CA N Balasubramanian 6/6/20161. Different Stroke  'Service' has been defined in clause (44) of the new section 65B and means -clause (44) of the new.

CA N Balasubramanian 6/6/20161

Different Stroke  'Service' has been defined in clause (44) of the new section 65B and means -clause (44) of the new section 65B  ♦ any activity  ♦ for consideration  ♦ carried out by a person for another  ♦ and includes a declared service. 6/6/20162

What is Service  ♦ any activity that constitutes only a transfer in title of (i) goods or (ii) immovable property by way of sale, gift or in any other manner  ♦ (iii) 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 Constitutionclause (29A) of article 366  ♦ a transaction only in (iv) money or (v) actionable claim  ♦ a service provided by an employee to an employer in the course of the employment.  ♦ fees payable to a court or a tribunal set up under a law for the time being in force 6/6/20163

Activity  Activity could be active or passive and would also include forbearance to act.  Agreeing to an obligation to refrain from an act or to tolerate an act or a situation has been specifically listed as a declared service under section 66E of the Act.section 66E 6/6/20164

Non Monetary Consideration  Non-monetary consideration essentially means compensation in kind such as the following:  ♦ Supply of goods and services in return for provision of service  ♦ Refraining or forbearing to do an act in return for provision of service  ♦ Tolerating an act or a situation in return for provision of a service  ♦ Doing or agreeing to do an act in return for provision of service 6/6/20165

Service when taxable  Rendered by one person to another  For a consideration  Self Service is not taxable  Exception: Two exceptions have been carved out to the general rule  ♦ an establishment of a person located in taxable territory and another establishment of such person located in non-taxable territory are treated as establishments of distinct persons. [Similar provision exists presently in section 66A (2)].section 66A (2)  ♦ an unincorporated association or body of persons and members thereof are also treated as distinct persons. [Also exists presently in part as explanation to section 65]. 6/6/20166

Charge of Service Tax  [Charge of service tax on and after Finance Act, 2012.  66B. There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent. on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed.]  2 [Explanation.- For the removal of doubts, it is hereby clarified that the references to the provisions of section 66 in Chapter V of the Finance Act, 1994(32 of 1994) or any other Act, for the purpose of levy and collection of service tax, shall be construed as references to the provisions of section 66B.]section 66Finance Act, 1994(32 of 1994) 6/6/20167

Negative List  The negative list of service is specified in the Act itself in Section 66 D. Section 66 D  (a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere—  (i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;  (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;  (iii) transport of goods or passengers; or  (iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities; 6/6/20168

Negative List- Contd  (b) services by the Reserve Bank of India;  (c) services by a foreign diplomatic mission located in India;  (d) services relating to agriculture or agricultural produce by way of—  (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;  (ii) supply of farm labour; 6/6/20169

Negative List- Contd  (iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;  (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;  (v) loading, unloading, packing, storage or warehousing of agricultural produce;  (vi) agricultural extension services; 6/6/201610

Negative List- Contd  (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce;  (e) trading of goods;  (f) any process amounting to manufacture or production of goods;  (g) selling of space or time slots for advertisements other than advertisements broadcast by radio or television; 6/6/201611

Negative List- Contd  (h) service by way of access to a road or a bridge on payment of toll charges;  (i) betting, gambling or lottery;  (j) admission to entertainment events or access to amusement facilities;  (k) transmission or distribution of electricity by an electricity transmission or distribution utility; 6/6/201612

Negative List- Contd  (l) services by way of—  (i) pre-school education and education up to higher secondary school or equivalent;  (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;  (iii) education as a part of an approved vocational education course; 6/6/201613

Negative List- Cont  (m) services by way of renting of residential dwelling for use as residence;  (n) services by way of—  (i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;  (ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers; 6/6/201614

Negative List- Cont  ) service of transportation of passengers, with or without accompanied belongings, by—  (i) a stage carriage;  (ii) railways in a class other than—  * (A) first class; or  *(B) an air conditioned coach;  (iii) metro, monorail or tramway;  (iv) inland waterways;  * Exempted up to 30.09.2012 6/6/201615

Negative List- Cont  (v) public transport, other than predominantly for tourism purpose, in a vessel, between places located in India; and  (vi) metered cabs, radio taxis or auto rickshaws;  (p) services by way of transportation of goods—  (i) by road except the services of—  (A) a goods transportation agency; or  (B) a courier agency;  (ii) by an aircraft or a vessel from a place outside India upto the customs station of clearance in India ; or  (iii) by inland waterways;  q) funeral, burial, crematorium or mortuary services including transportation of the deceased.]  6/6/201616

Declared Services  6E. The following shall constitute declared services, namely:––  (a) renting of immovable property;  (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion-certificate by the competent authority. 6/6/201617

Declared Services  (I) the expression "competent authority" means the Government or any authority authorized to issue completion certificate under any law for the time being in force and in case of nonrequirement of such certificate from such authority, from any of the following, namely:––  (A) architect registered with the Council of Architecture constituted under the Architects Act, 1972; (20 of 1972.) or  (B) chartered engineer registered with the Institution of Engineers (India); or  (C) licensed surveyor of the respective local body of the city or town or village or development or planning authority;  (II) the expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure; 6/6/201618

Declared Services  (c) temporary transfer or permitting the use or enjoyment of any intellectual property right;  (d) development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software; 6/6/201619

Declared Services  (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;  (f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods; 6/6/201620

Declared Services  (g) activities in relation to delivery of goods on hire purchase or any system of payment by instalments;  (h) service portion in the execution of a works contract;  (i) service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of the activity.] 6/6/201621

Some Important definitions  Section 65B Defines-  "advertisement" means any form of presentation for promotion of, or bringing awareness about, any event, idea, immovable property, person, service, goods or actionable claim through newspaper, television, radio or any other means but does not include any presentation made in person; 6/6/201622

Some Important definitions  "agriculture" means the cultivation of plants and rearing of all life-forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products;  "agricultural extension" means application of scientific research and knowledge to agricultural practices through farmer education or training; 6/6/201623

Some Important definitions  "agricultural produce" means any produce of agriculture on which either no further processing is done or such processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market; 6/6/201624

Some Important definitions  "amusement facility" means a facility where fun or recreation is provided by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks, theme parks or such other places but does not include a place within such facility where other services are provided; 6/6/201625

Some Important definitions  "approved vocational education course" means,––  (i) a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training offering courses in designated trades notified under the Apprentices Act, 1961; or  (ii) a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Union Ministry of Labour and Employment; or  (iii) a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India; 6/6/201626

Some Important definitions  "betting or gambling" means putting on stake something of value, particularly money, with consciousness of risk and hope of gain on the outcome of a game or a contest, whose result may be determined by chance or accident, or on the likelihood of anything occurring or not occurring; 6/6/201627

Some Important definitions  "business entity" means any person ordinarily carrying out any activity relating to industry, commerce or any other business or profession;  "courier agency" means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles; 6/6/201628

Some Important definitions  "entertainment event" means an event or a performance which is intended to provide recreation, pastime, fun or enjoyment, by way of exhibition of cinematographic film, circus, concerts, sporting event, pageants, award functions, dance, musical or theatrical performances including drama, ballets or any such event or programme; 6/6/201629

Some Important definitions  "goods" means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;  (26) "goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name calle 6/6/201630

Some Important definitions  "information technology software" means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment; 6/6/201631

Some Important definitions  local authority" means-  (a) a Panchayat as referred to in clause (d) of article 243 of the Constitution;  (b) a Municipality as referred to in clause (e) of article 243P of the Constitution;  (c) a Municipal Committee and a District Board, legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund;  (d) a Cantonment Board as defined in section 3 of the Cantonments Act, 2006; (41 of 2006.)  (e) a regional council or a district council constituted under the Sixth Schedule to the Constitution;  (f) a development board constituted under article 371 of the Constitution; or  (g) a regional council constituted under article 371A of the Constitutio 6/6/201632

Some Important definitions  "person" includes,––  (i) an individual,  (ii) a Hindu undivided family,  (iii) a company,  (iv) a society,  (v) a limited liability partnership,  (vi) a firm,  (vii) an association of persons or body of individuals, whether incorporated or not,  (viii) Government,  (ix) a local authority, or  (x) every artificial juridical person, not falling within any of the preceding sub-clause 6/6/201633

Some Important definitions  "process amounting to manufacture or production of goods" means a process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944 (1 of 1944.) or any process amounting to manufacture of alcoholic liquors for human consumption, opium, Indian hemp and other narcotic drugs and narcotics on which duties of excise are leviable under any State Act for the time being in force; 6/6/201634

Some Important definitions  "renting" means allowing, permitting or granting access, entry, occupation, use or any such facility, wholly or partly, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, licensing or other similar arrangements in respect of immovable property; 6/6/201635

Some Important definitions  "support services" means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis; 6/6/201636

Some Important definitions  "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any moveable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property; 6/6/201637

Exemptions  1. Services provided to the United Nations or a specified international organization;  2. Health care services by a clinical establishment, an authorised medical practitioner or para-medics;  3. Services by a veterinary clinic in relation to health care of animals or birds;  4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;section 12AAIncome tax Act, 1961 (43 of 1961 6/6/201638

Exemptions  5. Services by a person by way of-  (a) renting of precincts of a religious place meant for general public; or  (b) conduct of any religious ceremony;  6, Services provided by-  (a) an arbitral tribunal to -  (i) any person other than a business entity; or  (ii) a business entity with a turnover up to rupees ten lakh in the preceding financial yea 6/6/201639

Exemptions  (b) an individual as an advocate or a partnership firm of advocates by way of legal services to,-  (i) an advocate or partnership firm of advocates providing legal services ;  (ii) any person other than a business entity; or  (iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or  (c) a person represented on an arbitral tribunal to an arbitral tribunal; 6/6/201640

Exemptions  7. Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India;  8. Services by way of training or coaching in recreational activities relating to arts, culture or sports; 6/6/201641

Exemptions  9. Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-  (a) auxiliary educational services; or  (b) renting of immovable property;  10. Services provided to a recognised sports body by-  (a) an individual as a player, referee, umpire, coach or team manager for participation in a sporting event organized by a recognized sports body;  (b) another recognised sports body; 6/6/201642

Exemptions  11. Services by way of sponsorship of sporting events organised,-  (a) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone;  (b) by Association of Indian Universities, Inter- University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;  (c) by Central Civil Services Cultural and Sports Board;  (d) as part of national games, by Indian Olympic Association; or  (e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme; 6/6/201643

Exemptions- Provided to Government  12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -  (a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;  (b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); 6/6/201644

Exemptions- Provided to Government  (c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;  (d) canal, dam or other irrigation works;  (e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or  (f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act; 6/6/201645

Exemptions – Construction Services, Repair Etc- All  3. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of,-  (a) a road, bridge, tunnel, or terminal for road transportation for use by general public;  (b) a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;  (c) a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public; section 12 AAIncome tax Act, 1961(43 of 1961)  (d) a pollution control or effluent treatment plant, except located as a part of a factory; or  (e) a structure meant for funeral, burial or cremation of deceased; 6/6/201646

Exemption – Construction Service  14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-  (a) an airport, port or railways, including monorail or metro;  (b) a single residential unit otherwise than as a part of a residential complex 6/6/201647

Exemption – Construction Service  (c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;  (d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or  (e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages; 6/6/201648

Exemptions- Others  15. Temporary transfer or permitting the use or enjoyment of a copyright covered under clauses (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films;  16. Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, excluding services provided by such artist as a brand ambassador;  17. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India; 6/6/201649

Exemptions- Hotels& Restaurants  18. Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a unit of accommodation below rupees one thousand per day or equivalent;  19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beverages; 6/6/201650

Exemptions- Transportation of Goods  20. Services by way of transportation by rail or a vessel from one place in India to another of the following goods -  (a) petroleum and petroleum products falling under Chapter heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); Central Excise Tariff Act, 1985 (5 of 1986)  (b) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;  (c) defence or military equipments; 6/6/201651

Exemptions- Transportation of Goods  d) postal mail or mail bags;  (e) household effects;  (f) newspaper or magazines registered with the Registrar of Newspapers;  (g) railway equipments or materials;  (h) agricultural produce;  (i) foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or  (j) chemical fertilizer and oilcakes; 6/6/201652

Exemptions- Transportation of Goods-GTA  21. Services provided by a goods transport agency by way of transportation of -  (a) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;  (b) goods where gross amount charged for the transportation of goods on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or  (c) goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty; 6/6/201653

Exemption – Vehicle on Hire  22. Services by way of giving on hire -  (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or  (b) to a goods transport agency, a means of transportation of goods; 6/6/201654

Exemption – Passenger Transport  23. Transport of passengers, with or without accompanied belongings, by -  (a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal;  (b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire; or  (c) ropeway, cable car or aerial tramway; 6/6/201655

Exemption- General Public Utility  24. Services by way of vehicle parking to general public excluding leasing of space to an entity for providing such parking facility;  25. Services provided to Government, a local authority or a governmental authority by way of -  (a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or  (b) repair or maintenance of a vessel or an aircraft; 6/6/201656

Exemption- Insurance  26. Services of general insurance business provided under following schemes -  (a) Hut Insurance Scheme;  (b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme);  (c) Scheme for Insurance of Tribals;  (d) Janata Personal Accident Policy and Gramin Accident Policy;  (e) Group Personal Accident Policy for Self- Employed Women;  (f) Agricultural Pumpset and Failed Well Insurance;  (g) premia collected on export credit insurance; 6/6/201657

Exemptions-Insurance  (h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture;  (i) Jan Arogya Bima Policy;  (j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);  (k) Pilot Scheme on Seed Crop Insurance;  (l) Central Sector Scheme on Cattle Insurance;  (m) Universal Health Insurance Scheme;  (n) Rashtriya Swasthya Bima Yojana; or  (o) Coconut Palm Insurance Scheme; 6/6/201658

Exdemption - Incubatee  27. Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:-  (a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and  (b) a period of three years has not been elapsed from the date of entering into an agreement as an incubatee; 6/6/201659

Exemption- Trade Union, Society  28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution -  (a) as a trade union;  (b) for the provision of carrying out any activity which is exempt from the levy of service tax; or  (c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex; 6/6/201660

Exemption-Sub Broker, Agents etc  29. Services by the following persons in respective capacities -  (a) sub-broker or an authorised person to a stock broker;  (b) authorised person to a member of a commodity exchange;  (c) mutual fund agent to a mutual fund or asset management company;  (d) distributor to a mutual fund or asset management co 6/6/201661

Exemption-Sub Broker, Agents et  (e) selling or marketing agent of lottery tickets to a distributer or a selling agent;  (f) selling agent or a distributer of SIM cards or recharge coupon vouchers;  (g) business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or  (h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt; 6/6/201662

Exemption- intermediate production process as job work  30. Carrying out an intermediate production process as job work in relation to -  (a) agriculture, printing or textile processing;  (b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act,1985 (5 of 1986);Central Excise Tariff Act,1985 (5 of 1986); 6/6/201663

Exemption- intermediate production process as job work  (c) any goods on which appropriate duty is payable by the principal manufacturer; or  (d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year; 6/6/201664

Exemptions- Telephone Etc  31. Services by an organiser to any person in respect of a business exhibition held outside India;  32. Services by way of making telephone calls from -  (a) departmentally run public telephone;  (b) guaranteed public telephone operating only for local calls; or  (c) free telephone at airport and hospital where no bills are being issued;  33. Services by way of slaughtering of bovine animals; 6/6/201665

Exemptions- Import of Services  34. Services received from a provider of service located in a non- taxable territory by -  (a) Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession;  (b) an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; orsection 12AAIncome tax Act, 1961 (43 of 1961)  (c) a person located in a non-taxable territory; 6/6/201666

Exemptions- Others  35. Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material;  36. Services by Employees’ State Insurance Corporation to persons governed under the Employees’ Insurance Act, 1948 (34 of 1948);  37. Services by way of transfer of a going concern, as a whole or an independent part thereof; 6/6/201667

Exemptions-Others  38. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets;  39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. 6/6/201668

Some more Definitions- Per Mega Exemption Notification  “business facilitator or business correspondent” means an intermediary appointed under the business facilitator model or the business correspondent model by a banking company or an insurance company under the guidelines issued by Reserve Bank of India; 6/6/201669

Some more Definitions- Per Mega Exemption Notification  “charitable activities” means activities relating to -  (i) public health by way of -  (a) care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or  (b) public awareness of preventive health, family planning or prevention of HIV infection; 6/6/201670

Some more Definitions- Per Mega Exemption Notification  “charitable activities” means activities relating to  (ii) advancement of religion or spirituality;  (iii) advancement of educational programmes or skill development relating to,-  (a) abandoned, orphaned or homeless children;  (b) physically or mentally abused and traumatized persons;  (c) prisoners; or  (d) persons over the age of 65 years residing in a rural area; 6/6/201671

Some more Definitions- Per Mega Exemption Notification  “charitable activities” means activities relating to -  (ii) advancement of religion or spirituality;  (iii) advancement of educational programmes or skill development relating to,-  (a) abandoned, orphaned or homeless children;  (b) physically or mentally abused and traumatized persons;  (c) prisoners; or  (d) persons over the age of 65 years residing in a rural area; 6/6/201672

Some more Definitions- Per Mega Exemption Notification  “charitable activities” means activities relating to –  (iv) preservation of environment including watershed, forests and wildlife; or  (v) advancement of any other object of general public utility up to a value of,-  (a) eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12;  (b) twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year; 6/6/201673

Some more Definitions- Per Mega Exemption Notification  “declared tariff” includes charges for all amenities provided in the unit of accommodation (given on rent for stay) like furniture, air-conditioner, refrigerators or any other amenities, but without excluding any discount offered on the published charges for such unit; 6/6/201674

Some more Definitions- Per Mega Exemption Notification  “general public” means the body of people at large sufficiently defined by some common quality of public or impersonal nature;  legal service” means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority; 6/6/201675

Some more Definitions- Per Mega Exemption Notification  principal manufacturer” means any person who gets goods manufactured or processed on his account from another person;  “residential complex” means any complex comprising of a building or buildings, having more than one single residential unit;  “single residential unit” means a self- contained residential unit which is designed for use, wholly or principally, for residential purposes for one family; 6/6/201676

Some more Definitions- Per Mega Exemption Notification  “incubatee” means an entrepreneur located within the premises of a Technology Business Incubator (TBI) or Science and Technology Entrepreneurship Park (STEP) recognised by the National Science and Technology Entrepreneurship Development Board (NSTEDB) of the Department of Science and Technology, Government of India and who has entered into an agreement with the TBI or the STEP to enable himself to develop and produce hi- tech and innovative products; 6/6/201677

Some more Definitions  "package tour" means a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour,  c. “tour operator” means any person engaged in the business of planning, scheduling, organizing, arranging tours (which may include arrangements for accommodation, sightseeing or other similar services) by any mode of transport, and includes any person engaged in the business of operating tours, 6/6/201678

Abatements Sl NO Taxable service %Conditions 01Services in relation to financial leasing including hire purchase 10Nil 02transport of goods by rail30Nil 03Transport of passengers, with or without accompanied belongings by rail 30NIl 6/6/201679

Abatements Sl No Taxable Service%Conditions 04Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises ( including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises 70i) CENVAT credit on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985 (5 of 1986) used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. Central Excise Tariff Act, 1985 (5 of 1986) CENVAT Credit Rules, 2004. 6/6/201680

Abatements Sl No Taxable Service%Conditions 05 06 Transport of passengers by air, with or without accompanied belongings Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes. 40 60 CENVAT credit on inputs and capital goods, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004. Same as above. 6/6/201681

Abatements Sl No Taxable Service%Conditions 07 08 09 Services of goods transport agency in relation to transportation of goods. Services provided in relation to chit Renting of any motor vehicle designed to carry passengers 25 70 40 CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004. Same as above. 6/6/201682

Abatements Sl No Taxable servuce%Conditions 10 11 Transport of goods in a vessel Services by a tour operator in relation to,- (i) a package tour 50 25 Same as in 9 (i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004 (ii) The bill issued for this purpose indicates that it is inclusive of charges for such a tour. 6/6/201683

Abatements Sl NO Taxable service%Conditions 11Services by a tour operator ii) a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour 10i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004. CENVAT Credit Rules, 2004 (ii) The invoice, bill or challan issued indicates that it is towards the charges for such accommodation. (iii) This exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation. 6/6/201684

Abatements Sl No Taxable Service%Conditions 11Tour Operator iii) any services other than specified at (i) and (ii) above. 40(i) CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004 (ii)The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour. 6/6/201685

Abatements Sl No Taxable Service%Conditions 12Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority 25(i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004. CENVAT Credit Rules, 2004 (ii)The value of land is included in the amount charged from the service receiver. 6/6/201686

Reverse Charge  Partial Reverse Charge  With effect from 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of service tax shall be both on the service provider and the service recipient. 6/6/201687

Reverse Charge  New partial reverse charge mechanism is applicable to services provided or agreed to be provided by way of  (a) renting of a motor vehicle designed to carry passengers on non-abated value to any person who is not engaged in a similar business, or  (b) supply of manpower for any purpose, or  (c) service portion in execution of a works contract;  by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as a body corporate located in the taxable territory. Thus the nature of the service and the status of both the service provider and service receiver are important to determine the applicability of partial reverse charge provisions. 6/6/201688

Reverse Charge-Issues  If the service provider is exempted being a SSI (turnover less than Rs. 10 lakhs), how will the reverse charge mechanism work?  The liability of the service provider and service recipient are different and independent of each other. Thus in case the service provider is availing exemption owing to turnover being less than Rs. 10 lakhs, he shall not be obliged to pay any tax. However, the service recipient shall have to pay service tax which he is required to pay under the partial reverse charge mechanism. 6/6/201689

Reverse Charge-Issues  What shall be the point of taxation for the service recipient? When will he need to pay the service tax in respect of his liability?  Service Provider – Date of Invoice  Service Receiver- Date of payment for Services 6/6/201690

Reverse Charge-Issues  10.1.6 How is the service recipient required to calculate his tax liability under partial reverse charge mechanism? How will the service recipient know which abatement or valuation option has been exercised by the service provider?  The service recipient would need to discharge liability only on the payments made by him. Thus the assessable value would be calculated on such payments done. (Free of Cost material supplied and out of pocket expenses reimbursed or incurred on behalf of the service provider need to be included in the assessable value in terms of Valuation Rules) 6/6/201691

Reverse Charge-Issues  The invoice raised by the service provider would normally indicate the abatement taken or method of valuation used for arriving at the taxable value. However since the liability of the service provider and service recipient are different and independent of each other, the service recipient can independently avail or forgo an abatement or choose a valuation option depending upon the ease, data available and economics. 6/6/201692

Reverse Charge  Is the reverse charge applicable on services provided and complete before 1.7.2012 though payments were made after 1.7.2012?  For any service whose point of taxation has been determined and whole liability affixed before 1.7.2012 the new provisions will not apply. Merely because payments are being made after 1.7.2012 will not add any additional liability on the service receiver in respect of such services. 6/6/201693

Reverse Charge IS SSI exemption available for Reverse Charge – to Service recipient NO, (ii) such value of taxable services in respect of which service tax shall be paid by such person and in such manner as specified under sub-section (2) of section 68 of the said Finance Act read with Service Tax Rules,1994.sub-section (2) of section 68Service Tax Rules,1994 6/6/201694

Reverse Charge  Status of service paid on reverse charge-Is it an Output service  (p) “output service” means any service provided by a provider of service located in the taxable territory but shall not include a service,-  (1) specified in section 66D of the Finance Act; orsection 66D  (2) where the whole of service tax is liable to be paid by the recipient of service. 6/6/201695

Reverse Charge  Refund of CENVAT credit to service providers providing services taxed on reverse charge basis.-  5B. A provider of service providing services notified under sub-section (2) of section 68 of the Finance Act and being unable to utilise the CENVAT credit availed on inputs and input services for payment of service tax on such output services, shall be allowed refund of such unutilised CENVAT credit subject to procedure, safeguards, conditions and limitations, as may be specified by the Board by notification in the Official Gazette.section 68 6/6/201696

Reverse Charge  Is refund available to Service providers when Tax is paid filly on Reverse Charge basis –  NO  Reason: In such cases the same is not treated as Output service 6/6/201697

Reverse Charge  The service liability under reverse charge mechanism should be discharged only by paying it in cash and Cenvat credit shall not utilized for such payment.  This is made very clear by inserting an Explanation to Rule 3(4) of the Cenvat Credit Rules, 2004 vide Notification No. 28/2012 – CE NT dated 20.06.2012.  The relevant portion is reproduced below  "Explanation. - CENVAT credit cannot be used for payment of service tax in respect of services where the person liable to pay tax is the service  recipient" 6/6/201698

Reverse Charge Sl NO Description of serviceservice Provider service receiver 01 02 03 04 05 by an insurance agent to any person carrying on insurance business goods transport agency in respect of transportation of goods by road by way of sponsorship by an arbitral tribunal by individual advocate Nil 100 6/6/201699

Reverse Charge SlNoDescription of Serviceservice ProviderService Receiver 06 07 by way of support service by Government or local authority (a)by way of renting or hiring any motor vehicle designed to carry passenger on abated value. (b)by way of renting or hiring any motor vehicle designed to carry passenger on non abated value. Nil 60 100 40 6/6/2016100

Reverse Charge Sl NO Description of ServiceService ProviderService receiver 08 09 10 by way of supply of manpower for any purpose by way of works contract by any person who is located in a non-taxable territory and received by any person located in the taxable territory 25 50 Nil 75 50 100 6/6/2016101

Reverse Charge  *by way of renting or hiring any motor vehicle designed to carry passenger or supply of manpower for any purpose or works contract by any individual, Hindu Undivided Family or proprietary firm or partnership firm, whether registered or not, including association of persons; located in the taxable territory to any company formed or registered under the Companies Act, 1956 (1 of 1956) or a business entity registered as body corporate located in the taxable territory;Companies Act, 1956 (1 of 1956) 6/6/2016102

Bundled Services  Taxability of 'bundled services'.  'Bundled service' means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services.  An example of 'bundled service' would be air transport services provided by airlines wherein an element of transportation of passenger by air is combined with an element of provision of catering service on board. 6/6/2016103

Bundled Services  Services which are naturally bundled in the ordinary course of business  The rule is - 'If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character'  Example-C& F Agents Service 6/6/2016104

Bundled Services  Another Example:  ♦ A hotel) provides a 4-D/3-N package with the facility of breakfast. This is a natural bundling of services in the ordinary course of business. The service of hotel accommodation gives the bundle the essential character and would, therefore, be treated as service of providing hotel accommodation. 6/6/2016105

Bundled Services  A 5 star hotel is booked for a conference of 100 delegates on a lump sum package with the following facilities:  Accommodation for the delegates  Breakfast for the delegates,  Tea and coffee during conference  Access to fitness room for the delegates  Availability of conference room  Business centre  How do we classify the above 6/6/2016106

Bundled Services  As is evident a bouquet of services is being provided, many of them chargeable to different effective rates of tax. None of the individual constituents are able to provide the essential character of the service.  However, if the service is described as convention service it is able to capture the entire essence of the package. Thus the service may be judged as convention service and chargeable to full rate.  However it will be fully justifiable for the hotel to charge individually for the services as long as there is no attempt to offload the value of one service on to another service that is chargeable at a concessional rate. 6/6/2016107

Bundled Services  Services which are not naturally bundled in the ordinary course of business  The rule is - 'If various elements of a bundled service are not naturally bundled in the ordinary course of business, it shall be treated as provision of a service which attracts the highest amount of service tax.' 6/6/2016108

Bundled Services  Illustrations -  ♦ A house is given on rent one floor of which is to be used as residence and the other for housing a printing press. Such renting for two different purposes is not naturally bundled in the ordinary course of business. Therefore, if a single rent deed is executed it will be treated as a service comprising entirely of such service which attracts highest liability of service tax.  In this case renting for use as residence is a negative list service while renting for non-residence use is chargeable to tax. Since the latter category attracts highest liability of service tax amongst the two services bundled together, the entire bundle would be treated as renting of commercial property. 6/6/2016109

Bundled Services  No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business. Each case has to be individually examined in the backdrop of several factors some of which are outlined above. 6/6/2016110

Point of Taxation  Point of Taxation Rules, 2011  Point of taxation’ shall be,-  a) the time when the invoice for the service provided or to be provided is issued:  b) where the invoice is not issued within the time period specified in rule 4A of the Service Tax Rules,1994, the point of taxation shall be the date of completion of provision of the service.]rule 4AService Tax Rules,1994  c) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment 6/6/2016111

Point of Taxation  Illustration:  1.Date of Completion of Service: 01.07.2012  2.Date of issue of invoice:30.07.2012  3. Date of receipt of payment: 05.08.2012.  Point of taxation: The date of issue of Invoice: 30.07.2012 6/6/2016112

Point of Taxation  Illustration II  1. Date of Completion of Service: 05.07.2012  2. Date of issue of invoice: :10.08.2012  3. Date of receipt of payment:. 16.08.2012  Point of taxation: The date of issue of Invoice: 05.07.2012 6/6/2016113

Point of Taxation  Illustration III  1. Date of Completion of Service: 05.07.2012  2. Date of issue of invoice: :10.08.2012  3. Date of receipt of payment:. 01.07.2012  Point of taxation: The date of issue of Invoice: 01.07.2012 6/6/2016114

Point of Taxation  in case of continuous supply of service  1. Agreed date for event happening for making payment  For Eg in a construction contract:  Stage wise – Like on Booking, Foundation. Lintel. Roof etc  Explanation.- For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.] 6/6/2016115

Point of Taxation  Determination of point of taxation in case of change of rate of tax.-  a) in case a taxable service has been provided before the change of rate,-  (i) Where the invoice for the same has been issued and the payment received after the 3 [change in effective rate of tax], the point of taxation shall be date of payment or issuing of invoice, whichever is earlier; or 6/6/2016116

Point of Taxation  Illustration:  Change in Rate :01.04.2012  Issue of Invoice: 10..04.2012  Payment received:05.04.2012  Rate applicable : New rate @ on the date of invoice 6/6/2016117

Point of Taxation  a) in case a taxable service has been provided before the change of rate,-  (ii) where the invoice has also been issued prior to 2 [change in effective rate of tax] but the payment is received after the 3 [change in effective rate of tax], the point of taxation shall be the date of issuing of invoice; or  Change in Rate :01.04.2012  Issue of Invoice: 31.03.2012  Payment received:05.04.2012  Rate applicable : old rate @ on the date of invoice 6/6/2016118

Point of Taxation  a) in case a taxable service has been provided before the change of rate,-  iii) where the payment is also received before the 3 [change in effective rate of tax], but the invoice for the same has been issued after the 3 [change in effective rate of tax], the point of taxation shall be the date of payment;  Change in Rate :01.04.2012  Issue of Invoice: 04..04.2012  Payment received:25..03.2012  Rate applicable: old rate @ on the date of Payment 6/6/2016119

Point of Taxation  b) in case a taxable service has been provided after the 3 [change in effective rate of tax],-  (i) where the payment for the invoice is also made after the 1 [change in effective rate of tax] but the invoice has been issued prior to the 1 [change in effective rate of tax], the point of taxation shall be the date of payment; or  Change in Rate: 01.04.2012  Issue of Invoice: 28.03.2012  Payment received:05..04.2012  Rate applicable: New rate @ on the date of Payment 6/6/2016120

Point of Taxation  b) in case a taxable service has been provided after the 3 [change in effective rate of tax],-  (ii) where the invoice has been issued and the payment for the invoice received before the 1 [change in effective rate of tax], the point of taxation shall be the date of receipt of payment or date of issuance of invoice, whichever is earlier; or  Change in Rate: 01.04.2012  Issue of Invoice: 28.03.2012  Payment received:26...03.2012  Rate applicable: Old rate @ on the date of Payment 6/6/2016121

Point of Taxation  b) in case a taxable service has been provided after the 3 [change in effective rate of tax  (iii) where the invoice has also been raised after the 3 [change in effective rate of tax], but the payment has been received before the 3 [change in effective rate of tax],, the point of taxation shall be date of issuing of invoice.  Change in Rate: 01.04.2012  Issue of Invoice: 05.04.2012  Payment received:26.03.2012  Rate applicable: New rate @ on the date of Invoice 6/6/2016122

Place of Provision of Service  “location of the service provider” means-  (a). where the service provider has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained;  (b). where the service provider is not covered under sub-clause (a):  (i) the location of his business establishment; or 6/6/2016123

Place of Provision of Service  location of the service provider” means-  (ii) where the services are provided from a place other than the business establishment, that is to say, a fixed establishment elsewhere, the location of such establishment; or  (iii) where services are provided from more than one establishment, whether business or fixed, the establishment most directly concerned with the provision of the service; and  (iv) in the absence of such places, the usual place of residence of the service provider. 6/6/2016124

Place of Provision of Service  (i) “location of the service receiver” means:-  (a). where the recipient of service has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained;  (b). where the recipient of service is not covered under sub-clause (a):  (i) the location of his business establishment; or 6/6/2016125

Place of Provision of Service  “location of the service receiver” means:-  d establishment elsewhere, the location of such establishment; or  (iii) where services are used at more than one establishment, whether business or fixed, the establishment most directly concerned with the use of the service; and  (iv) in the absence of such places, the usual place of residence of the recipient of service.  Explanation:-. For the purposes of clauses (h) and (i), “usual place of residence” in case of a body corporate means the place where it is incorporated or otherwise legally constituted. 6/6/2016126

Place of Provision of Service  Place of provision generally.-  03. The place of provision of a service shall be the location of the recipient of service:  Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service. 6/6/2016127

Place of Provision of Service  Place of provision of performance based services.-  04. The place of provision of following services shall be the location where the services are actually performed, namely:-  (a) services provided in respect of goods that are required to be made physically available by the recipient of service to the provider of service, or to a person acting on behalf of the provider of service, in order to provide the service: 6/6/2016128

Some Specific Queries  1. CLPL is engaging sub contractors for most our transporation, clearing & forwarding work orders. How are they placed under service tax on GTA as service receiver & other services to the provider?  Ans:.GTA -In this case the services provided by the sub contractor si to be treated as “Lorry Hire Charges “ which is specifically exempt from Service Tax- Mega Exemption Notification  22. Services by way of giving on hire-  (b) to a goods transport agency, a means of transportation of goods;  However the Services provided by CLPL will be treated as GTA services and the Liability will be on CC who will be paying the freight to CCPL 6/6/2016129

Some Specific Queries  Sub Contractors for C&F contracts: C&F contract is a naturally bundled contract. If the entire work of C&F is outsourced to a sub contractor, the following is to be noted-  Service provided by Sub Contractor – Out put service for him and input service for CLPL  C&F by CLPL – Out put service for them and Input service for CC 6/6/2016130

Some Specific Queries  Option II – CLPL engages various Sub Contractors –Each one has to be treated as Input service for CLPL and the liability will be dependent on such individual services  For Eg – CLPL engages and Individual for supply of labour – then CLPL will pay 75% under Reverse Charge 6/6/2016131

Some Specific Queries  2 We engage foreign technicians for erection, commissioning, some times for maintenance also. As receiver in the taxable territory, when and what rate of exchange, service tax is payable by us?  This is service rendered in the taxable territory.It is assumed that the foreign personnel visits India do not have any office or place of establishment in India In such cases the Service tax is payable by CC on reverse charge basis at the normal rate. 6/6/2016132

Some Specific Queries  Rule 2(G) of CCR-- in relation to any taxable service provided or agreed to be provided by any person which is located in a non-taxable territory and received by any person located in the taxable territory, the recipient of such service;  If the above work involves both supply of goods and labour then the service portion in the works contract is taxable. Rule 2 A of The Determination of value rules 2006  If the foreign Technician is part of an entity having an establishment in India – then the liability will shift to them 6/6/2016133

Some Specific Queries  3 When we are liable to pay ST partly like 25% or 50%, do we have to pay ST on the gross invoice value including the ST claimed by the provider?  The taxable value will exclude the ST claimed by the service provider. 6/6/2016134

Some Specific Queries  4 How to differentiate between works contract and job work like where we send our spares for reconditioning ? (this is relevant since in case of WC, Receiver is liable to pay part ST).  The partial reverse charge will come in to play only when the Service provider is –  Any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons. 6/6/2016135

Some Specific Queries  The distinction between job work and that of work contract is to be clearly noted.  A plain reading of the Definition of Works contract will reveal that it is a composite contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods. 6/6/2016136

Some Specific Queries  In the case of spares sent for re conditioning it is an activity in which there is no transfer of material from the Service provider to the Service recipient. Accordingly the same will not be a works contract. On the other hand if it is contract like retreading of tyres which included tread rubber etc will amount to Works Contract. 6/6/2016137

Some Specific Queries  5 Under works contract, is there any abatement available for material supplies?  Yes. Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority- Abatement of 75% is available subject to the following conditions:  (i) CENVAT credit on inputs used for providing the taxable service has not been taken under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004  (ii)The value of land is included in the amount charged from the service receiver 6/6/2016138

Works Contract .Construction Sector  Declared services:  The Declared services has two entries-  (b) construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of completion- certificate by the competent authority  (h) service portion in the execution of a works contract;  What is included in Construction:II) the expression "construction" includes additions, alterations, replacements or remodeling of any existing civil structure; 6/6/2016139

Works Contract  Definition of Works Contract:  According to Section 65 B (54) "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of any moveable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property;  From the above it can be seen that the definition is wide and almost in line with VAT laws to cover transactions involving both movable goods and immovable properties. 6/6/2016140

Works Contract  Applicability of earlier abatements:  All exemption Notifications including abatements will cease to exist from 1sts July 2012.  Notification No. 26/2012- Service Tax- Provides abatement of 75% when value of land is included 6/6/2016141

Works Contract  Normal Method:  Under non composition scheme of payment of service tax, the value shall be gross amount including the value of free supply materials minus VAT paid and value ofgoods sold. If the value of goods sold is determined for VAT purposes, the same canbe excluded here also. It may be noted, that sofar, the value of free supply material needs to be included only under composition scheme. 6/6/2016142

Works Contract  (i) Value of service portion in the execution of a works contract shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract.  CBEC in its guidance note has presented this in simple table as under:  In brief the value of the service portion is the gross amount charged for the works contract less the value of transfer of property in goods involved in the execution of the said works contract. 6/6/2016143

Works Contract Gross Amount Includes Labour charges for execution of the works Value of transfer of property in goods involved in the execution of the said works contract. Note: Where Value Added Tax has been paid on the actual value of transfer of property in goods involved in the execution of the works contract, then such value adopted for the purposes of payment of Value Added Tax, shall be taken as the value of transfer of property in goods involved in the execution of the said works contract. 6/6/2016144

Works Contract Gross Amount includesDeoss Amount Excludes Amount paid to a sub-contractor for labour and services Charges for planning, designing and architect’s fees Charges for obtaining on hire or otherwise, machinery and tools used for the execution of the works contract Cost of consumables such as water, electricity, fuel, used in the execution of the works contract Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the said works contract Cost of establishment of the contractor relatable to supply of labour and services and other similar expenses relatable to supply of labour and services Profit earned by the service provider relatable to supply of labour and services 6/6/2016145

Works Contract  (ii) Where the value has not been determined under(i) as above, the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely:- 6/6/2016146

Works Contract Original works40% of the Total amount charged works contract entered into for maintenance or repair or reconditioning or restoration or servicing of any goods, 70% of the total amount charged works contracts, not covered under sub-clauses (A) and (B), including maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling, installation of electrical fittings of an immovable property 60% of the total amount charged 6/6/2016147

Works Contract  Some definitions as spelt out in the said rules:  Explanation 1.-For the purposes of this rule,-  (a) "original works" means-  (i) all new constructions;  (ii) all types of additions and alterations to abandoned or damaged structures on land that are required to make them workable;  (iii) erection, commissioning or installation of plant, machinery or equipment or structures, whether pre-fabricated or otherwise; 6/6/2016148

Works Contract  (b) "total amount" means the sum total of the gross amount charged for the works contract and the fair market value of all goods and services supplied in or in relation to the execution of the works contract, whether or not supplied under the same contract or any other contract, after deducting-  (i) the amount charged for such goods or services, if any; and  (ii) the value added tax or sales tax, if any, levied thereon:  Provided that the fair market value of goods and services so supplied may be determined in accordance with the generally accepted accounting principles. 6/6/2016149

Works Contract  Explanation 2.--For the removal of doubts, it is clarified that the provider of taxable service shall not take CENVAT credit of duties or cess paid on any inputs, used in or in relation to the said works contract, under the provisions of CENVAT Credit Rules, 2004.".  Henceforth all contracts involving both transfer of materials and labour have to be classified as works contract to take advantages of the Rules as above 6/6/2016150

Works Contract- Exemptions  Exemptions:  Service to the government for non-commercial/ Industrial construction Etc.  12. Services provided to the Government or local authority by way of erection, construction, maintenance, repair, alteration, renovation or restoration of -  (a) a civil structure or any other original works meant predominantly for a non-industrial or non-commercial use;  (b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);  (c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; 6/6/2016151

Works Contract- Exemptions  (d) canal, dam or other irrigation works;  (e) pipeline, conduit or plant for (i) drinking water supply (ii) water treatment (iii)sewerage treatment or disposal; or  (f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Finance Act; 6/6/2016152

Works Contract- Exemptions  Services for Charitable purpose / Public Utility etc.  13. Services provided by way of erection, construction, maintenance, repair, alteration, renovation or restoration of,-  (a) road, bridge, tunnel, or terminal for road transportation for use by general public;  (b) building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public; section 12 AAIncome tax Act, 1961(43 of 1961)  (c) pollution control or effluent treatment plant, except located as a part of a factory; or  (d) electric crematorium; 6/6/2016153

Works Contract- Exemptions  Service of Original works -infrastructure construction and agricultural related  14. Services by way of erection or construction of original works pertaining to,-  (a) airport, port or railways;  (b) single residential unit otherwise as a part of a residential complex;  (c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; 6/6/2016154

Works Contract- Exemptions  (d) post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or  (e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;  Definition of single Residential unit:. “single residential unit” means an independent residential unit with specific facilities for living, cooking and sanitary requirements, 6/6/2016155

Works Contract-Clarifications  The department in its guidance note has clarified as under:  6.7.1 I am a contractor in number of projects for constructing roads. What is my tax liability on construction of roads under different types of projects?  Construction of roads for use by general public is exempt from service tax. Construction of roads which are not for general public use e.g. construction of roads in a factory, residential complex etc would be taxable.  6.7.2 I am in to construction of hospitals and educational institutes. Am I required to pay service tax?  If you are constructing such structures for the government or local authority, you are not required to pay service tax. If you are constructing for others, you are required to pay tax.  From the above it can be inferred that Construction of more than on residential unit will now attract service tax instead of earlier limit of 12 residential units. 6/6/2016156

Health care services  What is Exempt  Health care services by a clinical establishment, an authorised medical practitioner or paramedics; 6/6/2016157

Health Care services  Health care services” means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma; 6/6/2016158

Health Care services  “Clinical establishment" means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases; 6/6/2016159

Health Care services  Authorised medical practitioner” means a medical practitioner registered with any of the councils of the recognised system of medicines established or recognized by law in India and includes a medical professional having the requisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force; 6/6/2016160

Health Care services  Who all are covered as paramedic?  Paramedics are trained health care professionals, for example nursing staff, physiotherapists, technicians, lab assistants etc. Services by them in a clinical establishment would be in the capacity of employee and not provided in independent capacity and will thus be considered as services by such clinical establishment. Similar services in independent capacity are also exempted. 6/6/2016161

Health Care Services  Are all health care services exempt?  No. only services in recognized systems of medicines in India are exempt. In terms of the Clause (h) of section 2 of the Clinical Establishments Act, 2010, the following systems of medicine are recognized systems of medicine:  ♦ Allopathy  ♦ Yoga  ♦ Naturopathy  ♦ Ayurveda  ♦ Homeopathy  ♦ Siddha  ♦ Unani  ♦ Any other system of medicine that may be recognized by central government 6/6/2016162

Education Services  Not Taxable –  l) services by way of—  (i) pre-school education and education up to higher secondary school or equivalent;  (ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;  (iii) education as a part of an approved vocational education course; 6/6/2016163

Education Services  What is Exempt  Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-  (a) auxiliary educational services; or  (b) renting of immovable property; 6/6/2016164

Education Services  “auxiliary educational services” means any services relating to imparting any skill, knowledge, education or development of course content or any other knowledge – enhancement activity, whether for the students or the faculty, or any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including services relating to admission to such institution, conduct of examination, catering for the students under any mid-day meals scheme sponsored by Government, or transportation of students, faculty or staff of such institution 6/6/2016165

Education Services  What are the courses which would qualify as an approved vocational education courses?  Approved vocational education courses have been specified in section 65B of the Act. These are-section 65B  ♦ a course run by an industrial training institute or an industrial training centre affiliated to the National Council for Vocational Training, offering courses in designated trades as notified under the Apprentices Act, 1961 (52 of 1961);  ♦ a Modular Employable Skill Course, approved by the National Council of Vocational Training, run by a person registered with the Directorate General of Employment and Training, Ministry of Labour and Employment, Government of India;  ♦ a course run by an institute affiliated to the National Skill Development Corporation set up by the Government of India. 6/6/2016166

Education services  Are services provided by international schools giving international certifications like IB also covered in this entry?  Yes. Services by way of education up to higher secondary school or equivalent are covered in this entry. 6/6/2016167

Education Services  4.12.4 Are services provided by boarding schools covered in this entry?  Boarding schools provide service of education coupled with other services like providing dwelling units for residence and food. This may be a case of bundled services if the charges for education and lodging and boarding are inseparable. Their taxability will be determined in terms of the principles laid down in section 66F of the Act. Such services in the case of boarding schools are bundled in the ordinary course of business. Therefore the bundle of services will be treated as consisting entirely of such service which determines the dominant nature of such a bundle. In this case since dominant nature is determined by the service of education other dominant service of providing residential dwelling is also covered in a separate entry of the negative list, the entire bundle would be treated as a negative list service.section 66F 6/6/2016168

Education Services  What are auxiliary educational services?  'Auxiliary educational services' are defined in the mega notification. In term of the definition, the following activities are auxiliary educational services:  ♦ any services relating to imparting any skill, knowledge or education, or  ♦ development of course content, or  ♦ any other knowledge - enhancement activity, whether for the students or the faculty, or  6/6/2016169

Education Services  ♦ any other services which educational institutions ordinarily carry out themselves but may obtain as outsourced services from any other person, including following services relating to:  ■ admission to such institution  ■ conduct of examination  ■ catering for the students under any mid- day meals scheme sponsored by Government  ■ transportation of students, faculty or staff of such institution. 6/6/2016170

Education Services  Are services provided by way of education as a part of a prescribed curriculum for obtaining a qualification recognized by a law of a foreign country covered in the negative list entry?  No. To be covered in the negative list a course should be recognized by an Indian law. 6/6/2016171

Education Services  Are placement services provided to educational institutions for securing job placements for the students covered in this negative list entry?  No. Such services do not fall in the category of exempt services provided to educational institutions (  Educational institutes such as IITs, IIMs charge a fee from prospective employers like corporate houses/MNCs, who come to the institutes for recruiting candidates through campus interviews. Whether services provided by such institutions are taxable?  Yes. Service tax is liable on services provided by such institutions in relation to campus recruitment as such services are not covered in the negative list. 6/6/2016172

Education Services  Are services of conducting admission tests for admission to colleges exempt?  Yes in case the educational institutions are providing qualification recognized by law for the time being in force 6/6/2016173

GTA  Definition under Section 65B  (25) "goods" means every kind of movable property other than actionable claim and money; and includes securities, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale;  (26) "goods transport agency" means any person who provides service in relation to transport of goods by road and issues consignment note, by whatever name called; 6/6/2016174

GTA  Who is liable to pay  (B) in relation to service provided or agreed to be provided by a goods transport agency in respect of transportation of goods by road, where the person liable to pay freight is,—  (I) any factory registered under or governed by the Factories Act, 1948 (63 of 1948);  (II) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any other law for the time being in force in any part of India;  6/6/2016175

GTA  (III) any co-operative society established by or under any law;  (IV) any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder; Central Excise Act, 1944 (1 of 1944)  (V) any body corporate established, by or under any law; or 6/6/2016176

GTA  (VI) any partnership firm whether registered or not under any law including association of persons;  any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage:  Provided that when such person is located in a non-taxable territory, the provider of such service shall be liable to pay service tax. 6/6/2016177

GTA Abatement Services of goods transport agency in relation to transportation of goods. Payable on 25% of the Freight amount Condition: CENVAT credit on inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.CENVAT Credit Rules, 2004. 6/6/2016178

GTA  GTA does not include:  Individual Truck operators who is not required to Issue Consignment Note  Exemptions:  ♦ fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage;  ♦ goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or  ♦ goods where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty. 6/6/2016179

GTA  Are goods transport agencies liable to pay tax in all cases or are provisions relating to reverse charge also applicable after introduction of negative list?  The provisions relating to reverse charge, i.e. service tax is liable to be paid by the consigner or consignee in specified cases, are applicable even after the introduction of negative list. 6/6/2016180

GTA  Some transporters under-take door-to- door transportation of goods or articles and they have made special arrangements for speedy transportation and timely delivery of such goods or articles. Such services are known as 'Express Cargo Service' with assurance of timely delivery. Whether such 'Express cargo service' is excluded as courier agency service under this negative list entry? 6/6/2016181

GTA  "Courier" has been defined in section 65B as any person engaged in door-to-door delivery of time sensitive documents, goods or articles utilizing the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles. The nature of service provided by 'Express Cargo Service' falls within the scope and definition of the courier agency. Hence, the said service is excluded from the negative list entry relating to transportation of goods by road.section 65B 6/6/2016182

GTA  Whether services provided by 'angadia' are liable to service tax as a courier service?  'Angadia' undertakes delivery of documents, goods or articles received from a customer to another person for a consideration. Therefore, 'angadias' are covered within the definition of a 'courier' and services provided by angadia are liable to service tax. 6/6/2016183

GTA  Place of provision of service  What is the place of provision of a service of transportation of goods?  Place of provision of a service of transportation of goods is the place of destination of goods, except in the case of services provided by a Goods Transportation Agency in respect of transportation of goods by road, in which case the place of provision is the location of the person liable to pay tax (as determined in terms of rule 2(1 )(d) of Service Tax Rules, 1994 (since amended). 6/6/2016184

GTA  Place of provision of Service  Illustration  A consignment of cut flowers is consigned from Chennai to Amsterdam. The place of provision of goods transportation service will be Amsterdam (outside India, hence not liable to service tax). Conversely, if a consignment of crystal ware is consigned from Paris to New Delhi, the place of provision will be New Delhi. 6/6/2016185

GTA  Place of provision of Service  Sub-rule 2(1)(d) of Service Tax Rules, 1994 provides that where a service of transportation of goods is provided by a 'goods transportation agency', and the consignor or consignee is covered under any of the specified categories prescribed therein, the person liable to tax is the person who pays, or is liable to pay freight (either himself or through his agent) for the transportation of goods by road in a goods carriage. If such person is located in non-taxable territory, then the person liable to pay tax shall be the service provider.Service Tax Rules, 1994  6/6/2016186

GTA  Place of provision of Service  Illustration 1  A goods transportation agency ABC located in Delhi transports a consignment of new motorcycles from the factory of XYZ in Gurgaon (Haryana), to the premises of a dealer in Bhopal, Madhya Pradesh. Say, XYZ is a registered assessee and is also the person liable to pay freight and hence person liable to pay tax, in this case. Here, the place of provision of the service of transportation of goods will be the location of XYZ i.e. Haryana. 6/6/2016187

GTA  Place of provision of Service  Illustration 2  A goods transportation agency ABC located in Delhi transports a consignment of new motorcycles from the factory of XYZ in Gurgaon (Haryana), to the premises of a dealer in Jammu (non-taxable territory). Say, as per mutually agreed terms between ABC and XYZ, the dealer in Jammu is the person liable to pay freight. Here, in terms of amended provisions of rule 2(1)(d), since the person liable to pay freight is located in non-taxable territory, the person liable to pay tax will be ABC. Accordingly, the place of provision of the service of transportation of goods will be the location of ABC i.e. Delhi. 6/6/2016188

GTA  Specified persons can nor use Cenvat Credit to pay ST on GTA  Small Scale Exemption is not available when paid under Reverse charge  Such ST can not be recovered from customer as it is an Input Service  Can avail Cenvat Credit of ST on inward transportation and up to place of removal 6/6/2016189

C&F Agency Service  It is in the nature of a Bundled Service It may Encompass-  Business support Services  Cargo Handling  Manpower supply Etc. 6/6/2016190

C&F Agency Service  What is covered- Generally  Clearing of goods  Unloading, Loading and stacking of Goods  Local Transportation  Billing and banking  Lorry halting charges  Demurrage  Rent. Electricity 6/6/2016191

C&F Agency Service  Gross amount claimed will be subject to Tax including reimbursement of Expenses incurred in the course of rendering service  Actual expenses incurred as a Pure Agent will be excluded  To claim Exclusion is becoming difficult 6/6/2016192

C&F Agency Service  Cenvat Credit  Input Service Includes-  Storage up to place of removal  Outward transportation up to the place of removal  Accounting 6/6/2016193

Job Work  "job work" means processing or working upon of raw materials or semi-finished goods supplied to the job worker/ so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process. vide Notification 214/86-CX 6/6/2016194

Job Work  When Exempt. Carrying out an intermediate production process as job work in relation to -  (a) agriculture, printing or textile processing;  (b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act,1985 (5 of 1986);Central Excise Tariff Act,1985 (5 of 1986);  (c) any goods on which appropriate duty is payable by the principal manufacturer; or  6/6/2016195

Job Work  (d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year; 6/6/2016196

Job Work  Job Work Done in the factory of manufacturer –  If the work is done on the raw materials or Semi Finished goods it is part of manufacturing  If it is post manufacturing activity- will attract Service Tax  Job work not amounting to manufacture – Service 6/6/2016197

Trading of goods.  Appears in the Negative List  “exempted service” means a-  (2) service, on which no service tax is leviable under section 66B of the Finance Act; orsection 66B  Accordingly Trading will fall under this definition for Cenvat Credit purposes 6/6/2016198

Trading of goods  As such Rule 6 of CCR will be applicable for Trading –  [Explanation I. - “Value” for the purpose of sub-rules (3) and (3A),—of CCR  (c) in case of trading, shall be the difference between the sale price and the cost of goods sold (determined as per the generally accepted accounting principles without including the expenses incurred towards their purchase) or ten per cent of the cost of goods sold, whichever is more. 6/6/2016199

Account Codes  Period Up to 30.06.2012  (i) service specific accounting codes will also continue to operate, side by side, for accounting of service tax pertaining to the past period (meaning, for the period prior to 1 st July, 2012); 6/6/2016200

Account Codes  Period Up to 30.06.2012  Primary Education Cess on all taxable services will be booked under 00440298 and Secondary and Higher Education Cess on all taxable services will be booked under 00440426; 6/6/2016201

New Account Codes  Negative List based comprehensive approach to taxation of services came into effect from the first day of July, 2012. For payment of service tax under the new approach, a new Minor Head - ‘All taxable Services’ has been allotted under the Major Head “0044-Service Tax”. 6/6/2016202

New Account Codes  Accounting codes for the purpose of payment of service tax under the Negative List approach, with effect from 1 st July, 2012 is as follows: 6/6/2016203 Name of Services Tax collection Other Receipts PenaltiesDeduct refunds All Taxable Services 004410890044109 0 0044109300441094 The sub-head “deduct refunds” is not to be used by the assessees, as it is meant for use by the Revenue/Commissionerates while allowing refund of tax.

Retrospective beneficial Changes  Penalties are waived for those taxpayers who pay the service tax due on the renting of immovable property service (as on the sixth day of March, 2012), in full along with interest within six months from 28.05.2012. 6/6/2016204

Retrospective beneficial Changes  Repair of roads has been exempted from service tax by Notification 24/2009- ST dated 27th July, 2009. By section 97, exemption relating to roads is extended for the earlier period commencing from June 16, 2005;Notification 24/2009- ST  6/6/2016205

Retrospective beneficial Changes  Service tax exemption has also been granted with retrospective effect on management, maintenance or repair service in relation to non-commercial Government buildings from 16th June, 2005. 6/6/2016206

Imp Budget Changes-2012  Invoice to be issued within 30 Days  Banking company or a financial institution including a non-banking financial company - 45 Days  Rate of Service Tax ! 12%+.Education Cess 2% of ST and Secondary Higher Education Cess-1% on ST  The rate for Cenvat reversal for exempt services has been revised likewise from 5% to 6% in Rule 6(3) of Cenvat Credit Rules (CCR), 2004. 6/6/2016207

Imp Budget Changes-2012  The benefit available to individuals and firms to determine POT on the basis of date of payment for eight specified services is being extended to all services in a slightly modified form. 6/6/2016208

Imp Budget Changes-2012  The facility will be now available to individuals and partnership firms (including limited liability partnership) up to a turnover of Rs 50 lakh in a financial year provided the taxable turnover did not exceed this limit in the previous financial year. For computing the above limits, the turnover of the whole entity is required to be summed up and not any single registration. 6/6/2016209

Imp Budget Changes-2012  The small scale exemption has also been amended recognizing that the first clearances up to Rs 10 lakhs will be in terms of invoices and not mere payments received.  Rule 9(1)(e) is amended to allow availment of credit on the tax payment challan in case of payment of service tax by all service receivers on reverse charge. 6/6/2016210

Imp Budget Changes-2012  Changes are made in Rule 7 of CCR relating to distribution of credits of input services by an input service distributor (ISD) to ensure their scientific allocation to only such units where they have been put to use and proportionate to turnover. 6/6/2016211

Imp Budget Changes-2012  For example in case of services by way of advertisement-  iif the advertisement is for a product or service provided from only one unit, the said credit shall be distributed only to that unit; and if two units, the said credit shall be distributed only to those two units, in proportion to the respective turnovers; 6/6/2016212

Imp Budget Changes-2012  if the advertisement is for the company as such, the said credit shall be distributed only to the extent of the turnover of units registered and entitled to avail Cenvat credit to the total turnover of the company including unregistered units 6/6/2016213

Imp Budget Changes-2012  Rule 6(4A) of Service tax Rules is amended to allow unlimited amount of permissible adjustments.  The adjustment of excess amount paid, under sub-rule (4A), shall be subject to the condition that the excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification. 6/6/2016214

Cenvat Credit- Capital Goods  a)"capital goods" means:-  (A) the following goods, namely:-  [3] (i) all goods falling under Chapter 82, Chapter 84, Chapter 85, Chapter 90, heading 6805, grinding wheels and the like, and parts thereof falling under heading 6804 of the First Schedule to the Excise Tariff Act;  (ii) pollution control equipment;  (iii) components, spares and accessories of the goods specified at (i) and (ii);  (iv) moulds and dies, jigs and fixtures; 6/6/2016215

Cenvat Credit- Capital Goods  (v) refractories and refractory materials;  (vi) tubes and pipes and fittings thereof; 16 [***]  (vii) 17 [storage tank and]  18 [(viii) motor vehicles other than those falling under tariff headings 8702, 8703, 8704, 8711 and their chassis, 22 [but including dumpers and tippers]]  used- 6/6/2016216

Cenvat Credit- Capital Goods  (1) in the factory of the manufacturer of the final products, but does not include any equipment or appliance used in an office; or  9 [(1A) outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory; or]  (2) for providing output service; 6/6/2016217

Cenvat Credit  [(B) motor vehicle designed for transportation of goods including their chassis registered in the name of the service provider, when used for-  (i) providing an output service of renting of such motor vehicle; or  (ii) transportation of inputs and capital goods used for providing an output service; or  (iii) providing an output service of courier agency]  7 [(C) motor vehicle designed to carry passengers including their chassis, registered in the name of the provider of service, when used for providing output service of-  (i) transportation of passengers; or  (ii) renting of such motor vehicle; or  (iii) imparting motor driving skills]  8 [(D) components, spares and accessories of motor vehicles which are capital goods for the assesse,] 6/6/2016218

Cenvat Credit  "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeable to "Nil" rate of duty 10 [goods in respect of which the benefit of an exemption under Notification No. 1/2011-CE, dated the 1st March, 2011 or under entries at serial numbers 67 and 128 of Notification No. 12/2012-CE, dated the 17 th March, 2012 is availed] Notification No. 1/2011-CENotification No. 12/2012-CE 6/6/2016219

Cenvat Credit  “exempted service” means a-  (1) taxable service which is exempt from the whole of the service tax leviable thereon; or  (2) service, on which no service tax is leviable under section 66B of the Finance Act; orsection 66B  (3) taxable service whose part of value is exempted on the condition that no credit of inputs and input services, used for providing such taxable service, shall be taken;  but shall not include a service which is exported in terms of rule 6A of the Service Tax Rules, 1994.]Service Tax Rules, 1994 6/6/2016220

Capital Goods-Removed As such  (5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an invoice referred to in rule 9:  [14] Provided that such payment shall not be required to be made where any inputs or capital goods are removed outside the premises of the provider of output service for providing the output service:  23 [Provided further that such payment shall not be required to be made where any inputs are removed outside the factory for providing free warranty for final products:] 6/6/2016221

CG –Removal after use  [(5A) If the capital goods, on which CENVAT credit has been taken, are removed after being used, whether as capital goods or as scrap or waste, the manufacturer or provider of output services shall pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by the percentage points calculated by straight line method as specified below for each quarter of a year or part thereof from the date of taking the CEVAT Credit, namely: 6/6/2016222

CG –Removal after use  (a) for computers and computer peripherals :  for each quarter in the first year @ 10%  for each quarter in the second year @ 8%  for each quarter in the third year @ 5%  for each quarter in the fourth and fifth year @ 1%  (b) for capital goods, other than computers and computer peripherals @ 2.5% for each quarter:  Provided that if the amount so calculated is less than the amount equal to the duty leviable on transaction value, the amount to be paid shall be equal to the duty leviable on transaction value.] 6/6/2016223

Input/ CG Written off in Books  (5B) If the value of any,  (i) input, or  (ii) capital goods before being put to use, 25 [on which CENVAT credit has been taken is written off fully or partially or where any provision to write off fully or partially has been made in the books of account then] the manufacturer or service provider, as the case may be, shall pay an amount equivalent to the CENVAT credit taken in respect of the said input or capital goods:  Provided that if the said input or capital goods is subsequently used in the manufacture of final products or the provision of 32 [output services], the manufacturer or output service provider, as the case may be, shall be entitled to take the credit of the amount equivalent to the CENVAT credit paid earlier subject to the other provisions of these rules.] 6/6/2016224

Utilisation of Cess  Provided that the credit of the education cess on excisable goods and the education cess on taxable services can be utilized, either for payment of the education cess on excisable goods or for the payment of the education cess on taxable services:  Provided further that the credit of the Secondary and Higher Education Cess on excisable goods and the Secondary and Higher Education Cess on taxable services can be utilized, either for payment of the Secondary and Higher Education Cess on excisable goods or for the payment of the Secondary and Higher Education Cess on taxable services. 6/6/2016225

Certain provisions to override Cenvat Credit rule  Where the provisions of any other rule or notification provide for grant of whole or part exemption on condition of non- availability of credit of duty paid on any input or capital goods, or of service tax paid on input service, the provisions of such other rule or notification shall prevail over the provisions of these rules. 6/6/2016226

Cenvat Credit- CG  The CENVAT credit in respect of capital goods received in a factory or in the premises of the provider of output service 4 [or outside the factory of the manufacturer of the final products for generation of electricity for captive use within the factory] at any point of time in a given financial year shall be taken only for an amount not exceeding fifty per cent. of the duty paid on such capital goods in the same financial year:  Provided that the CENVAT credit in respect of capital goods shall be allowed for the whole amount of the duty paid on such capital goods in the same financial year if such capital goods are cleared as such in the same financial year.  Provided further that the CENVAT credit of the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, in respect of capital goods shall be allowed immediately on receipt of the capital goods in the factory of a manufacturer. 6/6/2016227

Cenvat Credit – Inputs  (k) “input” means–  (i) all goods used in the factory by the manufacturer of the final product; or  (ii) any goods including accessories, cleared along with the final product, the value of which is included in the value of the final product and goods used for providing free warranty for final products; or  (iii) all goods used for generation of electricity or steam for captive use; or 6/6/2016228

Cenvat Credit – Inputs  (iv) all goods used for providing any output service; but excludes-  (A) light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol;  25 [(B) any goods used for -  (a) construction or execution of works contract of a building or a civil structure or a part thereof; or  (b) laying of foundation or making of structures for support of capital goods,  except for the provision of service portion in the execution of a works contract or construction service as listed under clause (b) of section 66E of the Act;] 6/6/2016229

Cenvat Credit – Inputs  Exclusions- Contd  (C) capital goods except when used as parts or components in the manufacture of a final product;  (D) motor vehicles;  (E) any goods, such as food items, goods used in a guesthouse, residential colony, club or a recreation facility and clinical establishment, when such goods are used primarily for personal use or consumption of any employee; and  (F) any goods which have no relationship whatsoever with the manufacture of a final product.  Explanation. – For the purpose of this clause, “free warranty” means a warranty provided by the manufacturer, the value of which is included in the price of the final product and is not charged separately from the customer;] 6/6/2016230

Cenvat Credit – Input Service  [(l) “input service” means any service, -  (i) used by a provider of 26 [output service] for providing an output service; or  (ii) used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,  6/6/2016231

Cenvat Credit – Input Service  and includes services used in relation to modernisation, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal ; 6/6/2016232

Cenvat Credit – Input Service  [but excludes],-  28 [(A) service portion in the execution of a works contract and construction services including service listed under clause (b) of section 66E of the Finance Act (hereinafter referred as specified services) in so far as they are used for -  (a) construction or execution of works contract of a building or a civil structure or a part thereof; or  (b) laying of foundation or making of structures for support of capital goods,  except for the provision of one or more of the specified services; or] 6/6/2016233

Cenvat Credit – Input Service  [(B) services provided by way of renting of a motor vehicle], in so far as they relate to a motor vehicle which is not a capital goods; or  21 [(BA) service of general insurance business, servicing, repair and maintenance, in so far as they relate to a motor vehicle which is not a capital goods, except when used by -  (a) a manufacturer of a motor vehicle in respect of a motor vehicle manufactured by such person ; or  (b) an insurance company in respect of a motor vehicle insured or reinsured by such person; or] 6/6/2016234

Cenvat Credit – Input Service  (C) such as those provided in relation to outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, membership of a club, health and fitness centre, life insurance, health insurance and travel benefits extended to employees on vacation such as Leave or Home Travel Concession, when such services are used primarily for personal use or consumption of any employee;” 6/6/2016235

Cenavt credit- Output service  [(p) “output service” means any service provided by a provider of service located in the taxable territory but shall not include a service,-  (1) specified in section 66D of the Finance Act; orsection 66D  (2) where the whole of service tax is liable to be paid by the recipient of service.] 6/6/2016236

Cenvat Credit -Documents  9[(2) No CENVAT credit under sub-rule (1) shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994, as the case may be, are contained in the said document: ]  6/6/2016237

Cenvat Credit -Documents  Provided that if the said document does not contain all the particulars but contains the details of duty or service tax payable, description of the goods or taxable service, 4 [assessable value, Central Excise or Service Tax registration number of the person issuing the invoice, as the case may be], name and address of the factory or warehouse or premises of first or second stage dealers or 10 [provider of output service], and the Deputy Commissioner of Central Excise or the Assistant Commissioner of Central Excise, as the case may be, is satisfied that the goods or services covered by the said document have been received and accounted for in the books of the account of the receiver, he may allow the CENVAT credit; 6/6/2016238

Cenvat Credit- Obligation  6. 10[ Obligation of a manufacturer or producer of final products and a 31 [provider of output service]  (1) The CENVAT credit shall not be allowed on such quantity of 11 [input used in or in relation to the manufacture of exempted goods or for provision of exempted services, or input service used in or in relation to the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted services] except in the circumstances mentioned in sub-rule (2).  Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. 6/6/2016239

Cenvat Credit- Obligation  (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow 13 [any one] of the following options, as applicable to him, namely:-  14 [(i) pay an amount equal to 23 [six per cent.] of value of the exempted goods and exempted services; or  (ii) pay an amount as determined under sub-rule (3A); or 6/6/2016240

Cenvat Credit- Obligation  (6) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the excisable goods removed without payment of duty are either-  6 [(i) cleared to a unit in a special economic zone or to a developer of a special economic zone for their authorized operations; or]  (ii) cleared to a hundred per cent. export- oriented undertaking; or  (iii) cleared to a unit in an Electronic Hardware Technology Park or Software Technology Park; or  6/6/2016241

Credit not to be reversed  (iv) supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No.108/95- Central Excise, dated the 28th August, 1995, number G. S R. 602 (E), dated the 28th August, 1995; or  9 ; or 6/6/2016242

Credit not to be reversed  [(iva) supplied for the use of foreign diplomatic missions or consular missions or career consular offices or diplomatic agents in terms of the provisions of 28 [12/2012-Central Excise, dated the 17th March, 2012, number G.S.R. 163(E), dated the 17th March, 2012] or]12/2012-Central Excise  (v) cleared for export under bond in terms of the provisions of the Central Excise Rules, 2002 6/6/2016243

Credit not to be reversed  vi) gold or silver falling within Chapter 71 of the said First Schedule, arising in the course of manufacture of copper or zinc by smelting; or. 6/6/2016244

Credit not to be reversed  8 [(vii) all goods which are exempt from the duties of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and the additional duty leviable under sub-section (1) of section 3 of the said Customs Tariff Act when imported into India and are supplied,—First Schedule Customs Tariff Act, 1975 (51 of 1975)under sub-section (1) of section 3said Customs Tariff Act  (a) against International Competitive Bidding; or  (b) to a power project from which power supply has been tied up through tariff based competitive bidding; or  (c) to a power project awarded to a developer through tariff based competitive bidding, in terms of 29 [12/2012-Central Excise, dated the 17th March, 201212/2012-Central Excise 6/6/2016245

Credit not to be reversed  [(viii) supplies made for setting up of solar power generation projects or facilities]  21 [(6A) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the taxable services are provided, without payment of service tax, to a Unit in a Special Economic Zone or to a Developer of a Special Economic Zone for their authorised operation.]  6/6/2016246

Credit not to be reversed  32 [(7) The provisions of sub-rules (1), (2), (3) and (4) shall not be applicable in case the taxable services are provided, without payment of service tax, to a unit in a Special Economic Zone or to a developer of a Special Economic Zone for their authorised operations or when a service is exported, 6/6/2016247

Central Excise – Budget Changes  The standard rate of Central Excise duty for non-petroleum products has been enhanced from 10% to 12% ad valorem.  the rate of duty of 1% imposed on 130 items in the last Budget has been increased to 2%. The exceptions to this increase are:  Goods of heading no. 2701, i.e. coal;  All goods of Chapter 31, other than those clearly not to be used as fertilizers;  Articles of jewellery of heading 7113; and  Mobile handsets and cellular phones of heading 8517. 6/6/2016248

Central Excise – Budget Changes  This concessional duty of 2%would be available only for goods in respect of which credit of duty on inputs and tax on input services has not been taken. Wherever credit is taken, the applicable duty would be 6%. 6/6/2016249

Central Excise – Budget Changes  Cement:  The rate structure applicable to Portland cement falling under heading no.252329 has been revised. Both for packaged cement manufactured by mini- cement plants as well as non-mini cement plants, there were differential rates of duty depending on the Retail Sale Price (RSP) per bag of 50kgs, so far. Moreover, the rates of duty applicable to mini-cement plants were lower compared to non-mini plants. Now, a uniform rate of duty is being prescribed regardless of the RSP per bag although a difference in the rates applicable to mini and non-mini cement plants is being retained 6/6/2016250

Central Excise – Budget Changes Sl NoDescription of goodsEarlier rate Revise d rate 01Packaged cement manufactured in a mini- cement plan i) Of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne RSP not exceeding Rs. 3800 10% ad valore m 6% ad valorem + Rs. 120 PMT ii) Of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne RSP not exceeding Rs. 3800 10% ad valore m + Rs. 30 PMT 6% ad valorem + Rs. 120 PMT 6/6/2016251

Central Excise – Budget Changes Sl No Description of GoodsOld RateNew Rate 02Packaged cement manufactured in a plant other than a mini-cement plant – (i)Of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne RSP not exceeding Rs. 3800 (ii)ii) Of retail sale price not exceeding Rs. 190 per 50 kg bag or of per tonne RSP not exceeding Rs. 3800 10% ad valorem + Rs. 80 PMT 10% ad valorem + Rs. 160 PMT 12% ad valorem + Rs. 120 PMT 6/6/2016252

Central Excise – Budget Changes Sl NO Description of goodsOld rateNew Rate 03Cement, not cleared in packaged form 10% ad valorem 12% ad valorem 04Cement clinker10% ad valorem + Rs. 200 PMT 12% ad valorem where the retail sale price of the goods are not required to be declared under the Legal Metrology (Packaged Commodities) Rules,2011and thus not declared, the duty shall be determined as in the case of goods cleared in other than packaged form] 6/6/2016253

Central Excise – Budget Changes  Amendments in Cenvat Credit Rules, 2004  17.1 Rule 3(5) and 3(5A) are amended to prescribe that in case the capital goods on which Cenvat credit has been taken are cleared after being used then the amount payable shall be either the amount calculated on the basis of Cenvat credit taken at the time of receipt reduced by a prescribed percentage or the duty on transaction value whichever is higher. 6/6/2016254

Central Excise – Budget Changes  Rule 10A is inserted to permit transfer of unutilized credit of SAD lying in balance at the end of each quarter to another factory of the manufacturer  Rule 14 is amended to substitute the word “or” with “and” so that interest is not payable on credit wrongly taken unless the same is utilized. Similar changes are being carried out in Rule 16 of the Chewing Tobacco and Unmanufactured Tobacco Packing Machines (Capacity Determination and Collection of Duty) Rules, 2010. However, penalty provisions for such cases have not been amended. 6/6/2016255

Acknowledgements  CBEC’s Education Guide  TRU’s Letters  Contributions made by Various Authors 6/6/2016256

Final Word  A  Big  Thanks 6/6/2016257

CA N Balasubramanian 6/6/20161. Different Stroke  'Service' has been defined in clause (44) of the new section 65B and means -clause (44) of the new.

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CA N Balasubramanian 6/6/20161. Different Stroke  'Service' has been defined in clause (44) of the new section 65B and means -clause (44) of the new.

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Presentation on theme: "CA N Balasubramanian 6/6/20161. Different Stroke  'Service' has been defined in clause (44) of the new section 65B and means -clause (44) of the new."— Presentation transcript:

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