption or any drink, in a

premises, including hotel, convention premises, including hotel, convention

center, club, pandal, shamiana or any center, club, pandal, shamiana or any

place specially arranged for place specially arranged for

organizing a function organizing a function

70 70 CENVAT credit on any CENVAT credit on any

goods goods classifiable under classifiable under

chapter 1 to 22 of the chapter 1 to 22 of the

Central Excise Tariff Act, Central Excise Tariff Act,

1985 has not been 1985 has not been

taken under the taken under the

provisions of the provisions of the

CENVAT Credit Rules, CENVAT Credit Rules,

2004. 2004.

4747

Specific AbatementsSpecific Abatements

5 5 Transport of passengers by air, Transport of passengers by air,

with or without accompanied with or without accompanied

belongings belongings

40 40 CENVAT credit CENVAT credit on inputs or capitalon inputs or capital

goods, used for providing the goods, used for providing the

taxable service, has not been taken taxable service, has not been taken

under the provisions of the CENVAT under the provisions of the CENVAT

Credit Rules, 2004. Credit Rules, 2004.

6 6 Renting of hotels, inns, guest Renting of hotels, inns, guest

houses, clubs, campsites or houses, clubs, campsites or

other commercial places meant other commercial places meant

for residential or lodging for residential or lodging

purposes purposes

60 60 Same as above. Same as above.

7 7 Transport of goods by road by Transport of goods by road by

Goods Transport Agency Goods Transport Agency

25 25 CENVAT credit on CENVAT credit on inputs, capital inputs, capital

goods and input servicesgoods and input services, used for , used for

providing the taxable service, has providing the taxable service, has

not been taken not been taken under the under the

provisions of the CENVAT Credit provisions of the CENVAT Credit

Rules, 2004. Rules, 2004.

8 8 Services provided in relation to Services provided in relation to

chit chit


4848


9 9 Renting of any motor vehicle Renting of any motor vehicle

designed to carry passengers designed to carry passengers


10 10 Transport of goods in a vessel Transport of goods in a vessel

from one port to another from one port to another


11 11 Tour operator services Tour operator services

(i) provided by a tour operator in (i) provided by a tour operator in

relation to a package tour relation to a package tour

25 25 (i) CENVAT credit on (i) CENVAT credit on inputs, inputs,

capital goods and input capital goods and input

services,services, used for providing used for providing

the taxable service, has not the taxable service, has not

been taken under the been taken under the

provisions of the CENVAT provisions of the CENVAT


(ii) The bill issued for this (ii) The bill issued for this

purpose indicates that it is purpose indicates that it is

inclusive of charges for such inclusive of charges for such

a tour. a tour.

4949

(ii) provided by a tour (ii) provided by a tour

operator in relation to a operator in relation to a

tour, solely arranging or tour, solely arranging or

booking accommodationbooking accommodation

10 10 (i) CENVAT credit on (i) CENVAT credit on inputs, capital inputs, capital

goods and input services,goods and input services, used for used for

providing the taxable service, has providing the taxable service, has

not been taken under the not been taken under the

provisions of the CENVAT Credit provisions of the CENVAT Credit

Rules, 2004. Rules, 2004.

(ii) The invoice, bill or challan (ii) The invoice, bill or challan

issued indicates that it is towards issued indicates that it is towards

the charges for such the charges for such

accommodation. accommodation.

(iii) This exemption shall not apply (iii) This exemption shall not apply

in such cases where the invoice, bill in such cases where the invoice, bill

or challan issued by the tour or challan issued by the tour

operator, in relation to a tour, only operator, in relation to a tour, only

includes the service charges for includes the service charges for

arranging or booking arranging or booking

accommodation for any person and accommodation for any person and

does not include the cost of such does not include the cost of such

accommodation. accommodation.


5050

(iii) Services, other (iii) Services, other

than services specified than services specified

above in (i) or (ii) above in (i) or (ii)

40 40 (i) CENVAT credit on (i) CENVAT credit on inputs, inputs,

capital goods and input capital goods and input

services,services, used for providing used for providing

the taxable service, has not the taxable service, has not

been taken under the been taken under the

provisions of the CENVAT provisions of the CENVAT


(ii) The bill issued indicates (ii) The bill issued indicates

that the amount charged in that the amount charged in

the bill is the gross amount the bill is the gross amount

charged for such a tour. charged for such a tour.


5151

12.12. Construction of a complex, Construction of a complex, building, civil structure or building, civil structure or a part thereof, intended a part thereof, intended for a sale to a buyer, for a sale to a buyer, wholly or partly except wholly or partly except where entire consideration where entire consideration is received after issuance is received after issuance of completion certificate by of completion certificate by the competent authority the competent authority

25 25 (i) CENVAT credit on (i) CENVAT credit on inputs inputs used for providing the used for providing the taxable service has not taxable service has not been taken under the been taken under the provisions of the CENVAT provisions of the CENVAT Credit Rules, 2004.Credit Rules, 2004.

(ii) The value of land is (ii) The value of land is included in the amount included in the amount charged from the charged from the

service recipient. service recipient.


5252

Changes in Reverse Changes in Reverse Charge MechanismCharge Mechanism

W.e.f. 1.7.2012 a new scheme of taxation is being brought W.e.f. 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of service tax into effect whereby the liability of payment of service tax shall be both on the service provider and the service shall be both on the service provider and the service recipient (Notification No. 30/ 2012 dated 20.6.2012 )recipient (Notification No. 30/ 2012 dated 20.6.2012 )

The extent to which tax liability has to be discharged by the The extent to which tax liability has to be discharged by the service receiver specified in the notification.service receiver specified in the notification.

Credit of tax paid by service recipientCredit of tax paid by service recipient

The credit of tax paid by the service recipient under partial The credit of tax paid by the service recipient under partial reverse charge would be available on the basis on the tax reverse charge would be available on the basis on the tax payment challanpayment challan

5353

Reverse Charge Mechanism Reverse Charge Mechanism under various servicesunder various services

Sr.NoSr.No Description of ServiceDescription of Service ServiceService providerprovider Service receiverService receiver

1.1. Services provided by an insurance Services provided by an insurance agent to any person carrying on agent to any person carrying on insurance businessinsurance business

NilNil 100%100%

2.2. Services provided by a goods Services provided by a goods transport agency in respect transport agency in respect of transportation of goods by roadof transportation of goods by road

NilNil 100%100%

3.3. Services provided by way of Services provided by way of sponsorshipsponsorship

NilNil 100%100%

5454

Reverse Charge Mechanism Reverse Charge Mechanism under various servicesunder various services

4.4. Services provided by an arbitral tribunalServices provided by an arbitral tribunal NilNil 100%100%

5.5. Services provided by individual advocate Services provided by individual advocate or a firm of advocates by way of legal or a firm of advocates by way of legal servicesservices

NilNil 100%100%

5A5A Services provided by director to the Services provided by director to the company (w.e.f. 7.08.2012)company (w.e.f. 7.08.2012)

NilNil 100%100%

6.6. Services provided by Government or Services provided by Government or local authority by way of support services local authority by way of support services excluding,- excluding,- (1)(1) renting of immovable property, renting of immovable property, (2)(2) postal services postal services (3)(3) transport of goods / passengers transport of goods / passengers (4)(4) air craft or vessel air craft or vessel

NilNil 100%100%

5555

Reverse Charge Mechanism under Reverse Charge Mechanism under various servicesvarious services

7.7. Hiring of Motor Vehicle Hiring of Motor Vehicle (a) renting of a motor vehicle (a) renting of a motor vehicle designed to carry passengers designed to carry passengers on on abated valueabated value to any person not to any person not engaged in the similar line of engaged in the similar line of businessbusiness(b) renting of a motor vehicle (b) renting of a motor vehicle designed to carry passengers designed to carry passengers on non on non abated valueabated value to any person who is not to any person who is not engaged in the similar line of engaged in the similar line of businessbusiness

NilNil

60%60%

100 %100 %

40%40%

8.8. Services provided by way of supply of Services provided by way of supply of manpower or manpower or security services security services for for any purpose any purpose (w.e.f. 7.08.2012)(w.e.f. 7.08.2012)

25%25% 75 %75 %

5656

Reverse Charge Mechanism under Reverse Charge Mechanism under various servicesvarious services

9.9. Services provided in service portion in Services provided in service portion in execution of works contractexecution of works contract 50%50% 50%50%

10.10. Services provided by any person who Services provided by any person who is located in a non-taxable territory is located in a non-taxable territory and received by any person located in and received by any person located in the taxable territorythe taxable territory

NilNil 100%100%

5757

Appeal before Commissioner Appeal before Commissioner (Appeals)(Appeals)

Time Period for Appeal Time Period for Appeal

Prior to 28.5.2012Prior to 28.5.2012 (sub-section 3)(sub-section 3)

To appeal within three months from date of To appeal within three months from date of communication of order appealed against communication of order appealed against

Period of 3 months can be extended by further 3 months Period of 3 months can be extended by further 3 months (total 6 months) by Commissioner (Appeals)(total 6 months) by Commissioner (Appeals)

Condonation of delay/ extension beyond 3 months is Condonation of delay/ extension beyond 3 months is beyond the power of Commissioner (Appeal)beyond the power of Commissioner (Appeal)

to be contd……….to be contd……….

5858

Appeal before Commissioner Appeal before Commissioner (Appeals)(Appeals)

w.e.f. 28.5.2012 (sub-section 3A)w.e.f. 28.5.2012 (sub-section 3A)

To appeal within two months from date of To appeal within two months from date of communication of order passed after 28.05.2012 communication of order passed after 28.05.2012

Period of 2 months can be extended by further 1 Period of 2 months can be extended by further 1 month (total 3 months) by Commissioner (Appeals)month (total 3 months) by Commissioner (Appeals)

Condonation of delay/ extension beyond 1 month is Condonation of delay/ extension beyond 1 month is beyond the power of Commissioner (Appeal)beyond the power of Commissioner (Appeal)

5959

Revision MechanismRevision Mechanism

Introduced by Finance Act, 2012Introduced by Finance Act, 2012 Section 35EE of Central Excise Act, 1944 made applicable Section 35EE of Central Excise Act, 1944 made applicable

to Service Tax w.e.f. 28.05.2012 to Service Tax w.e.f. 28.05.2012 All appeals against Commissioner (Appeals) orders lied All appeals against Commissioner (Appeals) orders lied

before Tribunal prior to 28.05.2012.before Tribunal prior to 28.05.2012. Like Excise, in Service Tax also, revision authority shall hear Like Excise, in Service Tax also, revision authority shall hear

matters relating to –matters relating to – Cenvat Credit Cenvat Credit Rebate of Exports Rebate of Exports

to be contd……..to be contd……..

6060

Revision MechanismRevision Mechanism

Revision by Central Government (Joint Secretary in Revision by Central Government (Joint Secretary in MOF)MOF)

Revision application to be heard and order passedRevision application to be heard and order passed Order may be annulled or modifiedOrder may be annulled or modified Minimum amount of dispute Rs. 5000Minimum amount of dispute Rs. 5000 To be filed within 3 months of communication of orderTo be filed within 3 months of communication of order Revision can be sought by CCE/ assesseeRevision can be sought by CCE/ assessee Central Government can also Central Government can also suo motosuo moto revise revise No provisions for appeal against revisionary orderNo provisions for appeal against revisionary order Only remeady is writ Jurisdiction Only remeady is writ Jurisdiction Quasi judicial proceedingsQuasi judicial proceedings

6161

Settlement Provisions in Settlement Provisions in Service TaxService Tax

Introduced by Finance Act, 2012 w.e.f. 28.5.2012Introduced by Finance Act, 2012 w.e.f. 28.5.2012 Sections 31, 32 and 32A to 32P of Central Excise Act, 1944 Sections 31, 32 and 32A to 32P of Central Excise Act, 1944

made applicable to Service Tax (section 83 of Finance Act, made applicable to Service Tax (section 83 of Finance Act,

1994) 1994) Service Tax (Settlement of Cases) Rules, 2012 notified Service Tax (Settlement of Cases) Rules, 2012 notified

(N.No. 16/2012-ST dated 28.05.2012)(N.No. 16/2012-ST dated 28.05.2012) Objective to encourage quick settlement of disputes and Objective to encourage quick settlement of disputes and

save business from prosecution / penalties save business from prosecution / penalties Principal bench at Delhi (benches at Mumbai, Calcutta, Principal bench at Delhi (benches at Mumbai, Calcutta,

Chennai) Chennai)

6262

Benefits of SettlementBenefits of Settlement

Quick settlement of disputes to avoid prolonged Quick settlement of disputes to avoid prolonged litigation litigation

A one time tax evader or an un-intending defaulter A one time tax evader or an un-intending defaulter can make clean his affairs through Settlementcan make clean his affairs through Settlement

Any defaulting person can admit his guilt, pay taxes Any defaulting person can admit his guilt, pay taxes with applicable interest and avoid further liabilitieswith applicable interest and avoid further liabilities

Settlement Commission can grant waiver/ reduction Settlement Commission can grant waiver/ reduction of penalty, fine or interest of penalty, fine or interest

Settlement Commission can grant immunity from Settlement Commission can grant immunity from prosecution to assessee, its directors and partnersprosecution to assessee, its directors and partners

6363

Settlement of CasesSettlement of Cases

Any assessee can approach the Settlement Commission Any assessee can approach the Settlement Commission The proceedings / cases should be pending with aggregate The proceedings / cases should be pending with aggregate

amount of more than Rs 3 lakh involved amount of more than Rs 3 lakh involved Application to Settlement Commission should be made with Application to Settlement Commission should be made with

prescribed fee and in prescribed formprescribed fee and in prescribed form Application once made, can not be withdrawnApplication once made, can not be withdrawn Application can be made by any assessee including Application can be made by any assessee including

directors or partners of firmsdirectors or partners of firms Application can also be filed by two or more Application can also be filed by two or more assessees and joint / co - noticeesassessees and joint / co - noticees proceedings or case must be pending before the proceedings or case must be pending before the

adjudicating authority on the date of application. adjudicating authority on the date of application. A show cause notice should have been issuedA show cause notice should have been issued

6464

Settlement of CasesSettlement of Cases

Application must make full and true disclosures before the Application must make full and true disclosures before the Settlement Commission which is the very basis of Settlement Commission which is the very basis of settlement.settlement.

Issues relating to recovery of Cenvat credit can also be Issues relating to recovery of Cenvat credit can also be taken up before the Settlement Commissiontaken up before the Settlement Commission

Cases involving only penalty or cases which are pending Cases involving only penalty or cases which are pending before court or Appellate Tribunal shall not be entertained before court or Appellate Tribunal shall not be entertained by the Settlement Commission.by the Settlement Commission.

Cases involving interpretation of classification and valuation Cases involving interpretation of classification and valuation can not be taken up by Settlement Commissioncan not be taken up by Settlement Commission . .

6565

Retrospective Retrospective AmendmentsAmendments

• Special provision for exemption in certain cases Special provision for exemption in certain cases relating to management etc of roads (Section 97) relating to management etc of roads (Section 97)

• Special provision for exemption in certain cases Special provision for exemption in certain cases relating to management etc of non-commercial relating to management etc of non-commercial Government buildings (Section 98) Government buildings (Section 98)

• Exemption to club & association including Exemption to club & association including cooperative societies for projects meant for cooperative societies for projects meant for treatment of effluents / solid waste w.e.f. treatment of effluents / solid waste w.e.f. 16.6.2005 (Section 145) 16.6.2005 (Section 145)

6666

Place of Provision of Services Rules, Place of Provision of Services Rules, 2012 (Section 66C)2012 (Section 66C)

These rules are primarily meant for persons who deal in These rules are primarily meant for persons who deal in cross-border services and state of Jammu and Kashmir.cross-border services and state of Jammu and Kashmir.

The service providers operating within India from The service providers operating within India from

multiple locations, without having centralized multiple locations, without having centralized registration and services that are wholly consumed registration and services that are wholly consumed within a SEZ, to avail the outright exemption will find within a SEZ, to avail the outright exemption will find them useful in determining the precise taxable them useful in determining the precise taxable jurisdiction. jurisdiction.

6767

Basis of classificationBasis of classification Location of service receiver [R. 3]Location of service receiver [R. 3] Performance of service/ Location of immovable Performance of service/ Location of immovable

property (also include multiple locations of property (also include multiple locations of performance) [R.4,5,6,7]performance) [R.4,5,6,7]

Both provider and receiver in India [R. 8]Both provider and receiver in India [R. 8] Location of service provider [R.9]Location of service provider [R.9] Service of transportation of goods and services Service of transportation of goods and services

[R. 10,11][R. 10,11] Services provided on board conveyance [R.12]Services provided on board conveyance [R.12] Order of application [R.14]Order of application [R.14]

67

6868

Place of Provision of Services Place of Provision of Services Rules, 2012 (Section 66C)Rules, 2012 (Section 66C)

What is the place of provision of servicesWhat is the place of provision of services

Performance based services – Location of performancePerformance based services – Location of performance

Immovable property related services – Location of Immovable property related services – Location of immovable property.immovable property.

Services relating to events – Location of event held.Services relating to events – Location of event held.

6969

Place of Provision of Services Place of Provision of Services Rules, 2012 (Section 66C)Rules, 2012 (Section 66C)

Services provided at more than one location – Location in the taxable territory Services provided at more than one location – Location in the taxable territory where the greatest proportion of service is provided. where the greatest proportion of service is provided.

Services where both service provider and receiver are located in the taxable territory Services where both service provider and receiver are located in the taxable territory – Location of service receiver– Location of service receiver

Specified services ( banking, online , Intermediary, transport hiring) – Location of Specified services ( banking, online , Intermediary, transport hiring) – Location of service provider.service provider.

Goods transportation services – Place of destination of goods. (In GTA Service – Goods transportation services – Place of destination of goods. (In GTA Service – Location of the person liable to pay taxLocation of the person liable to pay tax

Passenger Transportation service – Place were the passenger embarks. Passenger Transportation service – Place were the passenger embarks.

Services provided on board a conveyance – Location of first scheduled point of Services provided on board a conveyance – Location of first scheduled point of departure.departure.

Where more than one rule is applicable(which merit equal consideration), the later Where more than one rule is applicable(which merit equal consideration), the later rule will applyrule will apply

7070

Input servicesInput services

Input Services amended to includeInput Services amended to include

‘‘General Insurance’,General Insurance’, ‘ ‘servicing, repair and maintenanceservicing, repair and maintenance’, ’, of motor vehicles covered as input service in case of of motor vehicles covered as input service in case of vehicle manufacturers and insurance companiesvehicle manufacturers and insurance companies

Renting of motor vehicle Renting of motor vehicle availed by a person for whom availed by a person for whom motor vehicle is capital goods, shall be considered as motor vehicle is capital goods, shall be considered as input servicesinput services

For others these services are excludedFor others these services are excluded

7171

Input services and inputs – Input services and inputs – works contracts and works contracts and

builder’s servicesbuilder’s services

Input definitionInput definition

…….. but excludes-.. but excludes-

(B) any goods used for -(B) any goods used for -(a) (a) construction or execution of works contract of a building or a civil construction or execution of works contract of a building or a civil

structure or a part thereof; orstructure or a part thereof; or

(b) laying of foundation or making of structures for support of capital (b) laying of foundation or making of structures for support of capital goods,goods,

except for the provision of service portion in the execution of a except for the provision of service portion in the execution of a worksworks contract or contract or construction service as listed under clause construction service as listed under clause (b) of section 66E of the Act(b) of section 66E of the Act;;

7272

Input services and inputs – Input services and inputs – works contracts and works contracts and

builder’s servicesbuilder’s servicesbut excludes-but excludes-

(1) (1) service portion in the execution of a works contractservice portion in the execution of a works contract and and

(2) construction services including (2) construction services including

(3) service listed under clause (b) of section 66E of the Finance (3) service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as Act (hereinafter referred as specified servicesspecified services) )

in so far as they are used for -in so far as they are used for -

(a) construction or execution of works contract of a building or a (a) construction or execution of works contract of a building or a civil structure or a part thereof; orcivil structure or a part thereof; or

(b) laying of foundation or making of structures for support of (b) laying of foundation or making of structures for support of capital goods, capital goods,

- except for the provision of one or more of the specified - except for the provision of one or more of the specified services; orservices; or]]

7373

Service tax paid on Service tax paid on reverse chargereverse charge

Output serviceOutput service

2(p) “output service”2(p) “output service” means any service provided by means any service provided by

a provider of service located in the taxable territory a provider of service located in the taxable territory

but shall not include a service,-but shall not include a service,-

• specified in specified in section 66D of the Finance Act; or of the Finance Act; or

• where the whole of service tax is liable to be paid where the whole of service tax is liable to be paid

by the recipient of serviceby the recipient of service

http://www.taxmanagementindia.com/visitor/detail_act.asp?ID=16464

7474

Service tax paid on reverse Service tax paid on reverse chargecharge

5B. Refund of CENVAT credit to service providers 5B. Refund of CENVAT credit to service providers

providing services taxed on reverse charge basis.-providing services taxed on reverse charge basis.-

A provider of service providing services notified under sub-A provider of service providing services notified under sub-

section (2) of section (2) of section 68 of the Finance Act and of the Finance Act and

being unable to utilise the CENVAT credit being unable to utilise the CENVAT credit

availed on inputs and input services for payment of service availed on inputs and input services for payment of service

tax on such output services, tax on such output services,

shall be allowed refund of such unutilised CENVAT credit shall be allowed refund of such unutilised CENVAT credit

subject to procedure, safeguards, conditions and limitations, subject to procedure, safeguards, conditions and limitations,

as may be specified by the Board by notification in the as may be specified by the Board by notification in the

Official GazetteOfficial Gazette

http://www.taxmanagementindia.com/visitor/detail_act.asp?ID=541

7575

Amendment in Cenvat Amendment in Cenvat Credit RulesCredit Rules

Rule 7. Manner of distribution of credit by input service Rule 7. Manner of distribution of credit by input service distributordistributor Input service distributor to distribute the credit on service tax Input service distributor to distribute the credit on service tax paid on input service to its manufacturing units or units providing paid on input service to its manufacturing units or units providing output service, subject to the following conditions - output service, subject to the following conditions - (a) the credit distributed against a document does not exceed the (a) the credit distributed against a document does not exceed the amount of service tax paid thereon amount of service tax paid thereon (b) credit of service tax attributable to service used in a unit (b) credit of service tax attributable to service used in a unit exclusively engaged in manufacture of exempted goods or exclusively engaged in manufacture of exempted goods or providing of exempted services shall not be distributedproviding of exempted services shall not be distributed(c)credit of service tax attributable to service used wholly in a unit (c)credit of service tax attributable to service used wholly in a unit shall be distributed only to that unit shall be distributed only to that unit (d)credit of service tax attributable to service used in more than (d)credit of service tax attributable to service used in more than one unit shall be distributed prorata on the basis of the turnover one unit shall be distributed prorata on the basis of the turnover of the concerned unit to the sum total of the turnover of all the of the concerned unit to the sum total of the turnover of all the units to which the service relatesunits to which the service relates

7676

Amendment in Cenvat Credit Amendment in Cenvat Credit RulesRules

““No interestNo interest” on Cenvat credit wrongly availed ” on Cenvat credit wrongly availed but not utilised but not utilised

Rule 14 amended to provide that interest is chargeable Rule 14 amended to provide that interest is chargeable if Cenvat credit is “if Cenvat credit is “wrongly availed and utilizedwrongly availed and utilized”. Thus, ”. Thus, no interest is chargeable if Cenvat credit is wrongly no interest is chargeable if Cenvat credit is wrongly availed but remains unutilized. availed but remains unutilized.

However, rule 15 relating to penalty has not been However, rule 15 relating to penalty has not been amended and therefore in deserving cases, penalty amended and therefore in deserving cases, penalty may be charged even if wrongly availed Cenvat credit may be charged even if wrongly availed Cenvat credit is not utilized. is not utilized.

7777

Service Tax Rules - changes effective Service Tax Rules - changes effective from 01.04.2012from 01.04.2012

Self adjustment of excess tax paidSelf adjustment of excess tax paid Excess amount can be adjusted without any monetary limits provided Excess amount can be adjusted without any monetary limits provided

excess payment is not on account of interpretation of law, taxability, excess payment is not on account of interpretation of law, taxability, classification, valuation or applicability of any exemption Notification. classification, valuation or applicability of any exemption Notification. (Rule 6 (4A))(Rule 6 (4A))

Small service providers to pay tax on receipt basisSmall service providers to pay tax on receipt basis In respect of individual / firms whose value of taxable services from In respect of individual / firms whose value of taxable services from

multiple locations is Rs.50 lakhs or less in the previous financial year multiple locations is Rs.50 lakhs or less in the previous financial year option available to pay tax upto Rs.50 lakhs in the current financial year option available to pay tax upto Rs.50 lakhs in the current financial year based on receipt of payment.based on receipt of payment.

7878

Amendments in Finance Act, 1994- Amendments in Finance Act, 1994- changes effective from 28.05.2012changes effective from 28.05.2012

Special audit in service tax (Section 72A)Special audit in service tax (Section 72A) If Commissioner has reasons to believe that tax payer If Commissioner has reasons to believe that tax payer

has failed to declare the correct value of service, has failed to declare the correct value of service, taken CENVAT by fraud, services in multiple locations taken CENVAT by fraud, services in multiple locations etc, he can order special audit by CA/CWA even if it etc, he can order special audit by CA/CWA even if it is already audited under any other law.is already audited under any other law.

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