CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

by g. natarajanadvocate, swamy associates

Exemption Notifications under Section 93 of the Finance Act, 1994.

Exclusion in the coverage of the levy itself. Eg. Commercial or industrial construction service. Works Contract Service. (roads, railways, port, airport, transport terminal, bridges, tunnels & dam) Construction of residential complex service (personal use). Renting of immovable property service. (vacant land, residential, parking, sports, circus, etc.) BAS / Packaging Services (manufacture)

Abatements.

Notification No. 06/05-ST dated 01.03.2005

Intended to exempt small service providers.

Present limit- aggregate value not exceeding Rs.10 lakhs in any financial year.

Not applicable to – services provided under brand name & value of services under reverse charge.

Conditions

Option once exercise cannot be withdrawn in a financial year. No credit on inputs, input services and capital goods. Previous year turnover to be less than Rs. 10 lakhs.

Notification No. 12/03-ST dated 20-06-03

Scope Exemption to value of goods and materials sold by service provider to recipient during the course of provision of service; ( Eg- authorised service station service).

Conditions Documentary proof indicating value of goods and materials. Not to avail credit of excise duty paid on such goods and materials . in case of availment of credit, reversal of same before sale to service recipient.

Contra : Decision of LB in Aggarwal Colour Advance Photo System vs. CCE 2011 23 STR 608 (Tri-LB).

Notification No. 17/2011-ST dated 01.03.2011

Exemption to taxable services received by unit/developer of SEZ. (Earlier governed by 17/2002, 4/2004 & 9/2009)

Conditions

Exemption for ST paid on input services (U/S.66 & 66A) used for authorised operations.

Ab inito exemption for services wholly consumed inside SEZ. Provisions of Export of Service Rules, 2005 to be referred to.

Exemption vide refund for services not wholly consumed in SEZ.

Time limit – one year from date of payment to service provider.

No credit on input services.

Notification No. 8/2005 -ST dated 01-03-2005

BAS - Exemption to goods produced on jobwork.

Conditions Raw materials /semi finished goods to be supplied by client.

Goods to be returned to client for use in or in relation to manufacture of excisable goods.

Such final products are liable for appropriate duty of excise.

If production of goods by job worker amounts to manufacture u/s 2 (f) of Central Excise Act, 1944, there is no levy at all.

Notification No. 13/2003 - ST dated 20-06-2003

BAS - Exemption to commission agents.

Effective from 01.07.2003.

Scope restricted to “agricultural produce” from 09.07.2004.

Notification No. 24/2007 -ST dated 22.05.2007

Exemption to component of property tax while paying service tax on renting of immovable property service .

Conditions

Interest, penalty etc paid to local bodies on account of delayed payment of property tax not eligible for deduction.

When period for which property tax paid is different from period for which service tax is payable , proportionate property tax to be calculated for deduction.

Rule 6 (4c) - Bonanza for landlords.

Notification No. 34/2004 - ST dated 03.12.2004

GTA - Exemption for freight upto Rs.1,500 / Rs.750.

Notification 52/11 dated 30.12.11 ST Exemption for exporters.

Earlier Notification 41/2007, Notification 17/2009.

Now replaced by Notification 52/2011.

EDI Refund as per scheduled rate or actual refund.

Time limit for filing refund – one year from date of export.

Notification 18/2009 for commission agent services / GTA services.

Notification No. 30/2011 - ST dated 25.04.2011.

Health Services – Limited taxability from 01.07.2010.

Proposed expansion in 2011.

Volte facie due to “misery tax” campaign.

Notification No. 53/2010 - ST dated 21.12.2010.

Information Technology Services – Packaged Software.

Subject to payment of ED / CVD.

Parallel exemption under ED / CVD, if ST is payable.

Miscellaneous Exemptions.

Services provided to United Nations or an international organisation – Notification No. 16/02-ST dated 02-08-02.

Services provided or to be provided by Technology business incubator (TBI) Science & Technology Entrepreneurship Park (NSTEDB) – Notification No. 09/07-ST dated 01.03.07.

Services provided for official use of foreign diplomatic mission or consular post in India - Notification No. 33/07-ST dated 23.05.07.

Services provided for personal use or for use of family members of diplomatic agents or career consular offices posted in foreign diplomatic missions or consular post in India - Notification No. 34/07-ST dated 23.05.07.

ABATEMENTS

Notification No. 01/2006-ST dated 01.03.2006.

Scope

Abatement to various taxable services; Intention to exclude value of goods transferred in course of provision of service.

Conditions

No credit of duty paid on inputs and capital goods and service tax paid on input services used for providing taxable service;

Not to avail benefit of Notification No. 12/03-ST dated 20-06-2003.

Inclusion of value of materials – construction / ECI.

Implication under Rule 6 of CCR, 2004.

Export benefits under Service tax – background PERIOD RELEANT

PROVISION CONDITIONS TO AVAIL BENEFIT

28.02.99 to 08.04.99.

Notf. 2/99-ST dated 28.02.99

•Exemption to all taxable services;•Payment in convertible foreign exchange.

09.04.99 to 28.02.03.

Notf. 6/99- ST dated 09.04.99

•Exemption to all taxable service;•Payment in foreign exchange;•Payment shall not be repatriated from or sent outside India.

01.03.03 to 19.11.03.

Circular 56/5/2003-ST dated 25.04.03.

• No ST on exports;

20.11.03 to 14.03.05

Notf. 21/03-ST dated 20.11.03.

•Exemption to all taxable service;•Payment in foreign exchange;•Payment shall not be repatriated from or sent outside India

From 15.03.05 Export of Service Rules, 2005.

•Condition based exemption to all services.

Export of Service Rules 2005

Export of Service Rules 2005

Export of Service Rules, 2005.

Period Additional Conditions

15.03.05 to 18.04.06

•Services are delivered outside India and used for business or any other purpose outside India.

19.04.06 to 28.02.07

•Services are delivered outside India and used outside India;•Receipt of payment in foreign exchange.

01.03.07 to 27.02.2010

•Services are provided from India and used outside India;•Receipt in Foreign exchange.

From 01.03.2010 •Receipt in foreign exchange

Additional conditions – Confusions and Clarifications

“ provided from India and used outside India “

Circular 111/5/2009- ST dated 24.02.09 –

• meaning of expression to be understood in context of characteristic of particular category of service ;

• accrual of benefit outside is sufficient.

Circular 141/10/2011 –TRU dated 13.05. 2011 –

• accrual of benefit further clarified.

Case laws

“used outside India “

TNT India Private Ltd vs. CST 2007 (7) STR 142 (Tri-Bang) – Courier agency delivering consignments outside India. Blue Star Ltd vs. CCE 2008 (11) STR 23 (Tri-Bang) – Commission for procuring orders in India for foreign principal.CST vs. BA Research India Ltd 2009 TIOL 1981 CESTAT Ahm- Testing in India, reports sent outside India.

Consideration in Foreign exchange

ETA Travel Agency Pvt Ltd vs CCE 2007 (7) STR 454 (Tri-Bang) - Commission received in INR from foreign airlines. Suprasesh GIS & Brokers P. Ltd vs. CST 2009 (13) STR 641 (Tri-Che)- Reinsurance brokerage in INR.Nipuna Services Ltd vs. CCE 2009 (14) STR 706 (Tri-Bang) – Agent receiving commission on forex and paying appellant in INR.

Import of services – Brief history .

Period Statutory Provision

Person liable

28-02-99 to 15-08-02

Proviso to Rule 6(1) of ST Rules,1994.[omitted w.e.f 16-08-02]

Service provider.

16-08-02 to 15-05-05 Rule 2 (1)(d)(iv) of ST Rules,1994.

Service Recipient.

16-05-05 to 17-04-06 Explanation to S.65(105) Fin.Act.1994.

Service Recipient.

18-04-06 on wards S.66A of Fin. Act. 1994,R.2(1)(d)(iv) of S.T.Rules,1994 r./w. Taxation of Services (Provided from outside India) Rules, 2006.

Service Recipient.

Indian National Shipowners Association Case.

g. natarajan93400 54477mail@swamyassociates.com