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FREQUENTLY ASKED QUESTIONS

FREQUENTLY ASKED QUESTIONS ON SERVICE TAX

 

1) General :

Q. 1.1) What is Service Tax? Is it an indirect tax?
Ans :- Service Tax is an indirect levy imposed under Chapter V of the Finance Act, 1994 as amended. The tax is applicable to services specified in the section 65 & 66”.

Q. 1.2) What is the rate of Service Tax?
Ans :- At present the rate of Service Tax is eight percent to be levied on the “value of taxable service”. Generally speaking “value of taxable service” means the gross amount received by the service provider for the taxable service rendered by him.

Q. 1.3) Who is liable to pay Service Tax to the Govt?
Ans :- The person who provides the taxable service on receipt of charges is responsible for paying the Service Tax to the Government.

Q. 1.4) Who is liable to pay Service Tax in case service is provided by a person other than Indian resident or who does not have any establishment in India?
Ans :- In this case the services receiver in India is liable to pay service tax.

2) REGISTRATION :

Q. 2.1) Whom & where should one approach for registration?
Ans :- Generally, all Commissionerates of Central Excise, have a Service Tax Cell, headed by Assistant Commissioner/Deputy Commissioner. However, in certain Commi-ssionerates, separate Service Tax Divisions have been constituted. The work is also delegated to Central Excise Divisions in many Commissionerates. A prospective assessee of Service Tax can approach the Assistant Commissioner/Deputy Commissioner in charge of Service Tax cell of the Jurisdictional Commissionerates or Central Excise Division for registration depending upon the arrangements made in the Commissionerate.

Q. 2.2) What is the procedure for registration?
Ans :- A prospective taxable service provider seeking registration should file and application in Form ST-1 (in duplicate) before the juridictional Central Excise officer / Service Tax officer within thirty days from the date of notification of the taxable service. Department is required to issue the registration certificate within 7 days of the receipt of application. In case of failure to issue registration certificate within 7 days, the registration applied for is deemed to have been granted and the assessee can carry on with his activities.

Q. 2.3) Who should apply for registration under Service Tax law? Is there any provision for Centralised Registration?
Ans :- All persons providing taxable service are required to register with the Central Excise department. They would have to take only one registration even if they operate from more than on premise but have centralised billing at one place. However, if such persons do not have Centralised billing at one pace, then they will have to register at each place separately. Besides, only one registration is required to be taken even if any individual provides more than one service but from the same premises.

Q. 2.4) What is to be done with the registration when
a) a registered assessee transfers his business to another person, or
b) a registered assessee ceases to carry on the activity for which he is registered?
Ans :-   a) When a registered assessee transfers his business to another person the transferee should obtain a fresh certificate of registration.
            b) When a registered assessee ceases to carry on the service activity for which he is registered, he should surrender his registration certificate to the Central Excise authorities.

Q. 2.5) What is the time limit within which the service provider should register with the Central Excise department for the service tax purpose once the service is notified or once the assessee commences the business of rendering the taxable service?
Ans :- Every person liable to pay the service tax should make an application to the concerned Central Excise Officer for registration within a period of 30 day of the Service Tax having come into force. In cases where a person commences the business of providing a taxable service after such service has been notified, he is required to make an application for registration within a period of 30 days from the date of commencement of his activities.

Q. 2.6) Whether a service provider can make payment of Service Tax and file returns before the grant of registration by the proper officer?
Ans :- Yes, A service provider can pay service tax and file returns immediately after applying for registration.

Q. 2.7) Is there any penal provision for non-registration?
Ans :- Yes, Any offence of failure for non-registration will attract a mandatory penalty of rupees five hundred.

Q. 2.8) Is obtaining a PAN NO. from Income Tax Deptt, a must for obtaining Service Tax Registration?
Ans :- It is not mandatory to have a PAN for obtaining registration in Service Tax. However, it is advisable for Service Tax assessees to have a PAN No. as Service Tax Code (STC) Number based on PAN allotted by Income Tax Deptt. has been introduced in Service Tax also. The main objective of allocating a number is to identify the concerned person where he is located and registered.

3) PAYMENT OF SERVICE TAX :

Q. 3.1) How and where to pay Service Tax?
Ans :- The Service Tax amount is required to be paid in Form TR-6 challan (yellow in colour) in the specified branches of designated banks. The list of such Banks and Branches is available in every Commissionerate of Central Excise. Different heads of accounts have been specified for different taxable service by the Govt. under which payment has to be made. While making the payment of service tax to the credit of Central Govt., head of account should be correctly and properly indicated under major and minor heads and sub-heads to avoid misclassification.

Q. 3.2) When is Service Tax required to be paid?
Ans :- If the assessee is an individual or a proprietory or partnership firm, the service tax is to be paid on quarterly basis. The payment is to be made by the 25th day of the month following the quarter. For example, Service Tax for the quarter ending 30th June is to be paid by 25th July.
In respect of other categories, the tax is payable on monthly basis and is to be paid by 25th day of the succeeding month.

Q. 3.3) Whether the payment of Service Tax is to be made for the billed amount or for the value received?
Ans :- The Service Tax for a particular period is payable on the value of taxable service received in that period and not on the gross amount billed to the client.

Q. 3.4) Whether service tax deposited by the assessees is non-designated bank will amount to non-payment of service tax?
Ans :- Yes. For payment of service tax, specific Bank has been nominated for every Central Excise Commissionerate. If service tax amount is deposited in a branch of Bank other than nominated Bank, it amounts to non-payment of Service Tax.

Q. 3.5) What is the date of payment of Service Tax? Is it the date on which the cheque for the same is deposited / tendered in the designated Bank or the date on which the amount is credited?
Ans :- The date of deposit of cheque is the date of payment of Service Tax. the Service Tax rules as amended provide that it would suffice if the cheque is presented to the bank by the 25th of the month. However, if the cheque bounces, it would mean as if the tax has not been paid and the necessary penal consequences would follow.

Q. 3.6) How do you describe the expression “person” appearing in the definition of taxable service?
Ans :- The expression refers to a “legal person” and would include any individual, proprietary firm on partnership firm, company, trust, institution and society etc.

Q. 3.7) Would service provided in India for the foreign client be liable for payment of service tax?
Ans :- Yes, the service tax is payable on all taxable service rendered in India, whether to an Indian or foreign client.

Q. 3.8) Would the service provided abroad liable for payment of Service Tax?
Ans :- No, the services rendered abroad shall  not attract service tax as the levy covers only the services provided within India.

Q. 3.9) When payment is made by a client or customer to an assessee after deducting his Income Tax liability under “Tax Deducted At Source” provision, whether the Service Tax liability of the assessee is only towards the amount actually received from his client or customer or tax is to be paid on the amount of income tax deducted at source also?
Ans :- The Service Tax is to be paid on the value of taxable services which is charged by an assessee. Any income tax deducted at source is included in the charged amount. Therefore, Service Tax is to be paid on the amount of income tax deducted at source also.

Q. 3.10) What is the interest rate applicable on delayed payment of Service Tax?
Ans :- Every person, liable to pay the tax in accordance with the provisions of section 68 or rules made thereunder, who fails to credit the tax or any part there of to the account of the Central Government within the period prescribed, shall pay simple interest at the rate of fifteen per cent per annum for the period by which such crediting of the tax or any part there of is delayed.

Q. 3.11) Is the amount for Service Tax charged form the client compulsorily to be indicated separately in the Bills/Invoices raised on him?
Ans :- Yes it is compulsory to separately indicate the amount of Service Tax charged in the Bills/Invoices raised on clients in terms of Section 83 of Finance Act 1994 read with sec 12A of Central Excise Act 1944. It is also advisable for the service providers to separately bill the amount of Service Tax in the invoice/bill on the basis of taxable value of service rendered, especially so if he required to avail the input credit scheme.

Q. 3.12) Is there any exemption for payment of Service Tax if the receiver / provider of the service is the Central Govt. / State Govt. organisation and/or Public Sector Undertakings? Can any one of the above claim immunity from the liability to pay or make provision for paying the Service Tax?
Ans :-
No, there is no such general exemption, exempting the services received/provided by the Central Government / State Government organization or Public Sector Undertakings. No one can claim immunity from payment of service tax until specifically provided in law.

Q. 3.13) Whether any general exemption from Service Tax is available for small scale service providers, as in the Central Excise?
Ans :- No. At present there is no such general exemption available for small scale service providers.

Q. 1.14) What are the penal provisions if the service tax is not paid/paid late?
Ans :- Any person liable to pay service tax in accordance with the provisions of section 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which such failure continues, so however, that the penalty under this clause shall into exceed the amount of service tax that he failed to pay.

Q. 3.15) Can any adjustment of tax liability be made by an assessee on his own in cases where Service Tax has been paid in excess?
Ans :- Yes. As per Rule 6(3) “Where an assessee has paid to the credit of Central Government, service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a pro-rata basis) against his service tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the service tax thereon to the person from whom it was received.” In all other cases of excess payment, the refund claims have to be filed with the department.

4. FILING OF RETURNS :

Q. 4.1) How to file Service Tax Returns; at what interval and with whom?
Ans :- The Service Tax assessees are required to file a half yearly return in Form ST-3 or ST-3A as applicable in Triplet, to the Superintendent, Central Excise, dealing with Service Tax work. The return is to be filed within 25 days from the last day of the half year it relates to, and should be accompanied by copies of all TR-6 challans issued in the relevant period. Thus, returns for half year ending 30th September and 31st March are required to be filed by 25th October and 25th April, respectively.

Q. 4.2) What is e-filing of Service Tax returns?
Ans :- E filing is a facility for the electronic filing of Service Tax returns by the assessee from his office, residence or any other place of choice, through the Internet, by using a computer. The assessee can go to the e filing site ‘Home Page’ by typing the address http://servicetaxefiling.nic.in in the address bar of the browser.

Q. 4.3) Who can e file their returns?
Ans :- Assesses having a 15 digit STP code and falling under the following categories can avail of the facility of electronic filing of their ‘Return’ for the following services;

a) Telegraph Services (TGH)
b) Telephones (TSU)
c) Life Insurance Services (LIS);
d) Insurance Auxiliary (IAX)
e) General Insurance Business (GIB);
f) Stockbrokers (STB)
g) Advertising Agencies (ADV)
h) Courier Services (COU)
i) Banking and Financial (BFN) and
j) Custom House Agents (CHA)

This facility will be extended to other services in stages.

The assessee should take care to ensure that he has been indicating his 15 digit STP code in the challans used by him from September 2002. An assessee who has not done this may also opt for e filing but he will have to submit copies of challans manually to the department after e filing his return, evidencing payment of duties, after indicating his 15 digit STP code on each challan.

Q. 4.4) What is the procedure for e-filing?
Ans :- Those assessees coming under the above service categories and who have 15 digit Service Tax Payer Code allotted to them, should file an application to their jurisdictional AC/DC as laid out in Trade Notice issued in this regard. They should mention a trusted e-mail address in their application,  so that the department can send them their userword and password to help them file their return. They should log on to the Service Tax E-filing Home Page using the Internet. on entering their STP Code, user word and password in the place provided on the Home Page they will be permitted access to the E filing facility. They should then follow the instructions given therein.

Q. 4.5) What is to be done when no services are provided for in a half-year?
Ans :- If no service have been provided during a half year, no Service Tax is payable; the assessee may file a Nil Return within the prescribed time limit.

Q. 4.6) What is the penalty for non-filing or delayed filing of half yearly returns?
Ans :- As per Section 77, “If a person fails to furnish in due time the return which he is required to furnish under section 70 or the rules made there under, he shall be liable to penalty which many extend to an amount not exceeding one thousand rupees”.

Q. 4.7) Whether, a single return is sufficient when an assessee provides more than one Service or separate return is to be filed for each service?
Ans :- A single return would suffice. However, details in each of the column in Service tax return Forms ST-3 has to be furnished separately for each of the taxable service rendered by the assessee.

5. RECORDS :

Q. 5.1) Are there any statutory documents prescribed by the Govt. such as specified invoice proforma, specified registers etc for use by the Service Providers.
Ans :- No specific records have been prescribed to be maintained by a Service Tax assessee. The records including computerised data if any being maintained  by an assessee as required under any other law in force. (e.g. Income Tax, Sales Tax) is acceptable to the Central Excise Department for the purpose of Service Tax.

Q. 5.2) From where do the Service Tax assessee get the Forms Viz ST-1, ST-2 etc?
Ans :- The Forms are available on the website as well as with the jurisdictional Central Excise Commissionerates.

Q. 5.3) Can the Department ask for more information than what assessee is submitting to it in the Form ST-1 and ST-3?
Ans :- Yes, if required the Department can always ask for additional information.

6. REFUNDS :

Q. 6.1) Is the Service Tax payable by the assessee even in cases where his clients do not pay for the service rendered or pay only a part of the bill raised in this regard?
Ans :- The Service Tax is required to be paid only on the value of taxable service received in a particular month or quarter as the case may be and not on the gross amount billed to the client. However, in all such cases where the amount received is less than the gross amount charged/billed to the client, the Service Tax assessee are required to amend the bills either by rectifying the existing bill or by issuing a revised bill and by properly endorsing such charge in the billed amount. In case an assessee fails to do so, his liability to pay Service Tax shall be on the amount billed by him to the client for the services rendered.

Q. 6.2) What is the procedure for claiming refund?
Ans :- The procedure for claiming refund for the amount due from the Department is an mentioned below.

i) Submission of application in prescribed Form-R in triplicate to the jurisdictional Assistant Commissioner.
ii) Application should be filed within the prescribed period. i.e. before the expiry of six months from the relevant date as defined in Section11B of the Central Excise Act, 1944 which has been made applicable to service tax refund matters also.

Application should be accompanied by documentary evidence to establish that the amount claimed as refund is amount paid by him in excess of the service tax due and the incidence of such tax has not been passed on to any other person.

Q. 6.3) What is the “Relevant Date” for calculation of limitation period of one year in respect of filing refund claims related to Service Tax?
Ans :- The “Relevant Date” for the purpose of refund (under section 11B of CEA 1944) is the date of payment of Service Tax, Thus, the limitation period of one year is to be calculated from the said date.

7. APPELLATE REMEDIES :

Q. 7.1) Who should be approached when an assessee is aggrieved by an order of Assistant Commissioner/ Deputy Commissioner in respect of Service Tax?
Ans :- An assessee aggrieved by the order of Assistant Commissioner/Deputy Commissioner in respect of Service Tax, may file an appeal to the Commissioner of Central Excise(Appeals) in Form ST-4, in duplicate along with a copy of order appealed against. The appeal should be presented within three months from the date of receipt of the decision or order of the Central Excise Officer.

Q. 7.2) What is the procedure for filing of appeal against the order of Assistant Commissioner/Deputy Commissioner of Central Excise?
Ans :- Any person aggrieved by any order passed by any assessing officer or adjudicating authority below the rank of Commissioner may file an appeal before the Commissioner, Central Excise (Appeals).

i) The appeal shall be filed in the prescribed form ST-4.
ii) It shall be presented within three months from the date of receipt of order which is being appealed against.
iii) It should be filed in duplicate.
iv) It should be accompanied by a copy of the order appealed against.

Q. 7.3) Can the time limit of three months for filing the appeal to the Commissioner (Appeal) be extended, if yes, under what circumstances?
Ans :- Yes. If the Commissioner of Central Excise (Appeals) is satisfied that the appellant was prevented by sufficient cause, from presenting the appeal within the statutory period of three months, he may allow the appeal to be presented within a further period of three months.

Q. 7.4) Can an appeal be filed against the order of Commissioner of Central Excise of Commissioner of Central Excise (Appeals)?
Ans :- Yes, the law provides for filing an appeal against the order of Commissioner of Central Excise or Commissioner (Appeals). Such appeals can be filed with the CESTAT  within three months of the date of receipt of the order sought to be appealed against.

Q. 7.5) What is the procedure for filing appeal against the order of Commissioner of Central Excise or Commissioner (Appeals)?
Ans :- i) Any assessee aggrieved by the Commissioner of Central Excise or the Commissioner (Appeals) may file an appeal before the Appellate Tribunal i.e.CESTAT.
ii) The appeal should be filed within three months from the date of receipt of the order appealed against.
iii) It should be filed in the prescribed form ST-5.
iv) It shall be filed in quadruplicate.
v) It should be accompanied by a copy of the order appealed against, one of which should be a certified copy.
vi) The appeal should be accompanied by a fee of rupees.Two Hundred only.

8. SERVICE TAX CREDIT SCHEME :

Q. 8.1) Whether credit of Service Tax is available for all the input services used? If so what are the records to be maintained?
Ans :- Yes. An output service provider is allowed to avail Service Tax credit of the Service Tax paid on all input services in the following manner, namely :

a) where the input service falls in the same category of taxable service as that of output service, Service Tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the sixteenth day of August, 2002.
b) in any other case, Service Tax credit shall be allowed to be taken on such input service for which invoice or bill or challan is issued on or after the fourteenth day of May,2003.
The invoice or bill or challans as the case may, be shall contain the following details:-

i) Serial Number of the document
ii) Date of issue.
iii) Description and value of input service.
iv) Amount of Service Tax paid
v) Service Tax Registration No.
vi) Address of Input service provider.

Q. 8.2) Is there any prescribed document/register for availing Input Service Credit?
Ans :- The output service provider availing Service Tax credit shall maintain proper records in which the relevant information regarding the Sr.No. and date of document on which Service Tax credit is availed, Service Tax registration No. and name of the input service provider, description and value of input service, service tax credit availed, Service Tax credit utilised for payment of Service Tax on output service shall be recorded. The burden of proof regarding the admissibility of Service Tax credit shall lie upon the person taking such credit.

Q. 8.3) How to avail Service Tax credit?
Ans :- The output service provider to avail Service Tax credit shall submit to the Superintendent of Central Excise, a return in the form annexed to the Service Tax Credit Rules, 2003 alongwith Form ST-3.

Q. 8.4) Whether Input Credit can be accumulated and adjusted at the time of payment of Service Tax?
Ans :- Service Tax credit availed on input service may be utilized for payment of Service Tax on output service. Since no refund of any excess credit available is admissible, the asssessee has to utilize the same for payment of Service Tax. While paying Service Tax on the output service, the service tax credit shall be utilized only to the extent such credit is available on the last date of the month for payment of Service Tax relating to the month or in case where the assessee is an individual or proprietary or partnership firm to the extent the credit is available on the last day of the quarter for payment of Service Tax relating to the quarter.

Q. 8.5) How do the service provider operate within the scheme of service tax credit when he is providing both taxable and non taxable or exempt services?
Ans :- Where a service provider avails credit on any input service and renders such output services which are chargeable to service tax as well as exempted services or non taxable services, as the case may be, then the service provider shall maintain separate accounts for receipt and consumption of input service meant for consumption in relation to rendering of output services which are chargeable to service tax and the inputs service meant for consumption in relations to rendering of output services which are exempted services or non-taxable services, as the case may be. The service provider shall take credit only on that portion of input service, which is intended for use in relation to rendering output services, which are chargeable to service tax.

In case the service provider, opts not to maintain separate accounts of input service meant for consumption in relation to rendering of such output services which are chargeable to service tax as well as exempted services or non-taxable services, he shall be allowed to utilize service tax credit for payment of service tax on any output service only to the extent of an amount no exceeding thirty-five per cent. of the  amount of service tax payable on such output service.

Q. 8.6) What happens to the Service Tax credit lying unutlized in the account of an assessee when he shifts his establishment to another site or his establishment is transferred on account of change in ownership or on account of sale, merger, lease or transfer of such establishment?
Ans :- The output service provider is allowed to transfer the Service Tax credit lying unutlized in his account to such transferred, sold, merged or amalgamated establishment.

Q. 8.7) What is the provision regarding Service Tax credit on the service provided in relation to telephone connection?
Ans :- Service Tax credit on the service provided in relation to the telephone connection is allowed only in respect of such telephone connections which are installed in the business premises from where output services is provided. Mobile phones are not covered.

SERVICE SPECIFIC ISSUES WITH REFERENCE TO SERVICES INTRODUCED IN THE TAX NET IN YEAR 2003-2004

1. COMMERCIAL TRAINING AND COACHING CENTRES :           

Q. 1.1) Whether intensive tuition/coaching institutes/group of individuals for various competitive exams./correspondence and foreign degree courses/spoken language course liable for Service Tax?
Ans :- Commercial coaching and training services provided by institutes that prepare applicants for Board examinations and competitive exams, like entrance examinations for IIT, Joint Entrance Exams.Premedical Tests, Civil Services Exam, etc. are chargeable to service tax.

However, services in relation to Commercial Coaching and training, provided by :-

a) Vocational Training Institute
b) Computer Training Institute and
c) Recreational Training Institute;

have been exempted from service tax w.e.f. 1st July, 2003 vide Notf.No.9/2003 Service Tax. Therefore, vocational coaching and training services provided by typing and shorthand institutes, TV/Vehicle repairs training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer training centers, hobby classes, institutes teaching martial arts, painting, dancing etc, would not be  chargeable to Service Tax. This exemption notification 9/2003-ST is effective only up to 29th February 2004.

Q. 1.2) Whether service tax is leviable on postal/correspondence coaching?
Ans :- Service Tax is leviable on any coaching or training provided by an institution on commercial basis. Therefore, the coaching provided by postal means would also be covered under the service tax.

Q. 1.3) Whether individuals going to houses to impart tuition/coaching would be chargeable to service tax?
Ans :- Service tax is on institutions/establishments. Only those service providers are covered under service tax who have some establishment for providing commercial coaching or training.

Thus, individuals providing services at the premises of a service receiver would not be covered under service tax. However, if coaching or training center provides commercial coaching by sending individuals to the premises of service receivers, such services would be chargeable to service tax.

Q. 1.4) Whether commercial coaching imparted to students of standard 1 to 9 is taxable?
Ans :- Yes, only pre school coaching is exempted

Q. 1.5) Whether commercial coaching provided by institute to the students of degree exams held by universities are chargeable to service tax ?
Ans :- Yes. The commercial coaching given to the students to prepare them to prepare for university degree exam is liable for service tax.

2. MAINTENANCE & REPAIR SERVICE :

Q. 2.1) In case of maintenance contract entered prior to March, 2003 for one year on receipt of the service charges for the whole year, it appears illogical to demand collect  service tax on the services rendered prior to 14.5.2003 as the client has already paid the amount. Who will pay the service tax and how ?
Ans :- There are cases where maintenance contracts are entered into for a period of more than one year, Vide Notification No.11/2003 Service Tax dt.20.06.2003, for maintenance contracts entered into prior to 1st July 2003, exemption has been provided to that part of the value of service for which bill/inovice have been raised and the amount has actually been received prior to 1st July 2003. For such contracts, all subsequent payment or payments made against invoice raised subsequent to 1st July 2003 will be chargeable to service tax.

Q.2.2) Whether service tax is applicable on maintenance and repair services provided by persons other than authorised service centres of companies ?
Ans :- “Maintenance or repair” means any service provided by :-

i) any person under a maintenance contract or agreement; or
ii) a manufacturer or any person authorised by him in relation to maintenance or repair or servicing of any goods or equipments, excluding motor vehicle. therefore, service tax is applicable on maintenance and repair services provided by all such persons.

Q. 2.3) If there is a total sub-contract of the service, whether sub-contractor is supposed to take out a registration and discharge the tax liabilty?
Ans :- The sub-contractor need not take a registration under Service Tax. In all such cases, Service Tax is to be paid by main service provider.

Q. 2.4) Whether maintenance and repair provided without any contract is taxable?
Ans :- The maintenance or repair service undertaken under a mainteance contract or agreement is only chargeable to Service Tax.

Q. 2.5) Whether Annual Maintenance Contracts (AMC) for maintenances of roads are excluded from Service Tax?
Ans :- As roads are neither goods nor equipment, the AMC for roads would not be covered under Service Tax.

Q. 2.6) Whether Service Tax on maintenance and repair would be charged in case where during the guarantee period, the services are provided to the buyer of the goods while the payments for the same are received from the supplier of the goods?
Ans :- Irrespective of the fact that the receiver of the service is different from the person making payment for such services, the Service Tax is leviable on the service provided towards maintenance and repair. Therefore, for the services provided during the warranty period by the dealer or any other authorized person, Service Tax would also be leviable on any amount received by such dealer or such other authorized person from manufacturer of such goods.

Q.2.7) Maintenance or repair services rendered under contracts entered into prior to 01.07.2003 are exempted from Service Tax if the bills are raised, and payment also made, prior to 01.07.2003. Whether service Tax would still be chargeable in cases where though the bills are raised or payment made after 01.07.2003, but service were rendered prior to 01.07.2003?
Ans :- It is a cardinal principle of taxation that no tax can be levied or collected except by authority of law. Thus, if the levy of Service Tax on a particular  service comes into force on a given date, that service will not be taxable if rendered before that date. The levy of Service Tax on “Maintenance or Repair Service” has come into force on 01.07.2003. Accordingly, any maintenance or repair service rendered prior to 01.07.2003 will not be taxable, irrespective of  when the bills are raised or payment made. This will apply to other Services as well which were rendered prior to the imposition  of Service Tax on them.

3.BANKING & FINANCIAL SERVICE :

Q.3.1) Whether Finance Companies providing banking and Financial services and having proprietory/partnership status are liable to Service Tax?
Ans :- The Banking and Financial services provided by a banking company or a financial institution including a non banking financial company or any other body corporate is chargeable to Service Tax. The term Body corporate means a private limited, public limited company or a Government company. Such companies should be either a banking company or a financial institution or non banking financial company to come under the tax net. In other words individuals, proprietorship or Partnership firms will not come under the tax net.

Q.3.2) Whether buying and selling of foreign exchange by the authorised  dealers and money changers are under Service Tax net?
Ans :- Only the service of “Foreign Exchange Broking” when provided by the foreign exchange brokers, authorized dealers and money changers has been brought under tax net.

4. ARCHITECT/INTERIOR DECORATOR SERVICE :

Q.4.1) Whether Vaastu/Feng Shui Consultants come under the category of Interior Decorators?
Ans :- Interior Decorator means any person engaged whether directly or indirectly, in the business providing by way of advice, consultancy, technical assistance or in any other manner, services related to planning, design or beautification of spaces, whether man made or other wise. Since Vaastu/Feng Shui Consultants are offering services by way of advice relating to planning and designing of spaces, they come under the category of Interior Decorators.

5. SOUND RECORDING SERVICES :

Q.5.1) Whether lending/hiring of Video/Sound Recording equipment come under Service Tax?
Ans :-   The Lending/hiring of Video/Sound Recording equipment is in the nature of Sub-contracts and because the Sub-contractors are not  providing the services to the customer directly, they are not required to pay the Service Tax.

6. ADVERTISING  AGENCIES :

Q.6.1) Can Cinema theatres be treated as advertisement agencies as they project advertisement?
Ans :- The Cinema theatres cannot be treated as advertisement agencies as they project advertisements only on behest of advertising agencies. Further it has already been clarified that the amount paid by advertising agencies for space and time in getting the advertisement published in print media (i.e newspapers, periodicals etc), or the electronic media (Doordarshan, private T.V Channels AIR, Cinema theatres etc) will not be included in the value of taxable service for the purpose of levy of Service Tax.

7. CARGO HANDLING SERVICE :

Q.7.1) Whether the services in the form of supply of provisions called “Ship Stores” provided by Ship Chandlers to the vessels are taxable?
Ans :- The Services rendered by Ship Chandlers  are services  rendered in relation to the vessel under authorization from port authorities and hence come within the ambit of Port Services and liable to Service Tax.

Q.7.2) Whether storage of empty containers attracts levy of Service Tax?
Ans :- The handling/storage and ware housing of empty containers would be covered within the scope of storage and ware housing services and are liable for Service Tax.

Q.7.3) Whether handling/storage of empty containers within a port area would attract Service Tax?
Ans :- The handling/storage of empty containers within a port area would be covered within the scope of port Services, as empty containers would come under the definition of goods under Section 65(41) of the Finance Act,1994. The earlier clarification regarding not to consider empty container as cargo in the context of Cargo Handling Services has got no relevance vis-à-vis Port Service.

8. MANDAP KEEPER :

Q.8.1) Whether the services provided by a Mandap Keeper from a religious place are liable for Service Tax?
Ans :- The service provided by a Mandap keeper from the precincts of a religious place are exempted from payment of Service Tax.

9. BUSINESS AUXILIARY SERVICE :

Q.9.1) Whether service provided by call centres are taxable?
Ans :- Business auxiliary services provided by call centres, i.e Commercial Centres which provide assistance, help or informations , through telephone, on behalf of another person are exempted from Service Tax.

Q.9.2) Whether services provided by medical transcription centres are taxable?
Ans:- Business auxiliary services provided by medical transcriptions centres i.e commercial concerns which transcribe medical history, treatment, medical observations and the like, are exempted  from payment of Service Tax.

10. FRANCHISE SERVICE :

Q.10.1) What is the taxable service under Franchise Service?
Ans :- Franchise Service is a Service provided by the franchisor to a franchisee under a specific type of agreement know as franchise agreement. This agreement includes the franchisee being obliged to follow the concept of  business operation, managerial expertise, market techniques etc. of the franchisor and is under an obligation not to engage in selling , producing or providing similar goods or services, identified with any other person. The franchisee is required to pay to the franchisor, directly or indirectly , a fee which is chargeable to Service Tax.

Q.10.2) If the franchisor is not normally a resident of India, who has to pay Service Tax?
Ans :- As per Service Tax Rules in all such cases the service receiver in india would be liable to pay Service Tax on behalf of the service provider.

11. COMMISSIONING & INSTALLATION SERVICE :

Q.11.1) Whether commissioning or installation service provided by an individual would be taxable ?
Ans :-  Exemption from payment of Service Tax has been  provided for Commissioning or installation service provided by a Commissioning or installation agency other than a commercial concern. Accordingly, the Commissioning or installation services provided by an individual will be exempt from Service Tax.

12. GENERAL :

Q.12.1) Whether  the service provided by a Commission Agent are taxable?
Ans :- A Commission Agent is a person who causes sale or purchase of goods on behalf of another person for a consideration which is based on quantum of such sale or purchase. Business auxillary services provided by a Commission Agent are exempted from payment of Service Tax.

Q.12.2) Whether cost of material is also included in the value of taxable service?
Ans :- The cost of goods and materials sold by the service provider to the recipient is excluded from the value of taxable service.  This exemption would be available only in cases where the sale of such goods is evidenced and the sale value is quantified and shown  separately in the invoice.

Q.12.3) Whether the rental charged by the Telephone service providers in their bill is taxable?
Ans :- The rental charges are included in computing the value of taxable service provided  by the Telephone service providers. Thus, Service Tax applies to call charges, including rentals.

13. EXPORT OF SERVICES :

Q.13.1) Whether  export of services are exempted from Service Tax? If so, what would constitute exports? Whether secondary services providers supplying service to primary service  providers are exempted from Service Tax if the primary service is exported?
Ans :- The Service Tax is leviable only on the taxable services supplied within India except Jammu and Kashmir. Thus all the taxable services exported outside India are not leviable to service tax and therefore, exempt. Since tax is a destination based consumption tax and, therefore, if the services provided are consumed abroad, it is covered under export and therefore, not leviable to service tax. Some of the examples are that if a Management Consultant or a Consulting Engineer provides the consultancy service to a foreign company situated outside India. It will constitute direct export. Similarly, if service provider in India deputes his consultant abroad or provides the service to foreign customer abroad  by opening a branch office or any other establishment in that country, same would also constitute exports. However where a foreign company comes to India and takes the services of manpower recruitment agency in India for recruitment of personnel, the service tax will be leviable as it does not amount to export. Similarly, foreign tourist coming to India and enjoying taxable services (even though making payment in foreign currency) are taxable and are not exempt as it does not amount to export.

The Secondary services which are consumed or merged with the primary output services which are eventually exported outside India will be exempt.

IMPORTANT TELEPHONE NUMBERS

The Commissioner                                 23231486
Customs & Central Excise                     Fax : 23211086
Hyderabad - II Commissionerate,
Hyderabad.                     

The Joint Commissioner                       23211655
of Central Excise, Hyderabad - II           Fax : 23211655
Commissionerate                            
Hyderabad                                

The Assistant Commissioner of            23244586
Central Excise, Service Tax Cell

Hyderabad - II Commissionerate
Hyderabad.

The public Relations Officer                 23244438
Room No.714, 6th Floor,                      23244391
Office of the Commissioner of
Custom & Central Excise 
Basheerbagh, Hyderabad.

 

 

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