"WORKS CONTRACT/PROJECT

EXECUTION" (TAX PLANNING UNDER

VAT AND SERVICE-TAX LAWS)

1 day seminar on WORKS CONTRACT/PROJECT EXECUTION

(TAX PLANNING UNDER VAT AND SERVICE-TAX LAWS)
Date: 13th Feb 2012
Venue: A Hotel Sea Princess
Location: Mumbai
Overview of the seminar - The Seminar will cover basic concepts right from grass root level of both
the Indirect Tax laws viz. VAT and Service-tax. It will thereafter address the intricacies and
complicated areas connected with applicability of these laws to the activities of supply and services
involved in execution of works contract or project execution. Endeavour will be that at the end of the
day, each participant will go with enriched knowledge of this cumbersome area of Indirect tax law
which will help him better in protecting the interest of organization from any untoward exposure.
Brief profile of the speaker - Harish Motwani - A thorough Professional having in-depth knowledge
in the field of Indirect Taxation with over 35 years of Industry exposure in handling of indirect tax
matters with special expertise in imparting inter-active training on intricacies of indirect tax laws to
Trade and Industry, as a regular faculty in various prestigious Institutions. Retired Vice-President
of Siemens Limited. Has conducted various in-house seminars/workshops on all India bases
covering the various subjects of indirect taxation relevant for various departments/factories of
Siemens group of Companies. Has served as visiting Faculty to IIM, Bangalore for mi ddle/Senior
Level Management courses for several years. Visiting faculty to various local Business schools and
Educational Institutions.
Why you must not miss this seminar?
The intricacies connected with VAT and Service-tax has increased manifold in the recent times, for
the companies engaged in Works Contract and Project Execution. Radical changes have been made
in both these Indirect Tax Laws as a result of that it is a must for relevant companies to understand
the implications of such amendments and go for optimum tax planning. The taxes alone can tilt the
scale in favor of competitors in todays competitive world. Therefore no organization, ones who are
engaged in execution of Works contract or those who are awarding such contracts can afford to
overlook this subject of tax planning.
Who should attend?
The seminar should be attended not only by persons connected with handling of Indirect tax subject,
but persons of all other relevant departments such as Finance, Accounting, Sales, Marketing,
Technical etc., as all such departments are involved right from bidding process till the final execution
of Works contracts/projects. In order to cover the exposure on account of impending tax burden it
is a must to impart knowledge to all such concerned persons of the organization.
From Sectors: - Seminar is relevant for all Companies who are engaged in execution of Works
contracts and Project Execution as also for the companies who are engaging outside Works
Contractors to carry out said activities. Seminar will be especially useful for companies engaged in
EPC projects, Constructions, Power, Engineering, Mining etc. both in Private as well as Public
Sectors.
1 DAY SEMINAR AGENDA-
Fore Noon Session: 9.30 a.m. to 1.00 p.m.
(With Tea Break at 11.15 am)
SESSION - I: BASIC CONCEPTS OF VAT
Basic concepts and Salient Features of VAT Law
Taxable Event
Relevance of movement of Goods
Local Sale V/s Central Sale
Transit Sale Provisions
Exemptions
Sale in the course of Import
High Seas Sales
Return of Goods
SESSION - II: VAT vis--vis WORKS CONTRACT/PROJECT EXECUTION
Historical Background and Constitutional Position
Type of Works Contracts
Divisible & Indivisible Contracts
Which Contract to be preferred
Essence of Works Contract
Precautions to be taken
Computation of VAT for goods involved in execution of Works Contract
Composition Scheme
Sub-Contracting
Factors relevant for Tax Planning for Works Contract
After Noon Session: 2.00 p.m. to 5.00 p.m
(With Tea Break at 3.30 pm)
SESSION - III: BASIC CONCEPTS OF SERVICE-TAX
Basic Concepts & Salient features of Service-tax provisions
Constitutional Validity
Who is liable
Classification of Services
Valuation Provisions under Service-tax Law
Cenvat Credit Scheme (Credit of Inputs/Capital Goods/Input Services)
Taxability of Import of Services (Reverse charge mechanism)
Exemption on account of Export of services
General Exemptions applicable under Service-tax law
SESSION - IV: SERVICE-TAX vis--vis WORKS CONTRACT/PROJECT EXECUTION
Works Contract Category introduced under Finance Act, 1994
Govt. Objective behind introduction of Works Contract Category
Basic Conditions to be fulfilled for inclusion under Works Contract Category
Contracts statutorily covered
Important Litigations relating to Works Contract
Valuation of Taxable Services contained under Works Contract
Options for Payment of service-tax for services covered under Works Contract
Salient features of Composition Scheme prescribed under Service-tax law
SESSION V: OPEN HOUSE
9.30amRegistration&Breakfast
10.00amSessionBegins
11.30amSecondroundofteacoffee
11.45amSessioncontinue
01.00pmLunchBreak
02.00pmSessionContinue
03.45pmTeaBreak
04.00pmsessionContinue
05.30pmEndofDayandCertificateDistribution

Constitutional Bank Ground of

Indirect taxes in India
INBIAN TAX STR0CT0RE
C0NSTIT0TI0NAL BACKuR00NB
Since, Constitution of India is foundation and source of powers to all
laws in India including Tax Laws, it is necessary to understand general
background of Constitution in order to understand and appreciate
each individual Tax Law under Indian Tax Structure. In India,
Constitution which came into effect on 26th January 1950 is supreme
and all laws and Government actions are subordinate to the
Constitution.
India is a Union of States. The structure of Government is federal in
nature. Government of India (Central Government) has certain powers
in respect of whole country. India is divided into 28 States and 7 Union
Territories and each State and Union Territory has certain powers
concerning their respective areas. Thus, there are States like Gujarat,
Maharashtra, Tamil Nadu, Kerala, Uttar Pradesh, Punjab etc. and
Union Territories like Delhi, Pondicherry, Chandigarh etc.
Taxation under Constitution
In the basic scheme of taxation in India, as contained under Article
246 and Seventh Schedule to the Constitution it is envisaged that
Under List I (known as Union List) Central Government will get
tax revenue from Income Tax (except on Agricultural Income),
Excise (except on alcoholic drinks), Service-tax and Customs ;
and
Under List II (known as State List) , State Government will get
tax revenue from Sales Tax(known as VAT), Excise on liquor
and Tax on Agricultural Income and Municipalities will get tax
revenue from Octroi and House Property tax.
Accordingly, Income Tax, Central Excise, Service-tax and Customs
are administered by Central Government. As regards Sales Tax
(known in India as VAT), same is levied by individual States on
transactions involving local sales within the State and Central Sales
Tax is levied by Central Government on transactions involving inter-
State sales. Though Central Sales Tax is levied by Central
Government, it is administered by State Governments and tax
collected in each State is retained by that State Government itself.
Relevant Entries in List I (Union List) relevant to
on -
ENTRY NO. 82 - Tax on income other than agricultural
income.
ENTRY NO. 83 - Duties of customs including export
duties.
ENTRY NO. 84 - Duties of excise on tobacco and other
goods manufactured or produced in India except
alcoholic liquors for human consumption, opium,
narcotic drugs, but including medicinal and toilet
preparations containing alcoholic liquor, opium or
narcotics.
ENTRY NO. 85 - Corporation Tax.
ENTRY NO. 92A - Taxes on the Sale or purchase of
goods other than newspapers, where such sale or
purchase takes place in the course of Interstate trade or
commerce.
ENTRY NO. 92B - Taxes on consignment of goods
where such consignment takes place during Interstate
trade or commerce.
ENTRY 92C - Service Tax
ENTRY NO. 97 - Any other matter not included in List II,
list III and any tax not mentioned in list II or list III.
(These are called Residual Powers.)
Relevant Entries in List II (State list) relevant to
taxation
ENTRY NO. 46 - Taxes on agricultural income.
ENTRY NO. 51 - Excise duty on alcoholic liquors, opium
and narcotics.
ENTRY NO. 52 - Tax on entry of goods into a local area
for consumption, use or sale therein (usually called
Octroi).
ENTRY NO. 54 - Tax on sale or purchase of goods
other than newspapers except tax on interstate sale or
purchase.
List III of Seventh Schedule, called concurrent list,
includes matters where both Central Government and
State Government can make laws.
Note on VAT / CST Provisions
N0TE 0N vATCENTRAL SALESTAX
Introduction:
VAT :
In India VAT means Value Added Tax which is a multi point sales tax
levied by respective Governments of States on sale transactions taking
place in the respective States.VAT becomes applicable when seller and
buyer are within same State. These transactions are known as Local
Sales. There is set off for VAT paid on earlier purchases made within
the very same State is allowed for every subsequent sale. Similarly in
case of manufacturer-seller set-off of VAT paid on inputs purchased
from the State is allowed. VAT is basically a tax on the value addition
on the product. The burden of tax is ultimately born by the consumer of
goods. In many aspects it is equivalent to last point sales tax. It can
also be called as a multi point sales tax levied as a proportion of Valued
Added.
In India VAT has been introduced w.e.f. 1.4.2005.Prior to this date, a tax
in the name of SALES TAX was applicable on sale transactions. The
said levy was being regulated under respective Sales tax laws of States
which were totally different from each other. Also rates of taxes
provided in each state varied drastically which gave rise to unhealthy
competition amongst members of Trade and Industry. Also most of
these erstwhile sales-tax laws were resulting in cascading effect as in
most of the states no set-off was available on manufacturing as well as
trading activities.
In order to avoid anomalies of earlier sales-tax laws, Govt. of India took
the initiative and persuaded all the States to implement VAT which is
based on principles of elimination of cascading effect. Most of the
States introduced VAT on 1.4.2005, whereas few States adopted this
mode of taxing few years later.
CST:
Central Sales-tax is levied by Central Govt. i.e. Govt. of India on the
sale transactions involving two states i.e. where seller and buyer are
located in two different States. These transactions are known as inter-
state sales or Central Sales. The tax is levied by the seller of
dispatching State and recovered from buyer of the purchasing State.
There is no set-off of CST paid on a transaction is available when
goods are further used in manufacture or re-sold in a State. Thus CST
is a burden on the cost of the product at the hands of the buyer.
Taxable Event (for VAT/CST) :
The Taxable event for attracting VAT or CST is the Sale of goods. For
the purpose of levy of VAT / CST, Sale covers
a) Normal Sale as understood in Sale of Goods Act i.e. chattel
qua chattel where complete transfer of property in goods
passes from seller to buyer for valuable consideration.
b) Deemed Sale. This covers cases such as goods involved in
execution of works contract, leasing, hire purchase etc.
wherein normal chattel qua chattel sale does not take place.
Essentials of a Valid Sale:
Main elements of sale are as follows:
i) there must be transfer of goods
ii) general property in the goods should be transferred to
buyer from seller
iii) consideration i.e. price must be paid or agreed to be paid .
It may be cash , deferred payment or any other valuable
consideration.
Non-Sale Transactions:
Some transactions which are not sales are as follows:
i) Charge / Mortgage/Hypothecation/Pledge of goods
ii) Job Work / Processing of goods
iii) Consignment / Depot / Branch Transfer
iv) Barter or Exchange
v) Free gift
Meaning of Goods
VAT/CST is applicable on sale of goods which are defined as follows:
Goods include all materials, articles, commodities and all kinds of
immovable property but does not include news papers, actionable
claims, stocks, shares and securities.
The definition of goods in various States Acts varies but principle
applicable is same in all the cases.
Intangible Goods: Computer software, Trade marks, Import Licences,
Technical Drawings, Lottery tickets etc. are in the nature of intangible
goods and sale thereof is chargeable to VAT as well as CST.
Immovable properties: are not regarded as goods and hence not
subject to tax.
Liability of VAT/CST on Dealer:
The liability of VAT/CST is on the Dealer who sells the goods. As per
statutory definition a dealer means any person who carries on (whether
regularly or otherwise) the business of buying, selling, supplying or
distribution of goods, directly or indirectly for cash or for deferred
payment or for valuable consideration.
Every Dealer who engages in sale transaction beyond a threshold limit
specified separately in each State is required to be registered under the
respective State VAT Law. A Dealer who is also having transaction of
inter-sales is required to register under CST Law. In case a dealer is
having only one type of transaction i.e. either local or central, he is
required to register only under relevant law.
Movement of Goods- determining factor whether VAT/CST:
If Movement of Goods within the State - Local Sale attracting VAT :
If the goods are moving within the State under a Sale transaction
meaning Seller and Buyer are located within same State it will be
considered a LOCAL SALE , subjected to VAT by relevant State Govt.
Second and subsequent sales within the State will be taxed to the
extent of their value addition.
If Movement of Goods is from One State to another - Inter-State Sale
attracting CST:
If the goods are moving from one State to another State i.e. Seller is in
one State and Buyer is in another, this will not attract VAT but it will be
a case of Central Sale on which Central Sales Tax will be chargeable.
There can be cases where within two States there can be more than
one Central Sale i.e. original buyer may sale the goods to another buyer
within his State without taking delivery of the goods. This is known as
Second or subsequent Inter-state Sale (or Transit Sale) on which
exemption is granted form Central Sales-tax subject to exchange of
certain prescribed Declaration Forms between the parties.
Salient features of State Level VAT:
Tax Rates:
The General Rate structure which was originally prescribed under VAT
Laws of different States was as under:
x NIL rate on natural and un processes produces in
unorganized sectors, goods having social implications (to
be specified by each State) and items which are legally
barred (viz. Newspapers, national flags).
x 1% rate for Gold, Silver ornaments, precious and semi-
precious stones.
x 4% for goods of basic necessities (including medicines
and drugs), all industrial and agricultural inputs, declared
goods and capital goods. Some States have also included
IT products in this category.
x 20% Petroleum products, liquor, cigarettes.
x 12.5% on all other goods. Most of the products fall in this
category.
While most of the States have adopted the above rates, some deviation
have taken place since introduction of VAT in some States, who have
ventured to increase the rate in some of the products. As a result, the
original rate of 4% has been enhanced to 5% by most of the States and
original rate of 12.5% has been increased to 13.5% to 15% in different
States. Further the rate for liquor and petroleum products has also
been increased in some of the States.
Concession for Small Dealers:
In most of the States VAT is applicable only on those dealers whose
turnover exceeds Rupees Five Hundred Thousands in a year. However,
there is facility for voluntary registration of these dealers also.
Further there is Composition Scheme applicable to Dealers having
turnover of less than 50 Millions who have option of paying, as against
normal applicable rate, a small percentage of gross turnover without
entitlement of input set-off scheme.
Above are general provisions prevalent in most of the States with some
deviations in threshold limits in some of the States.
Input Tax Credit scheme:
x Manufacturers are entitled to credit of VAT paid on inputs/capital
goods purchased from within the State and used by them
manufacture. Credit is available generally for all the goods
except Petroleum products.
x A Trader is entitled to credit of VAT paid on goods purchased
from within the State for the purpose of re-sale within / from
State. Thus, the Trader can claim set-off against further local as
well as Central Sales.
x Credit is available in instant manner i.e. as soon as the inputs are
purchased. There is no one-to-one correlation required between
purchase and sales.
x For Capital goods most of States allow the credit in phases of 2/3
years. Some States allow this credit in one go also.
x No Credit is available on Inter-State purchases.
x Tax Credit is allowed on the basis of document which is known
as Tax Invoice which can be issued only by registered dealers.
The invoice is required to be serially numbered, duly signed,
containing prescribed details. The tax payable is required to be
shown separately in the Invoice. The issuing dealer is required to
keep counterfoil/duplicate copy of such invoice.
Procedural Requirements:
x Every dealer is required to pay taxes on monthly / quarterly basis
as per relevant provisions of State VAT Law. Most of the States
have switched over to system of E-payments now.
x Every dealer is required to file monthly / quarterly / annual
returns as per provisions of relevant VAT law of the State.
x Every dealer is required to keep copies of Tax invoices issued,
input invoices received for set-off purposes and maintain other
books of accounts viz. Purchase Registers, Sales Registers and
other related documents.
x Almost all State VAT Laws provide for Books of dealer to be
audited by outside Chartered Accountants whose turnover is
more than fixed limit. In most cases this limit is 40 Million.
x The Authorities complete the yearly assessments mostly on the
basis of such audited records where required. Tax Department
can also send their teams for auditing the records of dealer in
given circumstances.
Salient features of Central Sales-tax Law:
Meaning of Inter-State sale:
As per section 3 of CST Act, a sale or purchase of goods shall be
deemed to take place in the course of inter-State trade or commerce in
following two situations:
a) Where sale occasions the movement of goods from one State
to another. This is Direct CST transaction involving seller in
one State and the buyer in another State. The purchase order
placed by the buyer on seller occasions the movement of
goods.
b) Where sale is affected by transfer of documents to the title of
the goods during the movement of goods from one State to
another. This covers the cases where original buyer of the
receiving State has further contracted with yet another buyer
(2
nd
buyer) in same State for sale of said goods. There can be
cases where said 2
nd
buyer further sells the goods to yet
another buyer (3
rd
buyer).
In this transaction , which is commonly known as TRANSIT
SALE directions are given to Seller for sending the goods
directly to the 3
rd
buyer. However, title of the goods passes
first from Seller to 1
st
buyer, next from 1
st
buyer to 2
nd
buyer
and finally 2
nd
buyer to 3
rd
buyer for which necessary invoices
are issued by the parties on their respective buyers. Both the
subsequent sales are affected by making suitable
endorsements on the document of title which is generally a
Goods Consignment Note or Railway Receipt which is initially
handed over by the Seller to the first buyer.
In the above transaction, CST is payable only on the first CST
sale and subsequent all the CST sales are exempt from the
tax provided prescribed declarations (known as Form C) are
furnished by all the buyers to their sellers. Further Sellers are
required to furnish a prescribed Certificate (known as Form EI
and EII) to their respective buyers.
Tax collected by dispatching States:
The scheme of the CST Act is that the Central Sales-tax payable in the
State from which movement of goods commences (i.e. from which
goods are sold). The tax collected is retained by the State in which it is
collected. CST Act is administered by VAT Authorities of each State.
Rates of CST:
It is noteworthy that CST Act does not provide any separate rate of CST
but same depends upon the rate of dispatching State which is known
as appropriate State in common terminology. Following is CST Rate
structure:
x NIL rate in case of goods for which specific
notifications are issued by respective Central Govt.
or appropriate State Govt. (e.g. Nil rate for supplies
to SEZ Units etc.)
x FULL RATE - equivalent to the rate of VAT in the
dispatching State where goods are purchased by
the customers without furnishing any Declaration
Forms (known as Form C). For e.g. If local VAT rate
of a product is 12.5%, CST rate will also be 12.5%
where sale is not supported by any declaration
furnished.
x CONCESSIONAL RATE 2% CST against
Declaration form C which can be issued by buyer to
the seller only when he purchases goods for
specified purposes as detailed below:
o For re-sale of goods
o For use in manufacture/processing of goods
for sale
o For use in mining
o For generation and distribution of electricity
o For telecom purposes
o For use in packing of goods for sale/resale
Branch Transfer:
In case goods are moving from one Branch/Depot to the another of the
same dealer, there is no CST leviable as such movement is not
regarded as sale. However, in order to avail this exemption receiving
Branch/Depot of the dealer has to issue a prescribed declaration in
form F to the dispatching Branch/Depot.
Exemption to Sale in the course of Export:
While Direct Exports out of country enjoy exemption under all revenue
laws, under CST Law, penultimate sale prior to export is also exempted
under section 5(1) of CST Act. This is known as sale in the course of
Export. Thus where a buyer in India purchases goods from a Seller to
fulfill his export obligation, there will be no tax payable on the sale
which takes place in India prior to the export transaction. However, in
order to avail this exemption also, purchaser-exporter has to furnish a
Declaration in Form H to the dealer wherein he has to certify that the
goods have been duly exported and has also to furnish the details of
shipping documents.
Exemption to Sales in the course of Import / High Seas Sale:
Under the provisions of Section 5(2) of the CST Act, exemption is also
provided to sale of those goods which occasion the import into India or
which are purchased on High Seas Sale by the importer. This covers
the following cases of imported goods :
x Foreign Goods which are ordered on Indian party by his
buyers in India, specifically asking for said foreign goods,
pursuant to which he places order on foreign supplier .
The sale in India between buyer and importer is known as
Sale in the course of import and allowed exemption. The
goods after import are cleared from customs by importer
who files bill of entry, pays customs duty and later on sells
to the designated buyer.
However, in order to claim above exemption claimant has
to establish privity of contract, integral connection and
inextricable link between three parties.
x Foreign Goods purchased on High Seas sale basis by the
buyer in India from the Importer. Thus original order of the
goods has been placed by an importer, who gets the order
from Indian buyer before retirement of goods from
customs. He sells the goods by endorsement of Bill of
landing transferring the title of the goods. In this case Bill
of entry is filed by the ultimate buyer who also pays
customs duty.
Procedural Requirements:
As per section 9(2) of the CST Act, all provisions of VAT Laws of
appropriate State have set out Rules with regard to Periodic Returns,
Payment of taxes, Assessment etc. will apply to CST sale transactions.
Additionally there are specific procedural requirements with regard to
issuance of Declaration Forms viz. C, F, H and Certificates in form EI ,
EII etc. are prescribed which are required to be followed by the dealers.
Different States contain provisions for Audit of Accounts of Dealers
having Turnover of over Rs. 40 lakhs which is to be conducted by a
practicing Chartered Accountant on annual basis.
Note on Works Contract Implications
Under VAT Laws

N0TE 0N W0RKS C0NTRACT INPLICATI0NS
0NBER INBIAN vAT SCENARI0
Features of Indivisible Works Contract:
The works contracts are totally different as compared to normal conventional
sales. In the normal sale there is a transfer of property in definite or
ascertained goods. The goods remain same before and after the delivery of
the goods. However, in works contracts it does not happen. The goods before
the delivery and after the execution of works contracts are different, many
times in different form also. For example, at the site of construction of a
building, before the Construction (works contract) commences, the goods like
cement, steel, sand etc. are lying but after the Construction a building
(immovable goods) comes to an existence. This is the difference between the `
Normal sale and the deemed sale in the indivisible works contract .
The Supreme Court of India, in its various landmark judgments has confirmed
in the following wordings the difference between a normal sale (as defined
under the sale of goods Act) and an indivisible / composite works contract;
In a contract of sale, the main object is the transfer of Property and delivery of
the possession of Chattel as a Chattel to the buyer, where it is not so, it is a
contract of Works & Labour (Hindustan Aeronautics Ltd. 55-STC 314-SC).
If the thing to be delivered has any individual existence before the delivery as
the property of the party who is to deliver it, then it is a sale. If the main object
of the work undertaken is not the transfer of a Chattel qua Chattel, the contract
is one for work and labour (Hindustan Shipyard 119 STC 533-SC).
The activity is a sale or works contract depends upon the facts, the terms and
conditions and the intention of the parties (Mekenzis Ltd.-165 STC-58 SC)
In normal practice, we can identify many indivisible/composite works contracts
namely construction of a Building, erection of Plant & Machinery, Processing
jobs, Job works, Repair jobs, Electrical Fittings, Annual maintenance Contracts
(AMCs). Installation of Elevators, Air Conditioners, Repairs of Vehicles, Re-
trending of old tyres, Customized Printing Jobs, Electro Plating, electro-
galvanizing, anodizing etc. We would discuss later , the levy of Sales Tax/VAT
on such activities which are indivisible works contracts.
Concept of Deemed Sale
Under the State Sales Tax Laws, before the 46 th Amendment to the
Constitution of India, the Sales Tax was applicable only on the sales covered
under the sale of goods Act (Normal sale). The indivisible works contracts
were not covered under the State Sales tax Acts since works contracts were
not normal sales. The Supreme Court confirmed this legal status in its land
mark judgment in the case of Gammon & Dunkerely (9 STC 353). Due to this
legal status, the states were denied the levy of Sales Tax on the indivisible
works contracts. Such contractors were outside the clutches of sales tax laws.
The then Finance Ministers of the States have requested the then Union
Finance Minister to take necessary legal steps so as to levy Sales Tax on
indivisible works contracts.

Finally, the 46 th amendment to the Constitution of India has been made on 2 nd
February, 1983 to add a sub-article (29-4) as under,
(b) a tax on the transfer of property in goods (whether a goods or in some other form)
involved in the execution of a works contract.
After the said 46 th Amendment to the Constitution, the States were empowered to levy
Sales Tax / Works Contract Tax on such sales, called as Deemed sales involved in
the execution of works contract. Due to the said amendment, the concept of `Deemed
Sale was introduced. The important features of deemed sales are as under,
(a) It is not a normal sale as defined under sale of goods Act but a deemed sale of
goods subject to sales tax by the States.
(b) In the `deemed sales the states can levy Sales tax only on `the transfer of property
in goods . In other words , the states can levy Sales Tax / VAT only on the `Material
Value of the works contract and not on the `labour portion of the works contract.
( c ) If in a contract there is no transfer of property in goods from the contractor to the
contractee, then No sales tax is applicable on such contracts, called as Pure Labour
Jobs.
(d) Under the deemed Sale , an artificial break up of indivisible works contract has to be
made to arrive at the `material value and the `labour value of the contract.
Therefore, after the 46 th Amendment to the Constitution of India, the States are
empowered to levy sales tax (now VAT) on such deemed sales but only on the `Material
Value of the works contract. The High Courts and the Supreme Court have suggested
methods on How to arrive at a material value from the total Contract Price. (Gannon
Dunkerlys SC Judgement 1993 ) (88 STC 204).
The Supreme Court has also allowed the States to come out with an alternative method
to levy Sales Tax on Works contract, if to arrive at material value is difficult. The states
have come out with a alternative method called as Composition Tax method to tax the
indivisible works contract, which is a non-legal /alternative method. The small
percentage like 1%, 2%, 4%, 8% as Composition Tax is levied but on the total contract
price without any deduction which is available in the legal options under the State Sales
Tax / VAT Acts. After, the said amendment to the Constitution certain States a namely
Maharashtra & Delhi have come out with separate `Works Contract Acts. The other
states incorporated the separate provision to levy Sales Tax on the deemed sales in the
works contracts. Under the State Sales Tax Acts or separate Works Contract Acts, No
contractor or contractee were entitled to claim any set off of Sales Tax paid to their
vendors. There was a double taxation in the hands of Contractors in the Sales Tax
Regime.
Position after introduction of VAT Levy of VAT on Indivisible Works Contracts
(Deemed Sales)
The states have introduced the new value Added Tax (VAT) System from 1 st April
2005. The other five States have also followed from 1st April, 2006 and the State of
Tamil Nadu has introduced VAT System from 1.1.2007. At present , only Uttar Pradesh
and Pondicherry (U.T.) have not joined the VAT States / UTs . They may join from 1 st
April,2007.

Therefore, the VAT system is in force in most of the States and the Union Territories in
India.
All the VAT States have incorporated in their respective State VAT Acts, the provisions
of `Works Contracts for levying the Sales Tax /VAT on the deemed sales involved in
the execution of works contracts. There is no Works Contract Tax (WCT) now, it is a
VAT on the Works Contract transactions (Deemed Sales). The Advantage to the
Contractors is that under the VAT system, the Contractors like manufacturers can avail
VAT set off / Credit of the VAT paid to the local vendors, which was not available in the
Pre-VAT Regime.
Please note that there is an Uniform Scheme of Taxation for levy of VAT on Works
Contracts under all the State VAT Acts. There is no separate or different taxation
schemes in different States like in pre-VAT period for works contracts . There is a
uniformity under the works contract provisions in the Post VAT Regime. This is a
positive factor for Contractors under VAT Regime. In all the State VAT provisions, there
are three options available for the Contractors to levy VAT on deemed sales (Works
Contracts) and VAT is leviable on the `Material Value of the Contract. The said three
options (Uniform in all the VAT States) are as under,
A-1 Actual Labour Deduction
A-2 Standard Labour Deduction
B - Composition Tax
Under the options A-1 and A-2, the State Governments can levy VAT only on the
`Material Value of the Contract and not on the `Labour Portion of the Contract. Please
note that the States are empowered to levy tax on Material Value and not on Material
Cost in the works contract. For example, VAT is applicable on `Cement Block Value
and not on ` Cement Cost. Similarly, VAT is applicable on `Wooden Furniture Value
and not on `Timber/Wood Cost in the hands of the Contractor.
Explained below are the said three options available for the Contractor, executing
indivisible Works Contract under the State VAT Acts (Uniform Across the States).
Except the Rates of Composition Tax, the Rates of TDS deductions, Returns and
Payment dates, most of the Major Provisions are Similar / Uniform under the State VAT
Acts;
Actual Labour Deduction Option A-1
A-1 Option (Levy of VAT on Works Contracts in the hands of the Contractor)
Under the option A-1, the VAT is payable on the `Material Value of the Contract. The
deductions are available for arriving at the Material Value from the total contract price.
Such deductions are specified in the corresponding provisions of the state VAT Acts
which are based on the guidelines given by the Supreme Court in the case of Gannon
Dunkerley (88 STC 204) or the Contractors can arrive at the Material value / price of
the Contract by adopting cost + value Addition method. In this method, the Contractor
adds to the `Material Cost which is determined by considering all the purchase bills of
the materials (imports, outside the State and within the State), the margin on such
material cost plus any incidental
expenses attributed towards the material value. In other words, the Contractor
determines the Material Price after adding Material Cost and Margin to such cost .
The 4% or 12.5% or enhanced local rate of VAT would be applicable on such Material
Value /Price, depending upon the classification of such materials (Steel 4%, others
12.5% VAT) in which the property passes to the contractee . In this option A-1, the
Contractor can avail full VAT set off / credit of the VAT paid to the local vendors (Not on
CST paid to the outside the State Vendors) provided he obtains corresponding `Tax
Invoices from his local vendors. Therefore, the cost of VAT is zero for the Contractors
in this legal option. Similarly, the Contractee /Customer also can avail the full benefit
except on the purchases covered under the Negative list under the State VAT Act on
which No VAT set off/Credit is available. Mostly the Civil Works , Construction jobs,
refection of immovable property (Structures) are covered in the Negative lists. On the
other works contract purchases, the full VAT set off / Credit is available to the
contractee /customer. The T.D.S. (works contract) provisions are applicable to the
contractee in this option which are discussed later.
In nutshell, in the option A-1 , the Contractor gets full VAT set off / credit on the VAT
paid on the inputs and the Contractee also gets the credit, if it is not in the Negative list
(Like processing Jobs, Job works, Printing Jobs, Repair Jobs etc.) The Contractors are
benefited under VAT System as the Contractors can avail full set off / credit.
However, in this option the Contractor has to maintain proper books of accounts
and the other records to identify the material value of the Contract.
A-1 option is the Best option available since the Contractor levies VAT only on the
`Actual Material Value of the contract, even though it is litigation prone option. Many
Contractors who execute big indivisible works contracts, Turnkey Jobs opt for
Option A-1.
Option A-2 (Standard Labour Deduction)
(levy of VAT in the hands of the Contractor)
Under the option A-2, the VAT is payable on the `Material Value of the Contract. The
Material value is calculated after deducting the `Labour Portion from the total contract
value / Price.
However, in this option a table is available in the State VAT Act / Rules which shows
`Standard Labour portion attributed to the various works contracts. The Contractor has
to deduct such `Standard Labour portion shown in such tables from the total Contract
price to arrive at the `Material value. The Contractor would charge 12.5% or applicable
enhanced rate of VAT, on such material value. Each State has provided the said
`Standard Labour table , under this option. (Like in Maharashtra for Civil Works it is
30%, for Plant & Machinery 15% , for AMCs 40% and for others 25% (Residuary)) .
The advantage in this option compare to the A-1 option is that it is litigation free. The
Sales Tax Departments would allow the said ` labour portion deductions as the same
are provided in the VAT Rules itself. Also no identification record has to be maintained
by the contractor for the materials used in the contracts. However, the Contractor has to
consider both the options A-1 and A2 in the case where the Contractee/ Customer does
not get the VAT set off / credit and then selecting the cheaper option.

Like in A-1 option, in A-2 option also, the Contractor gets full credit / set off on the VAT
paid on the inputs and the Contractee also gets full set off of the VAT paid provided the
said purchases are not in the Negative list of VAT set off / credit. The TDS provisions
are applicable to the contractee in this option also which are discussed later.
Option-B -- Composition Tax
( Levy of VAT in the hands of the Contractor )
Option B is the Composition Tax option. This is an alternative option, simpler option for
those Contractors who cannot maintain the proper Accounts, Record of the material and
other portion in their contracts. The contractee / customer prefers this option as small
amount of Composition Tax 2% / 4% is payable to the Contractor instead of 12.5% VAT
payable in options A-1 and A-2 . However , VAT credit/set off is not available to them
in this option ( However, in this option , VAT Credit is available only in the state of
Maharashtra ) .
Under the Composition option, the Contractor has to pay Composition Tax (VAT) on
the total Contract value / price, No deduction of labour is available in this option.
Similarly, No VAT set off / Credit is available on the purchases of inputs to the
Contractors and the same is not available to the Contractees also. (Except under
Maharashtra VAT Act/Rules, partial VAT Credit is available to both Contractor and
Contractee in the Composition Tax option). The Rates of Composition Tax differ from
state to state. Generally it is 2% (for civil contracts) @ 4% for other Contracts. However,
exception is in Maharashtra State where the Rate of Composition Tax is 5% on Civil
Contracts and 8% on other Contracts. In Maharashtra, in this option , in excess over 4%
Credit is available on the input purchases for civil contracts (where composition Tax
Rate is 5%) and 64% of the total credit available for other Contracts ( where
Composition Tax Rate is 8%). Thus , partial VAT Credit is available to the Contractors in
the Composition Tax option. However, full credit is available to the Contractee in this
option in Maharashtra provided such purchases are not included in the Negative list
under MVAT Rules.
Therefore, except in Maharashtra, in all other states No VAT set off / credit is available
to both the Contractor and the Contractee in the Composition tax option. The TDS
provisions of Works Contract are applicable to Contractee in this option which are
discussed later.
In Short, in all the States only the said 3 options (A-1, A-2 and B) are available in the
hands of the Contractors for levy of VAT on the local works contract transactions in the
VAT system. If no VAT set off/Credit is available to the Contractee / Customer, then the
Composition Tax option is the Cheapest since the Rate of Composition Tax is lower
than 12.5% VAT. Therefore , if the Contractee / Customer can not avail the VAT set off /
Credit in all the three options , then , the VAT / Composition Tax paid to the contractor is
the cost to such Contractee /Customer, hence in such cases the Contractor and
Contractee should select the Best option available after considering the Actual Figures
in all the three options.
The States have provided separate sections / Rules under the respective State VAT
Acts for the works contracts transactions which include said three options of levy of VAT
, TDS , VAT Credits and Negative lists .


General Negative list Items for Works Contracts under State VAT Act & Rules

(a) Purchases effected by way of works contract where the contract results into an
immovable Property .
(b) Purchases of Building material which are not resold but are used in the activity of
Construction. (Free issues)
(c) Purchases of works contracts made by the Contractee in Civil Contracts .
(d) Any purchases of Consumables or of goods treated as Capital Assets by the
Contractor/dealer where he is principally engaged in doing job work or labour work and
is not engaged in the business of manufacturing of goods for sale by him.
(Please refer to the specific provisions of works contracts under the relevant state VAT
Acts for such Negative lists)

Tax deducted at source (TDS) provisions of works contracts under the State VAT
Act & Rules
In most of the State VAT Acts, the provisions of Tax deducted at source (TDS) are
incorporated. The logic behind the TDS (WC) provisions is that the Contractors are not
organized in many cases and they do not pay taxes on time , therefore in this provision
the contractee / customer deducts the prescribed % of TDS from the Contract Price and
pays the same before the prescribed dates, directly, to the respective State Government
through the specified challan. The TDS is to be deducted by the specified customers
only as notified by the State Governments. Generally, the dealers registered under the
State VAT Acts, State and Central Governments, Corporations, Government
Undertakings, Co-operative Societies only have to deduct the said TDS (WC) and not
by all the Customers. The monetary limit of the turnover is prescribed between
Contractor and Contractee for such deduction in the hands of the Customer in most of
the VAT Acts.
It is responsibility of the Contractee / Customer to deduct the prescribed % of TDS (As
provided in the relevant VAT Act & Rules) and pay the same to the State Government
before the prescribed date, otherwise interest / penalty is leviable on such Contractees /
Customers.
However, as per the State VAT Act provisions, the Seller (Contractor) is liable to pay
VAT, if No TDS is made by the Contractee/Customer. The State Governments have
prescribed different VAT Forms under the provision of TDS (WC). In certain States, the
Contractee has to obtain TANs (Tax deductible Account Number) and file Annual
Returns of TDS under the TDS provisions .
In Maharashtra, under MVAT Act, 4% TDS is applicable (instead of 2%) in the case
where the Contractor has not obtained the VAT TIN certificate (URD Contractor).
Provisions of Works Contract for Main and Sub-Contractor under the State VAT
Laws.
The following two types of VAT levies are provided for the transactions of works
contracts between the Main contractor and the Sub-Contractor:

In certain States, (like Maharashtra) Main and Sub Contractors are treated as
single legal Entity. Therefore, there is no VAT/TDS applicable between the transactions
of the Main and the Sub-Contractor . The VAT Forms are exchanged between the Main
and the Sub Contractors to declare that they have discharged VAT liability for their
portions of the Contracts. In such cases, the Main Contractor gets the deduction of the
value of the work executed by the Sub Contractor. The main and the Sub Contractor are
jointly and severally responsible for the compliance under the works contract provisions
of the VAT Act .
In certain states ( other than Maharashtra), the Main and the Sub Contractors are
treated as separate legal Entities, like separate two dealers under the VAT Act.
Therefore, in such provisions , Sub contractor charges applicable VAT/Composition Tax
to the Main Contractor, avails Credit of the VAT paid on the inputs and the Main
contracts also charges VAT/Composition Tax applicable to the Contractee/Customer
and avails the Credit available to him against the VAT paid to the Sub-Contractor. They
are assessed / audited separately under the State VAT Act provisions.
It is advisable that the Main Contractor and the Sub Contractor should discuss all the
relevant VAT provisions before opting for the specific method of levy of VAT /
Composition Tax to avoid complications at a later date.

Concept & Levy of C.S.T. on Inter state Works Contracts

The Central Government amended the definition of ` Sale under the Central Sales Tax
Act, 1956 from 11.5.2002. With the said amendment, the states are empowered to levy
C.S.T. on the interstate works contract. By the said amendment, the concept of
`Interstate works contract was introduced in the C.S.T. Act by inserting in the definition
of `Sale , the words Transfer of Property in goods involved in execution of works
contract .
When the Contractor dispatches his goods from one State to another under a
individuals works contract, it is a interstate works contract. The sections 3,4,5 of the
C.S.T. Act are applicable to such deemed sales in the interstate works contract.
Accordingly, the State of dispatch can collect the Central Sales Tax on such deemed
interstate sales . The Contractors may not be allowed the interstate depot transfers in
the cases of indivisible works contracts since such dispatches are made to the sites of
the contractee situated in other state and the same are earmarked for the specific
contractee. The Contractor would invoice to the Contractee from the state of dispatch
and would charge CST as applicable , with or without C/D Forms.
Recently, the CST Act was further amended to explain, the deductions available on the
total contract price to the Contractor to arrive at the material value. Please note that in
interstate works contracts also, the C.S.T. is payable only on the Material Value/Price
of the Contract and not on the Labour portion of the Contract.
The examples of interstate works contract would be that of Contractor from Mumbai,
dispatching goods from his Mumbai plant to the site in Chennai (Tamil Nadu) under a
indivisible works contract or A Manufacture in Mumbai dispatching his own material to a
processor in Surat and the processor returns back the processed material back to the
Mumbai Manufacturer. The Surat processor would charge 2% CST against `C form on
the material value of his invoice amount being a interstate works contract in his hands .
Please note that when it is an interstate works contract, the Contractee would raise an
invoice on the Customer situated in other state with applicable rate of CST on the
Material value of the contract, but the Customer would not deduct any amount towards
TDS since there is no provision of T.D.S. under the CST Act. TDS is to be deducted
only in the local works contracts where the Contractor has charged VAT/Composition
Tax.
In short, if the Contractor dispatches goods from his state to the State of the Contractee
(Customer) under an indivisible works contract, it is a interstate Works contract in the
hands of such Contractor subject to levy of CST which is collected by the state of
dispatch . However, in the interstate works contracts also , C.S.T. is payable only on the
`Material Value of the Contract .
Methodology for Contractee / Customer to look into the Works Contract
purchases for Minimum cost.
Under the VAT System, the Contractee/Customer can avail the full VAT Credit/Set off of
the VAT paid to the Contractor through the tax Invoices, provided such purchases are
not in the Negative list of set off/VAT Credit.
However, in the cases where the Contractees / Customers do not get any VAT set off /
Credit, they should note the following points to reduce their VAT Cost,
(a) To decide the Best option of Levy of VAT/Composition Tax before the execution of
the Works Contract Commences.

(b) To insist the Contractor to buy maximum inputs from local vendors only and the VAT
Credit thereof should be passed on to the Contractee by reducing his sale price ,
accordingly .
( c ) In case of free issues supplied by the Contractee / Customer to the Contractor , if
the price of the contractor is `Net off the material value supplied by the Contarctee then
there is no negative VAT impact to the Contractee . Otherwise, there is VAT cost in the
hands of the contractee with regards to the VAT paid on the purchases made by the
Contractee and given as free issues to the Contractor.
(d) Prescribed % of TDS payment to the government and timely issuance of TDS
certificates to the Contractors.
(e) To insist the Contractor to show the VAT applicable, separately on the invoice (Tax
Invoice, in the case if the Contractee can avail the credit)
(f) To add the clause in the agreement with the Contractor, If any additional liability on
Account of VAT (WC) arises at a future date shall be borne by the Contractor.
Recapitulation of the Main Points with regard to provisions of levy of
VAT/Composition Tax under the State VAT Act & Rules.
x Deemed Sales (WC) are taxed under the provisions of the State VAT Act,
there are no separate Works Contract Acts.
x For local works contract transaction State VAT (WC) is applicable and for
interstate works contract transaction , the Central Sales Tax (C.S.T.) is applicable as
covered under the CST Act.
x No VAT/CST is applicable on the pure labour Jobs (No material of the
Contractor / Job worker is involved)
x Under the State VAT Acts, VAT is applicable on the `Material Value of the
Contracts only as determined by the three options as discussed earlier and under the
C.S.T.Act also CST is applicable on the `Material Value only.
x In the contracts , `where both the sale of goods and rendering of Taxable
service are involved, both VAT & Service Tax is payable on the same contract price
subject to the relevant provisions under both the VAT & Service Tax Laws.
x Proper clauses of VAT/CST should be incorporated in the Agreements
between the Contractor and Contractee to avoid litigation.
x Under the VAT System both the Contractor and the Contractee can avail full
VAT set off/Credit subject to the Negative List.
x The Contractee should ask for the price reduction from the Contractor to pass
on the `VAT Benefit availed by the Contractor on his local purchases.

All India Works Contract Rate Chart
Under VAT Laws
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3
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5
Note on Service-tax Provisions
N0TE 0N SERvICE TAX PR0vISI0NS
Background
In India, Service tax is the latest entrant in the already complicated arena of indirect
taxation. It is a central levy within the domain of Indian Union Govt. Service tax was
imposed by Govt. of India for the first time on 3 services w.e.f. 1-7-1994 as an
experimental basis @ 1% . However, its scope went on increasing year after year.
Service-tax was imposed during the Union Budget of 1994 which contained a particular
chapter i.e. Chapter V of Finance Act, 1994. It was expected that in times to come self
contained Service-tax Act and Rules will be enactment to regulate this levy. However,
today even after 16 years, the same original regulation i.e. Chapter V of Finance Act,
1994 is the governing law for this levy.
In the meanwhile, almost during each Budget, new set of services were included and
the total number of services covered today has reached a staggering figure of about
109 services. The present rate of service-tax is 10.3% including Education Cess which
is 3% levied on basic rate of 10%. Service-tax is payable on all specified categories of
services which are known as Taxable services rendered in India except the State of
Jammu and Kashmir. The provisions also exist to tax the off-shore services provided by
foreign parties and received and used in India by the Indian clients through the reverse
charge mechanism.
After the above brief background, the highlights of the Service-tax Law in India are
explained below.
Nature of levy of Service Tax
Definition - As per section 65(95) of Finance Act, 1994, service tax means a tax
leviable under the provisions of Chapter V of Finance Act, 1994. Section 66 which is a
charging section providing that there shall be levied a service tax @ 12%, of the value
of taxable service provided or to be provided referred to in various clauses of section
65(105). However, said rate has been reduced to 10% by issuance of suitable
notification. The effective rate of service-tax today is 10.3% (Basic rate + Education
Cess).
Taxable Service - As per section 66 of Finance Act, 1994, service tax is payable on
taxable service. Various clauses of section 65(105) of Finance Act, 1994 define each
type of taxable service. The definition is different for each class of services given in
different clauses of section 65(105) such as - Advertising, Business Support,
Erection/Installation/Commissioning, Maintenance, Construction, Works Contract,
Transport, Clearing and forwarding, Computer networking, Management Consultants,
Cargo handling, Couriers, Airport, Port services etc. In fact all type of services which
can be thought of have been covered under service tax domain. Services which are
covered under any of the clauses of section 65(105) alone are taxable. Services which
are not covered therein will not be taxable. Few prominent exceptions are services
rendered by Medical Practitioners, Advocates which are still allowed to remain outside
service-tax net.
Date-wise Introduction of Taxable Categories:
The Table below shows the category of services which are taxable with the date of
introduction of such service. The table also shows the accounting heads for each
category service, for the purpose of payment of service tax:
Sr.No Service Category Date of
Introduction
Accounting codes
Tax
Collection
Other
Receipts
1 Advertising 01.11.1996 00440013 00440016
2 Air Travel Agent 01.07.1997 00440032 00440033
3 Airport Services 10.09.2004 00440258 00440259
4 Architect 16.10.1998 00440072 00440073
5 ATM Operations,
Management or Maintenance
01.05.2006 00440346 00440347
6 Auctioneers service, other
than auction of property
under directions or orders of
a count of or auction by
Central Govt.
01.05.2006 00440370 00440371
7 Authorized Service Station 16.07.2001 00440181 00440182
8 Auxiliary to General
Insurance
16.07.2001
00440169

00440170
9 Auxiliary to Life Insurance 16.08.2002
10 Banking & Other Financial
Services
16.07.2001 00440173 00440174
11 Beauty Parlor 16.08.2002 00440209 00440210
12 Broadcasting 16.07.2001 00440165 00440166
13 Business Auxiliary Service 01.07.2003 00440225 00440226
14 Business Exhibition Service 10.09.2004 00440254 00440255
15 Business Support Service 01.05.2006 00440366 00440367
16 Cable Operator 16.08.2002 00440217 00440218
17 Cargo Handling 16.08.2002 00440189 00440190
18 Chartered Accountant 16.10.1998 00440092 00440093
19 Cleaning Service 16.06.2005 00440318 00440319
20 Clearing & Forwarding Agent 16.07.1997 00440045 00440046
21 Clubs and Associations 16.06.2005 00440322 00440323
22 Commercial or Industrial
Construction
10.09.2004 00440290 00440291
23 Commercial Training or
Coaching
01.07.2003 00440229 00440230
24 Company Secretary 16.10.1998 00440100 00440101
25 Construction of Residential
Complex
16.06.2005 00440334 00440335
26 Consulting Engineer 07.07.1997 00440057 00440058
27 Convention Centre 16.07.2001 00440133 00440134
28 Cost Accountant 16.10.1998 00440096 00440097
29 Courier Services 01.11.1996 00440014 00440018
30 Credit Card, Debit Card,
Charge Card or other
payment card related
services
01.05.2006 00440394 00440395
31 Credit Rating Agency 16.10.1998 00440088 00440089
32 Custom House Agent 15.06.1997 00440026 00440027
33 Dredging 16.06.2005 00440310 00440311
34 Dry Cleaning 16.08.2002 00440221 00440222
35 Erection, Commissioning or
Installation
01.07.2003 00440233 00440234
36 Event Management 16.08.2002 00440197 00440198
37 Fashion Designer 16.08.2002 00440213 00440214
38 Forward Contract Services 10.09.2004 00440282 00440283
39 Franchise Service 01.07.2003 00440237 00440238
40 Foreign Exchange Broker 01.07.2003 00440173 00440174
41 General Insurance 01.07.1994 00440005 00440006
42 Health Club & Fitness Centre 16.08.2002 00440205 00440206
43 Intellectual Property Service 10.09.2004 00440278 00440279
44 Interior Decorator 16.10.1998 00440076 00440077
45 Internet Caf 01.07.2003 00440241 00440242
46 Internet Telecommunication
Service
01.05.2006 00440382 00440383
47 Life Insurance 16.08.2002 00440185 00440186
48 Mailing List Compilation and
Mailing
16.06.2005 00440330 00440331
49 Management Consultant 01.07.1997 00440116 00440117
50 Maintenance or Repair
Service
01.07.2003 00440245 00440246
51 Mandap Keeper 16.10.1998 00440035 00440036
52 Manpower Recruitment or
Supply Agency
07.07.1997 00440060 00440061
53 Market Research Agency 16.10.1998 00440112 00440113
54 On-line Information &
Database Access or Retrieval
Service
16.07.2001 00440153 00440154
55 Opinion Poll Service 10.19.2004 00440274 00440275
56 Outdoor Caterer 10.09.2004 00440051 00440052
57 Packaging Service 16.06.2005 00440326 00440327
58 Pandal or Shamiana Services 10.09.2004 00440054 00440055
59 Photography 16.07.2001 00440129 00440130
60 Port Service ( Major Ports) 16.07.2001
00440177

00440178
61 Port Services( Other Ports) 01.07.2003
62 Public Relations Service 01.05.2006 00440374 00440375
63 Rail Travel Agent 16.08.2002 00440201 00440202
64 Real Estate Agent /
Consultant
16.10.1998 00440104 00440105
65 Recovery Agent 01.05.2006 00440350 00440351
66 Registrar to an Issue 01.05.2006 00440338 00440339
67 Rent a Cab Operator 16.07.1997 00440048 00440049
68 Sale of space or time for
Advertisement, other than
print media
01.05.2006 00440354 00440355
69 Scientific or Technical
Consultancy
16.07.2001 00440125 00440126
70 Security Agency 16.10.1998 00440108 00440109
71 Share Transfer Agent 01.05.2006 00440342 00440343
72 Ship Management service 01.05.2006 00440378 00440379
73 Site Preparation 16.06.2005 00440306 00440307
74 Sound Recording 16.07.2001 00440161 00440162
75 Sponsorship service provided
to any body corporate or firm,
other than sponsorship of
sports event
01.05.2006 00440358 00440359
76 Steamer Agent 15.06.1997 00440029 00440030
77 Stock Broker 01.07.1994 00440008 00440009
78 Storage & Warehousing 16.08.2002 00440193 00440194
79 Survey & Exploration of
Minerals
10.09.2004 00440270 00440271
80 Survey and Map Making 16.06.2005 00440314 00440315
81 T.V. & radio Programme
Production Services
10.09.2004 00440286 00440287
82 Technical Testing & Analysis 01.07.2003 00440249 00440250
83 Technical Inspection &
Certification Agency
01.07.2003 00440249 00440250
84 Tour Operator 01.09.1997 00440063 00440064
85 Transport of goods by Air 10.09.2004 00440266 00440267
86 Transport of goods by Road 01.01.2005 00440262 00440263
87 Transport of goods in
containers by rail {other than
Indian railway omitted w.e.f.
01.09.2009}
01.05.2006 00440390 00440391
88 Transport of goods other than
water, through Pipeline or
other conduit
16.06.2005 00440302 00440303
89 Transport of passengers
embarking on international
journey by air, other than
01.05.2006 00440362 00440363
economy class passengers
90 Transport of persons by
cruise ship
01.05.2006 00440386 00440387
91 Travel Agent other than Air &
Rail Travel
10.09.2004 00440294 00440295
92 Underwriter
16.10.1998 00440084 00440085
93 Video Tape Production
16.07.2001 00440157 00440158
94 Telecommunication
01.06.2007 00440398 00440399
95 Renting of immovable
property
01.06.2007 00440406 00440407
96 Works contract
01.06.2007 00440410 00440411
97 Content Development &
Supply
01.06.2007 00440414 0440415
98 Asset Management
01.06.2007 00440418 00440419
99 Mining Services( Oil & Gas)
01.06.2006 00440402 00440403
100 Design Services
01.06.2007 00440422 00440423
101 Information Technology
Software services
16.05.2008 00440452 00440450
102 Investment Management for
ULIP
16.05.2008 00440430 00440431
103 Recognized Stock Exchange
16.05.2008 00440434 00440435
104 Recognized Associations-
Commodity Exchange
Services
16.05.2008 00440438 00440439
105 Clearing & Processing House
services
16.05.2008 00440442 00440443
106 Supply of Tangible Goods
services
16.05.2008 00440445 00440447
107 Cosmetic or Plastic Surgery
Services
01.09.2009 00440460 00440463
108 Transport of Coastal goods,
Goods through National
Waterways or Goods through
Inland Waterways
01.09.2009 00440470 00440473
109 Legal Consultancy Services
01.09.2009 00440480 00440483
110 Promotion, marketing or
organizing of games of
chance including lottery,
bingo etc. services
01.07.2010 00440595 00440596
111 Health services undertaken
by Hospitals or Medical
establishments
01.07.2010 00440598 00440599
112 Maintenance of Medical
Records services
01.07.2010 00440601 00440602
113 Promotion of Brand of Goods,
Services etc.
01.07.2010 00440604 00440605
114 Services of Permitting
Commercial Use or
Exploitation of any event
01.07.2010 00440607 00440608
115 Electricity Exchange Services
01.07.2010 00440610 00440611
116 Copyright Services
01.07.2010 00440613 00440614
117 Services provided by Builder
in relation to preferential
location, internal/external
development etc
01.07.2010 00440616 00440617
118
Services of Air-conditioned
restaurants having license to
service alcoholic beverages
in relation to service of food
or beverages.
1.5.2011 00441067 00441068
119
Services of providing of
accommodation in hotels /
inns/ cubs/ guest houses/
campsite for a continuous
period of less than three
months
1.5.2011 00441070 00441071
Note:
1. Accounting Code for Education Cess is 00440298 for all services.
2. Accounting Code for Secondary & Higher Education Cess is 00440426 for all
services.
3. The sub-head Other receipts is meant for interest, penalty on delayed payment of
service tax.
Service tax is destination-based consumption tax As per policy announced by
Govt. of India Service tax is a destination based consumption tax, meaning tax is linked
with the usage of services within Indian territories. Therefore services rendered in India
and exported outside country are granted exemption and conversely off-shore services
consumed in India are subjected to tax.
Service implies existence of two parties - Service tax is attracted when there are two
parties. One cannot give service to himself. Therefore self-service is considered non-
taxable.
Taxable Event in Service Tax
It is pertinent to note that opening sentence of section 65(105) as amended w.e.f. 16-6-
2005 reads as - taxable service means any service provided or to be provided. Thus
liability of service-tax arises not only on services which have been already provided but
on future services which are yet to be provided.
Thus, following are taxable events -
(a) Entering into contract for service - Entering into contract for providing service
which are already under taxable categories. Once you enter into a contract, it is
certainly service to be provided.
(b) Provision of service - This will happen in cases where contract for providing
service was entered into before the service became taxable, but service was provided
after the service became a taxable service.
Introduction of the Point of Taxation Rules, 2011 .
Hitherto, service tax was levied on receipt basis. Thus, receipt was the point of
taxation. But vide last budget, Point of Taxation Rules, 2011 (hereinafter mentioned as
PoT) has been incorporated which has changed the chargeability of service tax from
receipt basis to accrual basis with effect from 1st April 2011(with option to adopt
w.e.f. 1
st
July, 2011)
Consequently now following are different Taxable events which are provided
under above Point of Taxation Rules
y Date of Invoice
y Date of Receipt of Payment
y Date of Completion of Service
Date of Invoice Primary taxable event:
y As per main Rule viz. Rule 3 of PoT, date of invoice will be the taxable event
unless otherwise specified.
y Even though payment may be received later , the tax will be required to be paid
in the following month within due date. This method in fact is on lines of other
indirect taxes viz. excise, VAT.
y This will effect cash flow of service providers (particular corporate group) who will
have to pay service-tax from their pocket.
y Mercifully changes made in Cenvat Rules to allow credit on invoice basis
Receipt of Advance before issue of invoice:
y In cases where Payment is received before issuance of invoice viz. advances
etc., service-tax will be payable in following month of receipt of advances even
though invoices may be issued in later months.
If Invoice not made within time - Completion of Service criterion applicable
y In cases where Invoice is not issued by service provider within prescribed period
of 14 days and no advance is received, the taxable event will be date of
completion of service. Thus in such cases, the tax will be payable in following
month of completion of service even though invoice is made at a later date.
Services prescribed under Continuous Services :
y A) Telecommunication Services
y B) Commercial or Industrial Construction
y C)Construction of Residential complex
y D)Internet Telecommunication Services
y E)Works Contract Service
y A separate set of rules has been prescribed for continuous services (which are
defined as services provided or to be provided, under a contract, for a period
exceeding 3 months, or as notified in the Official Gazette by the Central
Government).
y Continuous services are generally those services where bill is to be issued on
a designated date as per mile stone and same is not issued by service provider,
the taxable event will be date of completion of service. Thus in such cases, the
tax will be payable in following month of mile stone date where invoice is not
issued on such due date.
y The PoT for continuous services is ordinarily the due date of payment under the
contract. However, if an invoice is raised within prescribed time or payment made
before the due date, the PoT shifts accordingly.
PoT not applicable to following service providers relating to Professionals:
y a) Architects
y b)Interior Decorators
y c)Chartered Accountants
y d)Cost Accountants
y e)Company Secretaries
y f) Scientists
y g)Legal Consultants
y In above cases, tax payable on the basis of date of receipt of payment as
hitherto.
PoT in case of Export of Services:
y In case of services covered under Rule 3(1) of Export of Service Rules, Point of
Taxation will be date on which payment is received, if same is received within
period specified by RBI.
y However, if payment is not received within the period specified by RBI, the PoT
will be determined as if above rule does not exist meaning it will be determined
as per general principles of date of invoice, receipt and completion as applicable
to domestic services
PoT in case of Import of Services: (Reverse charge mechanism)
y In case of Import of services as also other services where recipient is liable (viz.
GTA, MF etc) service tax is payable by service receivers on the basis of reverse
charge mechanism
y In above case PoT is the date on which payment is made to the service provider
by the recipient.
y However if payment is not received by service provider from recipient within six
months from date of invoice, PoT will be as per normal procedure.
PoT in case of change of Effective rate (If service was provided before change)
y If invoice and payment receipt after change of effective rate PoT will be date
whichever is earlier
y If invoice is prior to change and payment is after PoT will be date of issuance of
invoice
y If payment is received prior to date of change but invoice issued later PoT will
be date of receipt of payment
PoT in case of change of Effective rate (If service was provided after change)
y If invoice is prior to change and payment is after PoT will be date of payment
y If Invoice is issued as well as payment is received prior to date of change PoT
will be date whichever is earlier
y If invoice is issued after change but payment receipt is before change of effective
rate PoT will be date of issuance of invoice.
PoT in case of new taxable services
y If Invoice is issued as well as payment is received before date of introduction of
new services No service tax payable
y Similarly if invoice is issued after the imposition of service-tax within 14 days
from date of completion of service and payment received before No service-tax
payable
y In cases service provided before new tax and invoice is issued within 14 days
but payment is received after date of introduction No service-tax payable
Person liable to pay Service tax
As a general rule, in most of the cases, service provider, i.e. person who is providing
taxable service is liable to pay service tax. However, in few cases, exceptions have
been made and service receiver is made liable to pay service tax. The provision that
service receiver is liable to pay service tax is termed as Reverse Charge. The
exceptions are as follows -
Services provided to non-resident - In relation to taxable service provided or to be
provided by any foreign party from a country other than India and having no office in
India and received by any person in India, service tax is payable by recipient of service
[Rule 2(1)(d)(iv)](Section 66A)
Services of insurance agents - In case of insurance auxiliary service by an insurance
agent, the tax will be payable by insurance company (general insurance or life
insurance as the case may be). The insurance agent is not liable to register and pay
tax.
Goods Transport Agents Services - In case of services of Goods Transport Agency
(GTA), service tax is payable by consignor/consignee who is paying freight [rule
2(1)(d)(v)]
Services of Agents of mutual fund - In case of distributors/agents of mutual funds, the
liability will be on the recipient of service, namely, mutual funds [Rule 2(1)(vi)]
Body corporate or firm located in India receiving sponsorship service - In case of
sponsorship service provided to a body corporate or firm located in India, the body
corporate or firm receiving such sponsorship service will be liable to pay service tax
[rule 2(1)(d)(vii)
Services on sub-contract basis
The Ministry of Finance, Govt. of India has clarified that a sub-contractor is also a
taxable service provider. His services are taxable even if these are used by main
provider for completion of his work. The sub-contractor is liable even if the service is
input service of the main contractor and main contractor is paying service tax on entire
value of contract. However, main contractor is entitled to avail input service-tax credit
paid by sub-contractor.
Input tax credit (Cenvat Credit) Scheme
On the lines of Central Excise duty, following are salient features of Cenvat credit
scheme applicable to service-tax levy:
x Service provider can avail Cenvat credit of service tax paid on input services and
excise duty paid on inputs and capital goods used for provision of output
services. The credit can be utilized against payment of service tax on output
services.
x Definition of input service is wide. Any service in relation to business is input
service.
x Credit can be availed on basis of proper and complete specified original duty
paying documents.
x If assessee is providing both taxable and exempt services and if input services
are common, Cenvat credit can either be taken on proportionate basis or 6%
amount is required to be paid on exempted services.
Exemption from service tax
Following are important exemptions available under service-tax law:
1) Small service providers whose total value of services provided (including
exempt and non-taxable services) is less than Rs 1'0 Million in previous year
are not required to pay service tax in current financial year till they reach
turnover of Rs 1'0 Million. Clubbing provisions can apply. Registration is
required if turnover exceeds Rs 900,000 per annum. The exemption is not
available if service is provided under Brand Name of another person.
2) Services provided to SEZ unit or developer for consumption within SEZ are
exempt.
3) Services provided to UN and International Agencies are exempt.
4) Services provided to foreign diplomatic missions and their family members is
exempt
5) Services provided from India but exported out of India against payment of
convertible foreign exchange are exempt.
6) In case of specified services utilized for export, refund is admissible.
7) Services provided by Reserve Bank of India(RBI) are exempt but service
provided to RBI are not exempt.
Value of Taxable Service for the purpose of levy of service tax
Section 67 of Finance Act, 1994 contains provisions for valuation of taxable services for
charging service tax. The highlights of provisions of section 67 are as follows -
x Service tax is payable on gross amount charged by service provider for
service provided or to be provided. Thus, tax is payable as soon as advance
is received.
x Value of taxable service plus service tax payable is equal to gross amount
charged .
x Where the consideration for providing services is entirely in money, gross
amount charged by service provider of taxable service provided or to be
provided by him will be relevant for valuation .
x Where the consideration for providing services is not wholly or partly in terms
of money, service tax is payable on amount of money, which with addition of
tax service tax charged, is equivalent to the consideration .
x Where consideration is not ascertainable, valuation will be on basis of
Valuation Rules framed for this purpose.
x If gross amount charged by service provider is inclusive of service tax (i.e.
service tax not charged separately in invoice), value of taxable service will be
calculated by back calculations such that with addition of service tax payable,
the total is equal to the gross amount charged .
x Gross amount charged for taxable services can be before,
during or after provision of service .
Amount need not be charged by service provider - money paid to third party
may also be includible - It is not necessary that the money should be paid to service
provider himself. Amount paid even to third party is includible in value of service if it is
for provision of service and at the instance of service provider.
Service tax payable on net amount excluding VAT/Sales tax - Rule 2A(1)(i)(a) of
Service Tax Valuation Rules makes it clear that VAT/Sales tax is not to be included in
value for purpose of service tax. Thus, service tax is payable only on net amount
excluding VAT/Sales tax payable on the transaction.
Special Valuation Provisions for specified categories of Services:
a) In case of certain specified services e.g. construction services,
erection/installation services etc. partial abatement is available from gross value
and service tax is allowed to pay on lower abated value subject to the condition
that value of goods involved is included in the gross value and no input credit is
availed by the service provider. For example in case of Construction services,
service-tax @ 10.3% is payable on 25% of the gross value by allowing
abatement of 75%. Similarly in case of erection/installation abatement of 67% is
allowed tax is required to be paid only on 33%.
b) In case of Works contract services, a special composition scheme is prescribed
in terms of which a Works contractor can pay service-tax @ 4.12% on total gross
value including goods involved as against normal gross value of the contract.
Further he is not allowed input tax credit.
c) Similarly, in case of Goods Transport services, service-tax is charged on 25% of
the total freight paid by allowing abatement of 75% from gross value.
Import and Export of Service
Import of service:
There is no concept as import of service in the strict sense of the term in the
Finance Act, 1994 or the rules made there under. Here the word import is used
just to indicate service provided by a person who has established his business or
has his permanent address outside India and the recipient of such service is
such a person who has his permanent address or usual place of business in
India.
d) Provisions made under section 66A of the Finance Act, 1994 provide for payment
of service tax by the recipient of service in cases where the provider of taxable
service is from outside India and the receiver of service has his permanent
address / usual place of business in India. This is applicable even though the
service is received / consumed by the such Indian outside India. This provision is
not applicable in case of individuals who have received such service other than
for the purpose of use in business or commerce.
e) (Refer section 66A of the Finance Act, 1994)
f) In case where the service provider is a non-resident or is from outside India and
does not have office in India, the person receiving the service shall be liable to
pay the service tax.
g) ( Refer Rule 2 (1)d(iv) of Service Tax Rules, 1994)
Export of Service:
The export of service is governed by the Export of Service Rules, 2005. ( notified
vide Notification No. 9/2005 service tax, dated 03.05.2005 and subsequently
amended by Notification No.28/2005 service tax, dated 07.06.2005 and
Notification No. 13/2006- service tax dated 19.04.2006, Notification No. 02/2007-
ST dated 01.03.2007, Notification No. 30/2007- service tax dated 22.05.2007
and Notification No. 20/2008- service tax dated 10.05.2008 and 6/2010-ST
dated 27.02.2010, Notification 42/2011 ST, Notification 22/2011 ST both dated
1/3/2011 and Notification 36/2011 ST dated 25/4/2011 )
The taxable services have been divided in three groups and some group-specific
criteria are prescribed for provision of a particular service in a particular group to
be treated as export of service. However, there is a common condition which is
required to be fulfilled by all the taxable services (irrespective of the group they
belong to) to qualify as exported services.
These two conditions are: (i) such service is delivered outside India and used
outside India, and (ii) the payment received for providing such service should be in
convertible foreign exchange. It is necessary that the common qualifying conditions
as well as the group-specific conditions are fulfilled so as to treat the provision of
any such service as export of service.
For category 1 comprising of 18 services: the service should be provided in relation
to an immovable property situated outside India.
For category 2 comprising of 46 services: the service should be provided outside
India, though in case the service is partly performed outside India, it shall be treated
as performed outside India.
For category 3 comprising of services excluding sub clauses zzzo and zzzv of
S.65(105) of the Finance Act 1994, category at7.2.3 above except when the
provision of taxable services specified in sub clauses d, zzzc, zzzr and zzzzm ibid
does not relate to immovable property, and those specified in category at category
7.2.4 above, when provided in relation to business or commerce, it should be
provided to a recipient located outside India and when not provided in relation to
business or commerce it should be provided to a recipient located outside India at
the time of provision of such service.
Registration
1 Every person liable for paying the service tax shall make an application to the
concerned Superintendent of Central Excise in Form ST-1 for registration within a
period of thirty days from the date on which the service tax under section 66 of the
Finance Act, 1994(32 of 1994) is levied:
Provided that where a person commences the business of providing a taxable service
after such service has been levied, he shall make an application for registration within a
period of thirty days from the date of such commencement. (Refer section 69 of Finance
Act, 1994 & Rule 4 of the Service Tax Rules,1994)
Also, the following two categories of persons have been identified as Special Category
of Persons under The Service Tax (Registration of Special Category of Persons) Rules,
2005:
i) Input Service Distributor;
ii) Any provider of taxable service whose aggregate value of taxable service
(aggregate value has been defined in Rule 2(b) of The Service Tax (Registration of
Special Category of Persons) Rules, 2005) in a financial year exceeds nine lakh
rupees.
Input service distributor as defined under Rule 2 (m) of CENVAT Rules, 2004 means
an office of the manufacturer or producer of final products or provider of output service,
which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards
purchases of input services and issues invoice, bill or, as the case may be, challan for
the purposes of distributing the credit of service tax paid on the said services to such
manufacturer or producer or provider, as the case may be.
In case a service recipient is liable to pay service tax, as detailed at para 1. above, he
also has to obtain registration.
2. The service tax is administered by the Central Excise Department. The government
website www.exciseandservicetax.nic.in gives the details of the jurisdictional offices of
the Central Excise Department, State-wise, District-wise as well as Commissionerate-
wise.
3. Total 67 Central Excise & Service Tax Commissionerates, 7 exclusive Service Tax
Commissionerates and 5 Large Taxpayer Units administer Service tax collection in
India.
2.4 Following are the 7 Service tax Commissionerates:
1. Mumbai-I
2. Mumbai-II
3. Delhi
4. Chennai
5. Kolkata
6. Bangalore
7. Ahmedabad
5. There are 5 Large Taxpayer Units (LTUs) as listed below:
1. Bangalore,
2. Chennai,
3. Mumbai,
4. Delhi and
5. Kolkata
Procedure for Registration
1. Fill the Form ST-1 in duplicate. (Form ST-1 is available on the departmental website
(www.cbec.gov.in). Enclose photocopy of PAN card, proof of address to be registered
and copy of constitution /partner ship deed etc. of the firm, if any.
2. Copy of PAN card is necessary as a PAN based code (Service Tax Code) is allotted
to every assessee.
3. These forms are required to be submitted to the jurisdictional Central Excise office (in
case of seven Service Tax Commissionerates, to the jurisdictional Division office).
There are separate service tax commissionerates in Mumbai, Chennai, Delhi, Kolkata,
Bangalore and Ahmedabad as mentioned in the previous chapter).
4. A person liable to pay service tax should file an application for registration within
thirty days from the date on which the service tax on particular taxable service comes
into effect or within thirty days from the commencement of his activity.
(Refer Rule 4 (1) of Service Tax Rules, 1994)
5. Where a person, liable for paying service tax on a taxable service,
(i) provides such service from more than one premises or offices; or
(ii) receives such service in more than one premises or offices; or,
iii) is having more than one premises or offices, which are engaged in relation to
such service in any other manner, making such person liable for paying service tax,
and has centralized billing system or centralized accounting system in respect of such
service, and such centralized billing or centralized accounting systems are located in
one or more premises, he may, at his option, register such premises or offices from
where centralized billing or centralized accounting systems are located.
5.1 The registration under sub-rule 2 of Rule 4 of the Service Tax Rules,1994, shall be
granted by the Commissioner of Central Excise in whose jurisdiction the premises or
offices, from where centralized billing or accounting is done, are located:
Provided that nothing contained in this sub-rule shall have any effect on the registration
granted to the premises or offices having such centralized billing or centralized
accounting systems, prior to the 2
nd
day of November, 2006.
6. A single registration is sufficient even when an assessee is providing more than
one taxable services. However, he has to mention all the services being provided by
him in the application for registration and the field office shall make suitable
entries/endorsements in the registration certificate.
(Refer Rule 4 (4) of Service Tax Rules, 1994)
7. An assessee should get the registration certificate (registration number) within 7 days
from the date of submission of form S.T.1, under normal circumstances.
(Refer Rule 4 (5) of Service Tax Rules, 1994)
8. A fresh registration is required to be obtained in case of transfer of business to
another person.
(Refer Rule 4 (6) of Service Tax Rules, 1994)
9. Any registered assessee when ceases to provide the taxable service shall surrender
the registration certificate immediately.
(Refer Rule 4 (7) of Service Tax Rules, 1994)
10. In case a registered assessee starts providing any new service from the same
premises, he need not apply for a fresh registration. He can simply fill in the Form S.T.1
for necessary amendments he desires to make in his existing information. The new form
may be submitted to the jurisdictional Superintendent for necessary endorsement of the
new service category in his Registration certificate.
General Procedures
1. Every person providing taxable service is required to issue (within 14 days of
completion of service or receipt of payment towards value of service, whichever is
earlier) an invoice, a bill or challan signed by him or a person authorized by him. Such
invoice, bill or challan should be serially numbered and should contain following
information:
i name, address and registration number of such person
ii the name and address of the person receiving services
iii description, classification and value of taxable service provided, and
iv service tax payable thereon.
(Refer Rule 4A (1) of Service Tax Rules, 1994)
2. Any goods transport agency which provides service in relation to transport of
goods by road in a goods carriage and is liable to pay tax shall issue a
consignment note to the recipient of service.
(Rule 4B of Service Tax Rules, 1994)
3. Every input service distributor, distributing credit of taxable services should issue an
invoice, a bill or challan signed by him or a person authorized by him for each of the
recipient of credit distributed and such invoice, bill or challan should be serially
numbered and should contain :
i. name, address and registration number of the person providing input services and
the serial number and date of invoice, bill or challan issued by him.
ii name, address and registration number of the input service distributor
iii name and address of the recipient of the credit distributed, and
iv the amount of the credit distributed.
(Refer Rule 4A (2) of Service Tax Rules, 1994)
4. Records to be maintained:
The records including computerized data as maintained by the assessee in accordance
with the various laws in force shall be accepted.
( Refer Rule 5 (1) of Service Tax Rules, 1994)
5. Every assessee is required to furnish to the Superintendent of Central Excise a list of
accounts maintained by him in relation to service tax. This list is to be submitted once at
the time of filing his first S.T.3 return. )(e.g. books of account, viz. sales register,
purchase register, cash book, petty cash book, general ledger, etc.)
(Refer Rule 5 (2) of Service Tax Rules, 1994)
Payment of Service Tax
Any person providing taxable service to any person shall pay service tax at the rate
specified in Sec.66 in such a manner and within such period as may be prescribed.
(Sec.68 of the Finance Act, 1994)
The table below shows the rate of service tax applicable at the relevant period of time.
Sr.No. Period Rate of
Service Tax
Rate of
Education
Cess
Rate of
Secondary &
Higher
Education
Cess
1. Till 13.05.2003 5% Nil Nil
2. 14.05.2003 to
09.09.2004
8% Nil Nil
3. 10.09.2004 to
17.04.2006
10% 2% of the S.T. Nil
4. 18.04.2006 to
31.05.2007
12% 2% of the S.T. Nil
5. 01.06.2007 to
23.02.2009
12% 2% of S.T. 1% of S.T.
6. From 24.02.2009 10% 2% of S.T. 1% of S.T.
1. In case of Individuals or Proprietary Concerns and Partnership Firm, service tax is to
be paid on a quarterly basis. The due date for payment of service tax is the 5
th
of the
month immediately following the respective quarter ( in case of e-payment, by 6
th
of the
month immediately following the respective quarter). For this purpose, quarters are:
April to June, July to September, October to December and January to March.
However, payment for the last quarter i.e. January to March is required to be
made by 31
st
of March itself.
( Refer Rule 6 (1) of Service Tax Rules, 1994)
2. In case of any other category of service provider other than specified at 6.1 above,
service tax is to be paid on a monthly basis, by the 5th of the following month ( in case
of e-payment, by 6
th
of the month immediately following the respective month).
However, payment for the month of March is required to be made by 31st of
March itself.
( Refer Rule 6 (1) of Service Tax Rules, 1994)
3. Service tax is to be paid to the Central Government in respect of service deemed to
be provided as per the rules framed.
( Refer Rule 6 (1) of Service Tax Rules, 1994)
4. The facility of e-payment of service tax has been introduced with effect from
11.05.2005. From 1
st
April, 2010 e-payment of service tax has been made mandatory
for the assessees who have paid service tax of Rs.10 Lakhs (cash+ cenvat) and above
during the last financial year or who have paid service tax of Rs.10 Lakhs (cash +
cenvat) and above during the current financial year. The e-payment shall be made only
in designated banks by 6
th
day of the following month.
(Refer Rule 6 (1) & (2) of Service Tax Rules, 1994) {List of Banks, authorized to accept
e-payment is given in para 12)
5. The assessee is required to deposit the amount of service tax in the designated
banks through GAR-7 challan.
(Refer Rule 6 (2) of Service Tax Rules, 1994)
( Assessees may contact jurisdictional office for details of the designated banks.)
6. While depositing the service tax, the appropriate account head pertaining to the
particular service category should be mentioned on the challan. The correct accounting
heads have been given in the table showing the List of Services in para 1.3.
7. If the assessee deposits the amount of tax liable to be paid, by cheque, then the date
of presentation of the cheque to the designated bank would be treated as the date of
payment of service tax.
(Refer Rule 6 (2A) of Service Tax Rules, 1994)
8. Where an assessee has issued an invoice, or received any payment, against a
service to be provided which is not so provided by him either wholly or partially for any
reason, or where the amount of invoice is renegotiated due to deficient provision of
service, or any terms contained in a contract the assessee may take credit of such
excess service tax paid by him, if the assessee:-
a) has refunded the payment or part thereof, so received for the service provided to the
person from whom it was received or
b) has issued a credit note for the value of the service not so provided to the person to
whom such an invoice has been issued
( Refer Rule 6 (3) of Service Tax Rules, 1994)
9. The assessee can opt for provisional payment of service tax in case he is not able to
correctly estimate the tax liability. In such a situation he may request in writing to the
jurisdictional Assistant / Deputy Commissioner for the same.
( Refer Rule 6 (4) of Service Tax Rules, 1994).
10. Service tax ( including interest, penalty, refund) is to be rounded off to the nearest
rupee. 50 paise or more should be rounded off to the next rupee and less than 50 paise
should be ignored.
( Refer Boards Circular No.53/1/2003 dated 11.03.2003)
11. Any person who has collected any sum on account of service tax, is under
obligation to pay the same to the Government. He can not retain the sum so collected
with him by contending that service tax is not payable.
( Refer section 73A of the Finance Act, 1994.)
Interest
The due date for payment of service tax is 6
th
day of the month following the relevant
month/quarter, if electronically paid and in other cases, 5
th
day of the month following
the relevant month / quarter. It is provided under section 75 of the Finance Act, 1994
that in case of delayed payments (after due date) the assessee is required to pay
simple interest at the rate prescribed. Notification No. 26/2004 dated 10.09.2004 has
specified the rate of interest at 13% per annum. The table below shows the rate of
interest applicable at relevant period of time.
Sr.No. Period Rate of Interest
1. Till 11.05.2001 1.5% per month
2. 11.05.2001 to 11.05.2002 24% per annum
3. 11.05.2002 to 10.09.2004 15% per annum
4. From 10.09.2004 to 31.03.2011 13% per annum
5. From 01.04.2011 18% per annum
Penalty
Penalties have been prescribed under different sections for different types of offences.
Sr.
No.
Section Offence Details
1 76 Failure to pay service tax In addition to the service tax and
interest, penalty not less than
Rs.100/- for every day during
which failure continues, or @
1% of such tax per month,
whichever is higher but shall not
exceed 50% of service tax due.
2 77 General penalty for
contravention of any
provisions of chapter V of
Finance Act, 1994 or rules
made there under for which
no penalty is provided
a) Failure to take registration
in accordance with Sec.69 or
rules made thereunder Rs.
10000 or Rs. 200 per day during
which failure continues,
whichever is higher.
b) Failure to keep, maintain or
retain records- Up to Rs.10000/-
c) Failure to furnish
information, to produce
documents called for by Central
Excise Officer or to appear
before the Central Excise Officer-
Upto Rs.10000/- or Rs. 200 per
day during which failure
continues.
d) Failure to pay tax
electronically by the person
required to pay tax electronically-
upto Rs.10000/-
e) Failure to issue correct
invoice with complete details and
account for the invoice in his
books of accounts_Upto
Rs.10000/-
2. For contravention of any other
provisions of the Act where no
separate penalty is provided-
upto Rs.10000/-
3 78 Service tax not been levied
or paid or been short-levied
or short-paid or erroneously
refunded by reason of fraud
or collusion or willful mis-
statement or suppression of
facts or contravention of any
of the provisions of chapter V
of Finance Act, 1994 or of
the rules made there under
with intent to evade payment
of service tax
Shall in addition to the Service
Tax and interest thereon, if any
payable, be the amount equal to
the amount of Service tax not
levied or paid or short-levied or
short paid or erroneously
refunded. But where true
accounts are available in
specified records, the penalty is
reduced to 50%. Where the
service tax and interest is paid
within 30 days, from the date of
communication of the order the
penalty is 25%. The reduced
penalty is available only if the
penalty is paid within 30 days of
the date of communication of the
order.
4 70(1) &
Rule 7C
Late filing of returns Late fee upto Rs.20000/-
a)Delay up to 15 days-Rs.500/-
b) Delay beyond 15 days and
upto 30 days-Rs.1000/-
c) Delay beyond 30 days-
Rs.1000/- plus Rs.100 per day of
delay beyond 30 days
Provided the total amount
payable in terms of this rule shall
not exceed the amount specified
in Sec.70 of the Act.
Section 80 provides for non-imposition of penalty in certain cases falling under sections
76, 77 and 78 if there is reasonable cause for such failure.
Prosecution:
Provisions relating to prosecution reintroduced during Budget 2011-12:
Section 89 provides for prosecution in the following situations:
x Provision of service without issue of invoice;
x Availment and utilization of CENVAT credit without actual receipt of inputs or
input services;
x Maintaining false books of accounts or failure to supply any information or
submitting false information; and
x Non-payment of amount collected as service tax for a period of more than six
months.

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Govt. Guidelines on Service-tax
2


DISCLAIMER

Information is being made available in this booklet purely as a measure of public
facilitation. The provisions of the Finance Act 1994, rules made there under, notifications
and circulars or instructions of the Board shall prevail over the answers provided in this
booklet in case of any contradiction. While every effort has been made to ensure that the
information contained in this booklet is up-to-date, the Central Board of Excise and Customs
and Directorate General of Service Tax, Mumbai does not hold themselves liable for any
consequences, legal or otherwise, arising out of the use of any such information.


For complete Information please refer to the Finance Act,1994, rules made there under and
notifications and circulars. For further information you may contact jurisdictional Service Tax
office.


















































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3


CONTENTS

Sr. No. Topic Page No.
1 General . 4
1-A. Budgetary changes 2011-12.. 7
2 Registration 9
3 Payment of Service Tax........ 12
4 Filing of Returns........ 17
5 Records.. 18
6 Refunds. 20
7 Manner of payment of service tax 23
8 Exemptions........ 24
9 Penal Provisions. 29
10 Adjudication & Determination of Tax 31
11 Appellate Remedies... 32
12 CENVAT Credit Scheme. 33
13 Export of Services & taxable service used in
relation to export of goods... 35
14 Service Tax on Receipt of Services from
Outside (Import of Services). 37
15 Advance Ruling 38
16 Where can the Department be contacted. 39
17 Web enabled facility for the Assessee 40
18 Appendix 1 List of Taxable Services with Account Codes. 41
19 Appendix 2 Abatements available under Service Tax Laws. 47
20 Appendix 3 Provisions of
Central Excise Act, 1944 applicable to Service Tax.. 50
21. Appendix 4 - Export of Services Rules, 2005 & Taxation .. 51
of Services (Provided from outside India and Received in India)
Rules 2006 List of Service Categories.

















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4



SERVICE TAX
FREQUENTLY ASKED QUESTIONS

1. General

1.1. What is Service Tax and who pays this tax?

Service tax is, as the name suggests, a tax on Services. It is a tax levied on the
transaction of certain services specified by the Central Government under the
Finance Act, 1994.

It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally,
the service provider pays the tax and recovers the amount from the recipient of
taxable service.

1.2. Who is liable to pay service tax?

Normally, the person who provides the taxable service on receipt of service charges
is responsible for paying the Service Tax to the Government (Sec.68 (1) of the Act).
However, in the following situations, the receiver of the Services is responsible for
the payment of Service tax :

(i) Where taxable services are provided by foreign service providers with no
establishment in India , the recipient of such services in India is liable to pay
Service Tax.

(ii) For the services in relation to Insurance Auxiliary Service by an Insurance
Agent, the Service Tax is to be paid by the Insurance Company

(iii) For the taxable services provided by a Goods Transport Agency for transport
of goods by road, the person who pays or is liable to pay freight is liable to
pay Service Tax , if the consignor or consignee falls under any of the seven
categories viz. (a) a factory (b) a company (c) a corporation (d) a society (e) a
co-operative society (f) a registered dealer of excisable goods (g) a body
corporate or a partnership firm.

(iv) For the taxable services provided by Mutual Fund Distributors in relation to
distribution of Mutual Fund the Service Tax is to be paid by the Mutual Fund
or the Asset Management Company receiving such service.

[ Refer: Sec. 68(2) of the Act read with Rule 2(1)(d) of the Service Tax Rules,
1994.]

1.3. Under what authority service tax is levied?

Vide Entry 97 of Schedule VII of the Constitution of India, the Central
Government levies
service tax through Chapter V of the Finance Act, 1994. The taxable services
are defined in Section 65 of the Finance Act, 1994. Section 66 is the charging
section of the said Act.

1.4. What are the taxable service

Taxable Services have been specified under Section 65(105) of the Finance
Act, 1994. All the taxable services as on 01.05.2011 are listed in Appendix-1.
The list also shows the relevant Accounting Heads required to be mentioned
on the tax payment documents (GAR-7), while depositing the Service Tax and
other related dues in the banks.

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5


1.5. How to decide whether Service Tax is payable by a person?

A. If you are engaged in providing a service to any person, please check:-

(i) Whether the service rendered by you is falling under the scope of any
of the taxable services listed in the Appendix-1.; and

(ii) Whether there is a general or specific exemption available for the
category of service provided under any notification issued under
section 93 of the Finance Act, 1994.

(iii) Whether you are entitled to the value based exemption available for
small service providers under notification No.6/2005-ST dated 1.3.05
as amended from time to time. Details are explained in para 8.1 of this
Booklet.

(iv) Whether the service charges were received for the services provided or
to be provided.

In case the service provided by a person falls within the scope of the taxable
services and if such service is not fully exempted, the service tax is payable on
the value of the taxable service received, subject to the eligible abatements, if
any (as discussed at para 1.7 of this Booklet).

B. If you are availing the services of the service provider, please check:-

a. Whether the service received by you is falling under the scope of any
of the services where the recipient of the service is liable to pay
Service Tax in terms of Section 68(2) of the Act read with Rule 2(d) of
the Service Tax Rules, 1994 (Please also see Para 1.2 of this Booklet)

b. In case the service received by recipients of such service is falling
under the scope of any of the taxable services defined under section
65 of the Finance Act, 1994, the recipients of the service shall pay
Service Tax after considering specific exemptions/abatements
admissible, if any.

c. Please note that the value based exemption for small scale service
providers under Notification No.6/2005 ST dated 01.03.2005 as
amended is not admissible to such recipients of taxable services.
(For further details, please see para 7.1 of this Booklet).

1.6. What is the rate of Service Tax?

At present, the effective rate of Service Tax is 10.3% on the value of the
taxable service. The above effective rate comprises of Service Tax @10%
payable on the gross value of taxable service, Education Cess @ 2% on the
service tax amount, and Secondary and Higher Education Cess @ 1% on the
service tax amount.

1.7. What is meant by value of taxable service"?

i. The "value of taxable service" means, the gross amount received by
the service provider for the taxable service provided or to be provided
by him. Taxable value has to be determined as per the provisions of
the Section 67of the Finance Act, 1994, read with Service Tax
(Determination of Value) Rules, 2006.
ii. For certain services, a specified percentage of abatement is allowed
from the gross amount collected for rendering the services (see
Appendix 2) subject to the conditions, inter alia, that CENVAT Credit
has not been availed by the service provider and the benefit under the
Notification No.12/2003-ST dt. 20.6.2003 as amended has also not
been availed.
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6


iii. There is also a composition scheme for works contract service,
where the person liable to pay service tax in relation to works contract
service shall have the option to discharge his service tax liability on the
works contract service provided or to be provided, instead of paying
service tax at the rate specified in section 66 of the Act, by paying an
amount equivalent to 4% of the gross amount charged for the works
contract. The gross amount charged for the works contract shall not
include Value Added Tax (VAT) or sales tax, paid on transfer of
property in goods involved in the execution of the said works contract.

1.8. Can the Department modify the value determined by the service
provider?

(i) The Central Excise Officer is empowered to verify the accuracy of any
information furnished or document presented for valuation.

(ii) If the value adopted by the Service Tax assessee is not acceptable in
accordance with the statute, the officer shall issue a show cause notice
(SCN) proposing to determine the value as per the law.


(iii) The SCN would be decided after providing reasonable opportunity of
being heard to the assessee.

(Rule 4 of the Service Tax (Determination of Value) Rules, 2006 read with
Section 67 of the Act)


1.9. What are the statutes governing the taxation relating to Service Tax?

The Statutes governing the levy of Service Tax are as follows:

(i) The Finance Act, 1994 - Chapter V - Section 64 to 96 I. (Also referred
to as Act in this book). This chapter extends to the whole of India
except the State of Jammu and Kashmir.

(ii) The Finance Act, 2004 Chapter VI - for levy of Education Cess @ 2%
on the Service Tax.

(iii) The Finance Act, 2007 for levy of Secondary and Higher Education
Cess of 1% on Service tax.

(iv) The Service Tax Rules, 1994. (Also referred to as Rules or
STR,1994 in this book).

(v) The CENVAT Credit Rules, 2004.

(vi) The Export of Service Rules, 2005.

(vii) The Service Tax (Registration of Special categories of persons) Rules,
2005.

(viii) The Taxation of Services (Provided from Outside India and Received
in India) Rules, 2006 (with effect from 19th April, 2006) Notification
No. 11/2006-ST dated 19.4.2006 as amended vide Notfn.No.31/2007
ST dated 22.05.2007.

(ix) The Service Tax (Determination of Value) Rules, 2006 (with effect
from 19th April, 2006) Notification No. 12/2006-ST dated 19.4.2006
as amended vide Notfn.No.24/2006 ST dated 27.06.2006 and
Notfn.No.29/2007-ST, dated 22.05.2007.

(x) Works Contract (Composition Scheme for Payment of Service Tax)
Rules, 2007-Notification No. 32/2007-Service Tax dated 22nd May,
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2007, as amended by Notification No. 07/2008-St dated 1st March,
2008.

(xi) Service Tax (Removal of Difficulty) Order, 2010 effective from
22.6.2010.

(xii) Point of Taxation Rules 2011.



1.10. Is there any exemption from payment of service tax to Diplomatic
Missions for official use and individuals and their family members
posted in a Diplomatic Mission?


Yes, any taxable service provided to Diplomatic Missions for official use of
such Mission as well as for the personal use or for the use of the family
members of diplomatic agents or career consular officers posted in a foreign
diplomatic mission or consular post in India is exempt in terms of the
notifications numbers 33/2007-ST dated 23rd May, 2007 and 34/2007-ST dated
23rd May, 2007 respectively.

1-A Budgetary changes 2011-12

What are the new services introduced in the budget 2011-12?

The following two new services have been proposed:

(i) Services by air-conditioned restaurants having license to serve liquor; and
(ii) Short-term accommodation in hotels/inns/clubs/guest houses etc.

What are the changes or scope in the existing services?

Scope of New services

a. Services provided by a restaurant

Restaurants provide a number of services normally in combination with the
meal and/or beverage for a consolidated charge. These services relate to the
use of restaurant space and furniture, air-conditioning, well-trained waiters,
linen, cutlery and crockery, music, live or otherwise, or a dance floor. The
customer also has the benefit of personalized service by indicating his
preference for certain ingredients e.g. salt, chilies, onion, garlic or oil. The
extent and quality of services available in a restaurant is directly reflected in
the margin charged over the direct costs. It is thus not uncommon to notice
even packaged products being sold at prices far in excess of the MRP.

b. In certain restaurants the owners get into revenue-sharing arrangements with
another person, who takes the responsibility of preparation of food, with his
own materials and ingredients, while the owner takes responsibility for
making the space available, its decoration, furniture, cutlery, crockery and
music etc. The total bill, which is composite, is shared between the two
parties in terms of the contract. Here the consideration for services provided
by the restaurants is more clearly demarcated.

c. Another arrangement is whereby the restaurant separates a certain portion of
the bill as service charge. This amount is meant to be shared amongst the
staff who attend the customers. Though this amount is exclusively for the
services it does not represent the full of value of all services rendered by the
restaurants.

d. The new levy is directed at services provided by high-end restaurants that are
airconditioned and have license to serve liquor. Such restaurants provide
conditions and ambience in a manner that service provided may assume
predominance over the food in many situations. It should not be confused
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with mere sale of food at any eating house, where such services are
materially absent or so minimal that it will be difficult to establish that any
service in any meaningful way is being provided.

e. It is not necessary that the facility of air-conditioning is available round the
year. If the facility is available at any time during the financial year the
conditions for the levy shall be met.

f. The levy is intended to be confined to the value of services contained in the
composite contract and shall not cover either the meal portion in the
composite contract or mere sale of food by way of pick-up or home delivery,
as also goods sold at MRP. Finance Minister has announced in his budget
speech 70% abatement on this service, which is, inter-alia, meant to separate
such portion of the bill as relates to the deemed sale of meals and beverages.

1-A.2 Short-term accommodation

A-2.1 Short term accommodation is provided by hotels, inns, guest houses, clubs
and others and at camp-sites. This service is proposed to be taxed where the
continuous period of stay is less than 3 months.

A-2.2 Actual levy will be restricted to accommodation with declared tariff of Rs
1,000 per day or higher by an exemption notification. Once this requirement
is met, tax will be chargeable irrespective of the fact that actually the amount
charged from a particular customer is less than Rs 1,000. The tax will also be
charged on the gross amount paid or payable for the value of the service.

A-2.3 Finance Minister has announced 50% abatement from the value of service.


A-3 What is the relevance of declared tariff? Is the tax required to be paid
on declared tariff or actual amount charged?

Declared tariff includes charges for all amenities provided in the unit of
accommodation like furniture, air-conditioner, refrigerators etc., but does not
include any discount offered on the published charges for such unit. The
relevance of declared tariff is in determining the liability to pay service tax as
far as short term accommodation is concerned. However, the actual tax will
be liable to be paid on the amount charged i.e declared tariff minus any
discount offered. Thus if the declared tariff is Rs. 1100/-, but actual room rent
charged is Rs. 800/-, tax will be required to be paid @ 5% on Rs. 800/-.

A-4. Is it possible to levy separate tariff for the same accommodation in
respect of corporate/privileged customers and other normal customers?

It is possible to levy separate tariff for the same accommodation in respect of
a class of customers which can be recogonized as a distinct class on an
intelligible criterion. However, it is not applicable for a single or few corporate
entities.

A-5 Is the declared tariff supposed to include cost of meals or beverages?

Where the declared tariff includes the cost of food or beverages, Service Tax
will be charged on the total value of declared tariff. But where the bill is
separately raised for food or beverages, and the amount is charged in the bill,
such amount is not considered as part of declared tariff the revision in tariff
should be made uniformly applicable to all customers and declared when
such change takes place.







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A-6 Is the luxury tax imposed by States required to be included for the
purpose of determining either the declared tariff or the actual room
rent?

For the purpose of service tax luxury tax has to be excluded from the taxable
value.

Services Provided by Restaurants:

A-7 If there are more than one restaurants belonging to the same entity in a
complex, out of which only one or more satisfy both the criteria relating
to air-conditioning and licence to serve liquor, will the other
restaurant(s) be also liable to pay Service Tax?

Service Tax is leviable on the service provided by a restaurant which satisfies
two conditions:
(i) it should have the facility of air conditioning in any part of the
establishment and
(ii) it should have license to serve alcoholic beverages. Within the same
entity, if there are more than one restaurant, which are clearly
demarcated and separately named, the ones which satisfy both the
criteria is only liable to service tax.

A-8 Will the services provided by taxable restaurant in other parts of the
hotel e.g. swimming pool, or an open area attached to a restaurant be
also liable to Service Tax?

The taxable services provided by a restaurant in other parts of the hotel e.g.
swimming pool, or an open area attached to the restaurant are also liable to
Service Tax as these areas become extensions of the restaurant.

A-9 Is the serving of food and/or beverages by way of room service liable to
service tax?

When the food is served in the room, service tax cannot be charged under
the restaurant service as the service is not provided in the premises of the
air-conditioned restaurant with a licence to serve liquor. Also, the same
cannot be charged under the Short Term Accommodation head if the bill for
the food will be raised separately and it does not form part of the declared
tariff.

A-10. Is the value added tax imposed by States required to be included for the
purpose of service tax?

For the purpose of service tax, State Value Added Tax (VAT) has to be
excluded from the taxable value.


2 Registration :


2.1. What is meant by Registration? Who should apply for registration
under Service Tax law?

In terms of Section 69 of the Finance Act,1994 (Chapter V) read with rule 4 of
theService Tax Rules,1994

Every person who has provided a taxable service of value exceeding Rs. 9
lakhs, in the preceding financial year, is required to register with the Central
Excise or Service Tax office having jurisdiction over the premises or office of
such service provider.

In case a recipient is liable to pay service tax (Please see para 1.2 of this
Booklet) he also has to obtain registration.
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The Input Service Distributors are also required to register them as per
Notfn. No.26/2005-ST dated 07.06.2005 as amended.

Every person who provides taxable service and is liable to pay service tax.


2.2. Why registration is necessary?

Registration is identification of an assessee. Identification is necessary to
deposit service tax, file returns and undertake various processes ordained by
law relating to service tax. Failure to obtain registration would attract penalty in
terms of section 77 of the Finance Act, 1994, read with rule 4 of Service Tax
Rules 1994. (Please also refer para 2.15 of this Booklet)

2.3. What is the meaning of an assessee in relation to Service Tax?

As per the sub-section (7) of Section 65 of the Finance Act, 1994 (Chapter
V),assessee means a person liable to pay Service Tax and includes his
agent.


2.4. When should a prospective assessee obtain registration?

i. When a person commences business of providing a taxable service, he is
required to register himself within 30 days of such commencement of
business[sub-rule (1) of Rule 4 of Service Tax Rules, 1994].
ii. In case service tax is extended to a new service, an existing service provider
must register himself, unless he is eligible for exemption under any
notification, within a period of 30 days from the date of new levy [sub-rule 5A
of Rule 4 of the Service Tax Rules, 1994].

2.5. What does the word person appearing in the definition of taxable
service mean?

The word "Person" shall include any company or association or body of
individuals, whether incorporated or not. Thus, this expression includes any
individual, HUF, proprietary firm or partnership firm, company, trust, institution,
society etc.

2.6. What is the procedure for Registration? Who should be approached for
Service Tax Registration?

A prospective Service Tax assessee (service provider or service receiver) or
Input Service Distributor seeking registration should file an application in
Form ST-1 (in duplicate) [prescribed vide Notfn.No. 32/2005 dated 20.10.2005
as amended Notfn. No. 11/2008 dated 1.3.2008] before the jurisdictional
Central Excise/Service Tax officer. To verify the correctness of declaration in
the said form, certain documents such as copy of PAN card, proof of address
of business premise(s), constitution of the business [proprietorship, firm,
company, trust, institute etc.] etc. may be required by the registering authority.
The copies may be self-certified by the applicant. In case of doubts in select
cases, original documents may have to be presented for verification.

2.7. How much time is taken for the issuance of the Registration Certificate?

The Registration certificate should be issued within a period of seven days
from the date of submission of application ST-1 along with all relevant
details/documents. In case the registration certificate is not issued within
seven days, the registration applied for is deemed to have been granted. [Rule
4(5) of the STR, 1994].



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2.8. Is there any provision for centralized registration?

Service providers having centralized accounting or centralized billing system
who are located in one or more premises, at their option, may register such
premises or office from where centralized billing or centralized accounting
systems are located and thus have centralized registration.

Commissioner of Central Excise/Service Tax in whose jurisdiction centralized
account or billing office of the assessees exists, is empowered to grant
centralized registration in terms of sub rule 2 & 3 of Rule 4 of Service Tax
Rules,1994

2.9. In case of multiple services provided by an assessee, is separate
registration certificate required for each service?

As per sub-rule (4) of rule 4 of the Service Tax Rules, 1994, only one
Registration certificate is to be taken even if the person provides more than
one service from the same premises for which registration is sought.
However, while making application for registration, all taxable services
provided by the person should be mentioned.

If there is centralized registration, only one registration certificate is required
for services provided from different premises, declared in the application for
centralized registration.


2.10. What is to be done when the existing assessee starts providing a
taxable service not mentioned in the registration certificate?

He should intimate to the jurisdictional Assistant Commissioner or Deputy
Commissioner of Central Excise in writing if there is a change in any
information or details furnished by him in the original ST-1 form submitted at
the time of obtaining registration or if he intends to furnish any additional
information or details within a period of thirty days of such change.
(As per Rule 4(5A) of Service Tax Rules, 1994).


2.11. Is PAN allotted by the Income Tax Department a must for obtaining
Service Tax Registration?

Having PAN is essential because the Service Tax Code/Registration number
is generated based on the PAN issued by the Income Tax Department. The
PAN based Service Tax Code/Registration number is a must for payment of
service tax using the G.A.R. 7 Form.
.
2.12. What should be done with the Service Tax Registration on cessation of
business of providing taxable service -?

The Service Tax Registration certificate (ST-2) should be surrendered
immediately to the Superintendent of Central Excise [Rule 4(7) of the Service
Tax Rule, 1994].

2.13. What should be done with the Registration in case of transfer business
to another person?

In the event of transfer of the business, the transferee should obtain a fresh
certificate of Service Tax registration. [Rule 4(6) of the Service Tax Rules,
1994].






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2.14. Whether a service provider can make payment of Service Tax and file
Returns before the grant of registration by the proper officer?

A person liable to pay service tax must apply for registration before he starts
paying service tax and filing return. Service provider should apply well in
advance to obtain registration, which is normally granted within 7 days of
filing of application. If registration is not granted within seven days, it deems
to have been granted.

2.15. Is there any penal provision for non-registration?

Failure of registration may attract a penalty upto Rs.10000/- or Rs. 200/- for
every day during which such failure continues, whichever is higher [Section
77(1)(a) of the Finance Act, 1994].

However, such penalty may be waived in case the assessee proves that
there was reasonable cause for such failure [Section 80 of the Finance Act
1994].

2.16. What should be done in case of change in the office/place of business?

Any change in premises/office, as mentioned in Form ST-1, should be
intimated to jurisdictional Assistant/Deputy Commissioner Central Excise.

2.17. If a registration certificate issued by the Department is lost, can
duplicate be issued? What is the procedure in this regard?

The assessee is required to make written request for duplicate registration
certificate. The same will be issued by the Department after suitable entry in
the registers/records of the Office.

3. Payment of Service Tax

3.1. How to pay Service Tax?

Form G.A.R.7 (previously known as TR6 Challan) should be used to make
service tax payments. Payment of service tax may be made at the specified
branches of the designated banks. The details of such Banks and branches
may be obtained from the nearest Central Excise Office/Service Tax Office.

Service Tax can also be paid electronically, using e-payment facility. (Please
refer para 3.16 to 3.25).

3.2. When is Service Tax required to be paid?

1. Payments through Bank :

Category Frequency Due Dates
In case of Individuals,
Proprietary Firms &
Partnership Firms

Quarterly as mentioned
below -
( i ) For Q.E. 30th June
(ii ) For Q.E. 30th Sept.
( iii ) For Q.E. 31St Dec.
( iv ) For Q.E. 31st March



- by 5th July
- by 5th Oct
- by 5th Jan.
- by 31st March

Others (e.g. Companies,
Societies, Trusts etc.)

Monthly By 5th of the month
immediately following
the month in which
payments are received
towards the value of
taxable services.
However, in case of
March, the payment
should be made by
31st March.
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2. Electronic Payments through Internet :

Category Frequency Due Dates
In case of Individuals,
Proprietary Firms &
Partnership Firms

Quarterly as mentioned
below -
( i ) For Q.E. 30th June
( ii ) For Q.E. 30th Sept.
( iii ) For Q.E. 31St Dec.
( iv ) For Q.E. 31st March


- by 6th July
- by 6th Oct
- by 6th Jan.
- by 31st March.
Others (e.g. Companies,
Societies, Trusts etc.)
Monthly By 6th of the month
immediately following
the month in which
payments are received
towards the value of
taxable services.
However, in case of
March, the payment
should be made by 31
st

March.


3.3. What is the procedure to be followed for payment of Service Tax if full
details are not available to assess the correct service tax liability ? Under
what circumstances, provisional assessment is resorted to?

If an assessee is unable to correctly calulate the actual amount of Service Tax
payable for any particular month or quarter, as the case may be, he can
make a request in writing to the Asstt. / Dy.Commissioner of Central Excise
as provided under sub rule (4) of Rule 6 of the Service Tax Rules, 1994,
giving reasons for seeking payment of Service Tax on provisional assessment
basis. On receipt of such request for provisional assessment, the Asstt. /
Dy.Commissioner of Central Excise may allow payment of Service Tax on
provisional basis on such value of taxable service as may be specified by him
in a speaking order issued to that effect.

3.4. How is the provisional assessment finalized ?

In case the Service Tax assessee resorts to provisional assessment after
following the procedure and furnishes the returns in Form ST-3A along with
Form ST-3, it is the responsibility of the Asstt./Deputy Commissioner to
complete the assessment after calling for from the assessee the relevant
documents or records, as may be considered necessary by him. In terms of
provisions to Rule 7 of Central Excise Rules,2002 as applicable to Service
Tax, the order finalizing the assessment shall be passed as soon as the
relevant information is received.

3.5. What is the head of account into which the Service Tax amount is to be
paid in respect of various services?

Separate Head of account has been specified for each taxable service. This
must be mentioned on G.A.R. 7 (previously known as TR-6) challan for proper
accounting. (See Appendix-1 of this Booklet).

3.6. What is GAR-7 challan? Where is it available?

GAR-7 challan is the document for payment of service tax. GAR-7 challan is
available in any stationary shop selling Government forms. The format is also
given on web-site www.cbec.gov.in


3.7. Can the Service Tax be deposited in Non-designated banks?

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No. For payment of Service Tax, specific bank has been nominated for every
Central Excise/Service Tax Commissionerate. If Service Tax is deposited in a
Branch /Bank other than the nominated Bank / Branch, it amounts to non-
payment of Service Tax [Rule 6(2) of the STR, 1994]. In any case, a non-
designated bank will not accept service tax challans. You may approach the
local Service Tax Commissionerate to know the name of the nominated bank
for payment of your Tax dues.

3.8. Whether the payment of Service Tax is to be made for the billed amount
or for the amount received?

a) Service Tax is to be paid on the invoice amount or the billed amount.
Where invoice is not issued within a period of 14 days then the tax
becomes payable on the date of such completion of the provision of the
service and on the amount mentioned in the invoice. In any case issue of
invoice is mandatory as per Rule 3 of Point of Taxation Rules 2011.
b) Further the amount of tax to be paid in a case where the person providing
the service receives a payment before 14 days then it will be on the basis
of the extent of such payment received by the service provider. For
instance wherever any advance by whatever name known is received by
the service provider to the provision of Taxable Service that advance will
form the basis for calculating the Service Tax liability.

3.9. Can service tax be paid in advance, where the gross amount has not yet
been received?

Yes. As per Rule 6(1A) of Service Tax Rules, 1994, service tax can be paid
in advance to the credit of the central government and adjust the amount so
paid against the service tax which he is liable to pay for the subsequent
period. The assessee is required to intimate the details of the amount of
service tax paid in advance to the jurisdictional superintendent of Central
Excise/Service Tax within a period of 15 days of such payment and indicate
the details of the advance payment made, and its adjustment, if any in the
subsequent return to be filed under section 70 of the Act.

3.10. Can service tax be paid by cheque?

Yes, service tax can be deposited by cheque. [Rule 6(2A) of Service Tax
Rules,1994]

3.11. When paid by cheque, which date will be treated as date of payment?

The date of presentation of the cheque to the bank designated by the Central
Board of Excise & Customs for this purpose shall be deemed to be the date
on which service tax has been paid subject to realization of that cheque.


3.12 When payment is made by a client to an assessee after deducting his
Income Tax liability under the Tax deduction at source (TDS) provision,
whether the Service Tax liability of the assessee is only towards the
amount actually received from that client or tax is to be paid on the
amount including the Income Tax deducted at source also?

Service Tax is to be paid on the gross value of taxable service which is
charged by a Service Tax assessee for providing a taxable service. Income
tax deducted at source is includible in the charged amount. Therefore, service
Tax is payable on the gross amount including the amount of Income Tax
deducted at source also.

3.13 What is the interest rate applicable on delayed payment of Service Tax?

Every person, liable to pay the service tax in accordance with the provisions
of section 68 of the Act or rules made there under, who fails to credit the tax
or any part thereof to the account of the Central Government within the period
prescribed, shall pay simple interest @18% per annum. Interest is payable
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for the period from the first day after the due date till the date of payment of
any defaulted service Tax amount. [Refer to Section 75 of the Finance Act,
1994]

3.14. Can interest be waived, and by whom?

Interest payments are mandatory in nature and the same cannot be waived.

3.15. What are the penal consequences if the Service Tax is not paid or paid
late?

If a person who is liable to pay Service Tax fails to pay service tax, he shall
pay in addition to such tax and interest, a penalty which shall not be less than
Rs.100/- for every day during which such failure continues or @1% of such tax
per month, whichever is higher. However, the penalty amount payable shall
not exceed the amount of Service Tax payable. (Refer to Section 76 of the
Finance Act, 1994).


3.16. What is e-Payment of Central Excise and Service Tax?

e-Payment is a payment made through which a Taxpayer can remit his tax
dues to the Govt. (CBEC) using Internet Banking Service. It is an additional
facility being offered by the banks besides conventional procedure.

3.17. Is E-payment of Service Tax mandatory?

Yes. E-payment is mandatory for assesses who have paid service tax of
Rs.10 lakhs or more including the amount paid by utilization of CENVAT
credit, in the preceding financial year.(Refer Rule 6(2) of Service Tax
Rules,1994). However, there is no bar for other assessees to pay their tax
electronically. In other words, other assessees may also pay their service tax
through e-payment, if they choose to do so.

3.18. Which banks provide the facility of e-payment of Service Tax?

The following banks provide e-payment facility.

Sl.No. Name of Bank Name of Central Excise / Service Tax
Commissionerate for which the Bank is authorised to
collect Revenue through e-Payment
1. Allahabad Bank All Commissionerates
2. Bank of Baroda All Commissionerates
3. Bank of India All Commissionerates
4. Bank of Maharashtra All Commissionerates
5. Canara Bank All Commissionerates
6. Central Bank All Commissionerates
7. Corporation Bank All Commissionerates
8. Dena Bank All Commissionerates
9. HDFC Bank All Commissionerates at Delhi, Bangalore, Kolkata,
Mumbai
10. ICICI Bank All Commissionerates at Delhi, Chennai, Hyderabad,
Mumbai
11. IDBI Bank All Commissionerates
12. Indian Bank All Commissionerates
13. Indian Overseas Bank All Commissionerates
14. Oriental Bank of Commerce All Commissionerates (w.e.f 01.08.2009)
15. Punjab National Bank All Commissionerates
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16. State Bank of Bikaner& Jaipur All Commissionerates
17. State Bank of Hyderabad All Commissionerates
18. State Bank of India All Commissionerates
19. State Bank of Indore All Commissionerates
20. State Bank of Mysore All Commissionerates
21. State Bank of Patiala All Commissionerates
22. State Bank of Travancore All Commissionerates
23. Syndicate Bank All Commissionerates
24. UCO Bank All Commissionerates
25. Union Bank of India All Commissionerates
26. United Bank of India All Commissionerates
27. AXIS Bank All Commissionerates at Delhi, Bangalore, Hyderabad,
Mumbai
28. Vijaya Bank All Commissionerates

More banks will be added over a period of time. You may find out the latest
position on the web site of Principal Controller of Accounts
http//:pccacbec.nic.in or check with the local Central Excise/Service Tax
office.

3.19. How to get Internet banking facility of Bank?

The customers of Bank can request this facility on prescribed application
forms to any bank having internet banking facility.

3.20. Are there any geographical restrictions on Banks?

No. Customer can effect payment from anywhere for the Commissionerate in
which he is registered with, provided that particular bank is designated and
authorized to collect revenue for that Commissionerate.

3.21. Up to what time in a day the e-Payments can be made?

e-Payment can be made 24 hours a day using Internet banking service of
Bank. Payment made up to 8 pm will be accounted on the same day.
However payments effected after 8 pm will only be included in next working
day's scroll by the Focal point Branch. So, to ensure timely payment, e-
payment should be made latest by 8 p.m. on the due date.

3.22. Does the Internet banking service give any receipt/confirmation for the e-
Payment?

Yes, on successful payment the Internet banking user gets a Cyber Receipt
for the Tax payment, which he can save or print for his record.

3.23. How does the taxpayer get the regular Challan stamped and receipted by
Bank?

The respective Focal Point Bank on the next working day will send the
Challan copies duly receipted and stamped to the taxpayer by courier at the
mailing address provided by the taxpayer.

4. Filing of Returns

4.1. What are the Returns a service tax assessee has to file?

ST-3 Return For all the registered assessee, including Input
ServiceDistributors, (Ref. Section 70 of Finance Act,1994 and Rule 7 of
Service Tax Rules, 1994 read with Notfn.No. 14/2007-ST dated 02.04.2007).
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ST-3A Return The assessee who is making provisional assessment under
rule 6(4) of the Service Tax Rules, 1994.

The Forms are available at any Stationery shop selling Govt. forms.
These can also be downloaded from www.cbec.gov.in

4.2. When to file returns?

ST-3 Return is required to be filed twice in a financial year half yearly.

Return for half year ending 30th September and 31st March are required to
be filed by 25
th
October and 25
th
April, respectively.

4.3. How to file Service Tax Returns?

The details in respect of each month/ Quarter, as the case may be, of the
period for which the return is filed, should be furnished in the Form ST-3,
separately. The instructions for filing return are mentioned in the Form itself.

It should be accompanied by copies of all the GAR-7 Challans for payment of
Service Tax during the relevant period.

4.4. Is there any provision to file a revised return?

Yes, under rule 7B of Service Tax Rules, 1994 an assessee may submit a
revised return, in Form ST-3, in triplicate, to correct a mistake or omission,
within a period of ninety days from the date of submission of the return under
Rule 7. However, where an assessee submits a revised return, the relevant
date for the purpose of recovery of service tax, if any, under section 73 of the
Finance Act, 1994, shall be the date of submission of such revised return.

4.5. What is e-filing of Service Tax Returns?

The e-filing is a facility for electronic filing of Service Tax Returns through the
Internet.

4.6 How to file Service Tax return?

With effect from 25
th
August, 2011 in terms of Notfn. No. 43/2011 all Service
Tax returns are to be filed electronically.

4.7. Is E-filing of Returns mandatory to all assessees?

E-filing of Returns is mandatory for all assesses as provided by Rule 7
amended by [Notification No. 43/2011-ST dated 25/08/2011].

4.8. What is the procedure for e-filing?

(i) File an application to the jurisdictional Asst./Deputy Commissioner of
ServiceTax, specifying
- 15-digit PAN based registration number (STP Code)
- Valid e-mail address - so that the Department can send them their
User ID and password to help them file their Return.

(ii) Log on to the Service Tax e-filing home page by typing the address
http://servicetaxefiling.nic.in in the address bar of the browser.

(iii) Upon entering the Service Tax code, user ID and password, you will
be permitted to access the e-filing facility.

(iv) Follow the instructions given therein for filing the Returns
electronically.

(v) Obtain the acknowledgement.
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4.9. Is filing of return compulsory even if no taxable service provided or
received or no payments received during a period (a particular half
year)?

Filing of return within the prescribed time limit is compulsory, even if it may be
a nil return, failing which penal action is attracted.

4.10. Whether a single Return is sufficient when an assessee provides more
than one service?

A single return is sufficient because the ST-3 Return is designed to capture
details of each service separately within the same return.

4.11. Is there any penalty for non-filing or delayed filing of the Returns?

If a person fails to file the ST-3 Return by the due date [25th October and
25th April every year], he shall be liable to penalty which may extend to Rs.
Ten thousand rupees (Section 77 of the Act)

Mandatory Penalty for Late filing of ST-3 Return under Rule 7C of Service Tax
Rules, 1994 (Section 70 of the Act)

Sr.No. Period of Delay from the
prescribed date

Penalty

1 15 days Rs.500/-
2 Beyond 15 days but not
later than 30
days

Rs.1000/-

3 Beyond 30 days

Rs.1000/- plus Rs. 100/- for every day
from the thirty first day till the date of
furnishing the said return (not exceeding
Rs.20000)


5. Records

5.1. Are there any statutory documents prescribed by the Government such
as specified invoice proforma, specified registers etc. for use by the
service providers?

There are no specific statutory records which have to be maintained by a
Service Tax assessee. The records including computerized data, if any,
which are being maintained by an assessee on his own or as required under
any other law in force, such as Income Tax, Sales Tax etc. are acceptable for
the purpose of Service Tax - (Rule 5(1) of the Service Tax Rules, 1994).

However, under the revised rule 5(2) of the STR, 1994 (with effect from 28th
December, 2007), the assessee is required to provide to the jurisdictional
Superintendent of Central Excise/Service Tax a list, in duplicate, of all the
records prepared or maintained by the assessee for accounting of
transactions in regard to (a) providing of any service, whether taxable or
exempted; (b) receipt or procurement of input services and payment for such
input services; (c) receipt, purchase, manufacture, storage, sale, or delivery,
as the case may be, in regard of inputs and capital goods; (d) other activities,
such as manufacture and sale of goods, if any and all other financial records
maintained by him in the normal course of business,

5.2. Where from the Service Tax assessee can get the Forms such as ST-1,
ST-3 etc?

The Forms are available on the CBEC website and also at the Central Excise
Range/Division/Commissionerate Hqrs. offices. The forms are also available
in the market and are sold by private publishers.
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5.3. Can the Department ask for more information than what assessee is
submitting to it in the Form ST-1 and ST-3?

Yes. If it is felt necessary, the Department can call for additional information/
documents for scrutiny, as per Rule 6(6) of the Service Tax Rules, 1994 and
Sec. 14 of the Central Excise Act, 1944 which is made applicable to Service
Tax matters, as per Sec. 83 of the Finance Act, 1994.

Rule 5A of Service Tax Rules, 1994 provides that every assessee, on
demand, is required to make available to the Central Excise/Service Tax
officer authorized by the Commissioner or the audit party deputed by the
Commissioner or the Comptroller and Auditor General of India, within a
reasonable time not exceeding fifteen working days from the day when such
demand is made, or within such further period as may be allowed by such
officer or the audit party, the following records/documents for the scrutiny of
the officer or audit party:

i. the records as mentioned in Rule 5(2) of STR, 1994;

ii. trial balance or its equivalent; and

iii. the income-tax audit report, if any, under section 44AB of the Income-
tax Act, 1961 (43 of 1961).

In the event of failure to make available the records/documents, a penalty of
Rs. 10000 or Rs.200 for every day during which such failure continues,
whichever is higher, starting with the first day after the due date, till the date
of actual compliance, is imposable on the assessee under amended section
77 of the Finance Act, 1994.

5.4. Can a Service Tax officer access an assessees registered premises?

As provided under Rule 5A of STR, 1994, an officer authorized by the
Commissioner can have access to an assessees registered premises for the
purpose of carrying out any scrutiny, verification and checks as may be
necessary to safeguard the interest of revenue.

5.5. Whether issue of Invoice/Bill/Challan is mandatory? When should the
same be issued?

Issue of Invoice/Bill/Challan by a Service Tax assessee is mandatory as per
Rule 4A of the STR, 1994. The same should be issued within 14 days from
the date of completion of taxable service or receipt of payment towards the
service, whichever is earlier. However, if the service is provided continuously
for successive periods of time and the value of such taxable service is
determined or payable periodically, the Invoice/Bill/Challan shall be issued
within 14 days days of the date when each such event specified in the
contract, which requires the service receiver to make any payment to service
provider, is completed. ( Rule 4A (1) of the STR 1994).

5.6. Is there any prescribed format for the Invoice/Bill?

There is no prescribed format for issue of Invoice. However, the
invoice/bill/challan should contain the following information (Rule 4A of the STR,
1994):

i. Serial number.

ii. Name, address and registration no. of the service provider.

iii. Name and address of the service receiver.

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iv. Description, classification and value of taxable service being provided or to be
provided.

v. The amount of Service Tax payable (Service Tax and Education cess should
be shown separately)

Note: If the service provider is a Banking company, the details at Sl. No (i) and
(iii) are not necessary.

In respect of the taxable services relating to the transport of goods by road,
provided by the Goods Transport Agency, the service provider should issue a
consignment note containing the following information (Rule 4B of the STR,
1994): -

i. Serial Number
ii. Name of the consignor and consignee

iii. Registration no. of the vehicle

iv. Details of the goods transported

v. Details of the place of origin & destination

vi. Person liable for payment of Service Tax (consignor /consignee / GTA)

5.7. Is the amount of Service Tax charged from the client compulsorily to be
indicated separately in the Bills / Invoices / Challans raised on him?

Yes. It is mandatory to separately indicate the amount of Service Tax charged
in the Bills/Invoices/Challans raised on the clients, as per Section 12A of the
Central Excise Act, 1944 which is made applicable to Service Tax, under
Sec.83 of the Finance Act, 1994. Such mention of the Service Tax amount in
the Invoice / Bill / Challans, would also facilitate the service receiver to avail
the CENVAT credit of the Service Tax paid on the input services.

5.8. What is the preservation period for service tax records and
documents?

All records and documents concerning any taxable service, CENVAT
transactions etc. must be preserved for a minimum period of 5 years
immediately after the financial year to which such records pertain (Rule 5(3)
of Service Tax Rules 1994.)

6. Refunds

6.1 Can any adjustment of tax liability be made by an assessee on his own,
in cases when Service Tax has been paid in excess?

i. Yes. Where an assessee has issued an invoice, or received any
payment, against a service to be provided which is not so provided by
him either wholly or partially for any reason (or when the invoice
amount is renegotiated due to deficient provision of service, or any
terms contained in a contract) the assessee may take the credit of
such excess service tax paid by him, if the assesse has refunded the
payment or part received fr the service provided or has issued a credit
note for the value of the service not so provided to the person to whom
an invoice had been issued. (Rule 6(3) of the STR, 1994).

ii. Further, assesses having centralised registration who paid excess
amount of Service Tax, on account of non-receipt of details regarding
the receipt of gross amount for the services at his other premises or
offices, may adjust such excess amount against the Service Tax
liability for the subsequent period and furnish the details of such
adjustment to the Jurisdictional Superintendent of Central
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Excise/Service Tax within 15 days from the date of such adjustment
(Rule 6(4A) of the STR, 1994).

iii. In all other cases of excess payment, refund claims have to be filed
with the Department. The refund claims would be dealt as per the
provisions of Section 11B of the Central Excise Act, 1944, which is
made applicable to Service Tax vide Section 83 of the Finance Act
1994.

iv. It is important to note that any amount of Service Tax paid in excess of
the actual liability, is refundable, only if it is proved that the claimant of
refund had already refunded such amount to the person from whom it
was received or had not collected at all (Section 11 B of the Central
Excise Act, 1944 which is applicable to Service Tax matters under
Section 83 of the Act).

6.2 What is the procedure for claiming refund?


i. Application in the prescribed form (Form - R) is to be filed in triplicate
with the jurisdictional Asst./Deputy Commissioner of Central
Excise/Service Tax.
ii. The application should be filed within one year from the relevant date
as prescribed in Section 11B of the Central Excise Act, 1944 which
has been made applicable to Service Tax refund matters also.
iii. Application should be accompanied by documentary evidence to the
effect that the amount claimed as refund is the amount actually paid by
him in excess of the Service Tax due and the incidence of such tax
claimed as refund has not been passed on to any other person.


6.3. What is relevant date for calculation of limitation period in respect of
filing refund claims relating to Service Tax?

The relevant date for the purpose of refund as per section 11B of the
Central Excise Act, 1944 which is applicable to Service Tax also, is the date
of payment of Service Tax. Thus, the limitation period of one year is to be
calculated from the date of payment of the Service Tax.

6.4 Is there any provision for interest for delayed payment of refunds?

If any duty/tax ordered to be refunded under section 11B(2) of Central Excise
Act, 1944, to any applicant is not refunded within three months from the date
of receipt of application, interest at the applicable rate shall be paid, subject to
conditions laid down under section 11BB of the Central Excise Act, 1944.

Also where an amount deposited by an appellant in pursuance of an order
passed by the Commissioner (Appeals) or the Appellate Tribunal, under the
first proviso to section 35F of the Central Excise Act, 1944, is required to be
refunded consequent upon the order of the appellate authority and such
amount is not refunded within three months from the date of communication
of such order to the adjudicating authority unless the operation of the order of
appellate authority is stayed by a superior court or tribunal, interest shall be
paid at the applicable rate after the expiry of three months, under the
provisions made in section 35FF of the Central Excise Act, 1944.

Provisions of Sections 11B, 11BB, 35F and 35FF of the Central Excise Act,
1944 are made applicable to Service Tax vide section 83 of the Finance Act,
1994.


6.5 To claim the refund arising out of service tax paid under section 66A, no
proforma is prescribed in the notification; how to claim it?

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In the notification, there is no difference in treatment of service tax paid under
section 66 and section 66A of Finance Act, 1994. Where refund arises, Table
A, in Form A-2 can be used for making a refund claim.

6.6 Meaning of the expression who does not own or carry on any
business other than the operations in the SEZ appearing in paragraph
2(a)(iii) of the notification, which creates a difference between
standalone and non-standalone SEZ Unit/Developer, may be clarified?

The expression refers to an entity which is carrying out business operations
in SEZ and also DTA. Merely having an office in the DTA for purpose of
liaison/business promotion, does not restrict a SEZ Unit from availing benefit
extended to a standalone unit.

6.7 Whether Approval by UAC is necessary, to claim benefit under the
Notification?

Yes. Unit Approval Committee (UAC) of the SEZ determines goods and
services required for the authorised operations of a Unit/Developer, under the
SEZ law. Hence approval of the UAC is necessary for availing the notification
benefit, on the taxable services.

6.8 i) Does condition (c) prescribed in paragraph 2 of the notification,
17/2011-ST dated 01. 03. 2011, restrict the non-standalone
Units/Developers, from availing upfront exemption for wholly consumed
services, which fall under category (i) and (ii) of para 2(a) of the
notification?
(ii) For whom and for what purpose, Declaration in A-1 is required?

In respect of category (i) and (ii) services listed in paragraph 2(a), upfront
exemption is made available to all SEZ Units/Developers, who fulfill the
conditions of notification; only in the case of category (iii), difference is
created between standalone and non-standalone SEZ Units/Developers.
Declaration in Form A-1 is required to be produced, to a service provider, to
claim upfront exemption (after striking out the inapplicable portion). This is a
one-time Declaration. Original Declaration can be retained with the SEZ
Unit/Developer for business record or for production to the jurisdictional
Central Excise/Service Tax authorities, if need be, for any verification; a copy
has to be retained by SEZ Specified Officer; self-attested photocopies of the
Declaration can be submitted to service provider to avail upfront exemption,
subject to fulfillment of other conditions mentioned in the notification.

6.9 Meaning of the expression total turnover found in paragraph 2(d) of
the notification 17/2011 is not clear: whether it refers to turnover of SEZ
Unit or the entity (including DTA and SEZ Unit). This may be clarified?

Total turnover includes turnover of DTA Unit and also export turnover of SEZ
Unit. This is the way to calculate proportionate refund. Table-C in Form A-2,
illustrates this aspect

6.10 A Developer may not have export turnover; therefore, he cannot get
refund of service tax based on the formula provided for shared services
in paragraph 2(d) of the notification 17/2011: therefore, it may be
explained how a Developer can claim exemption under this notification?

Generally, SEZ Developers will be using category (i) services listed in
paragraph 2(a), relating to immovable property located within SEZ; upfront
exemption is available for these services, and category (ii) services,
irrespective of whether the Developer is standalone or not. As another option,
refund route is also available. In the case of category (iii) services if
Developer is standalone, upfront exemption is available. If Developer is not
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standalone, on service tax paid on category (iii) services, which are
exclusively used for the authorised operations in SEZ, he can avail
exemption through refund route.

6.11 Whether proportionate amount of service tax paid on shared services
that have not been refunded after applying the formula, shall be
available to the DTA Units of the entity as cenvat credit?

Yes. Available

6.12 Whether consolidated refund claim under 17/2011-ST can be filed by an
entity having more than one SEZ unit and a centralized service tax
registration.?

If an entity is having multiple SEZ Units with a centralized service tax
registration, consolidated refund claim can be filed, provided separate
accounts are maintained for receipt and use of services for the authorised
operations in SEZ Unit.

6.13 Whether certified copies of invoices can be used for claiming refund, if
originals are needed for other statutory purpose; Whether on the basis
of single invoice, one can claim proportionate refund for SEZ Unit and
balance as cenvat credit?

In terms of the notification, original invoices are needed for claiming refund;
after receiving the refund, originals can be taken back on submission of
copies certified by Chartered Accountant. On a single invoice, if proportionate
refund (by SEZ Unit) and cenvat credit (by DTA Unit) needs to be obtained,
then also similar system shall be followed.

7. Manner of payment of Service Tax, when clients (recipient of service) do
not pay service tax amount, what should be done?


7.1. Is the Service Tax payable by the assessee even in cases where his
clients [recipient of service] do not pay for the service(s) rendered or
when the client pays only a part of the bill raised in this regard?

Though the burden of Service Tax ultimately rests on the service recipient
the law requires the service provider to collect the tax from the service
recipient on the services provided and deposit to the Government Account .
Therefore whether the service provider receives the payment from his client
(service recipient) or not , he is legally bound to pay the service Tax liability in
respect of the services rendered by him. The Service Tax has to be paid
when the Invoice is issued or the completion of service provided or certain
advance/payment is received for the services provided. Therefore Service
Tax is payable when payment for the part of the bill is paid by the service
recipient. However the tax liability will be to the full extent on the total amount
to be received by the service provider.


7.2 What is meant by completion of service as in many situations it is not
possible to issue invoices within 14 days of the completion of the service
since the exact date of completion of service is difficult to identify?

The Service Tax Rules, 1994 requires that invoice should be issued within a
period of 14 days from the completion of the taxable service. The invoice
needs to indicate interalia the value of service so complete. Thus the term
completion of service referred above would include not only the physical
part of providing the service but also the completion of all other auxiliary
activities like measurement, quality testing etc. but excluding any filmsy or
irrelevant grounds. Thus the test for determination if a service has been
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completed would be the completion of all the related activities that place the
service provider in a situation to be able to issue an invoice

7.3. How does one work out the Service Tax liability and pay the same to
the Government, in case the customer or a client pays only the value of
the service amount, but not the Service Tax amount mentioned in the
bill?

Service Tax is payable on amount realized. In given situation, the amount so
realized from the client would be treated as gross amount inclusive of Service
Tax and accordingly the value of taxable service and the Service Tax liability
are worked out as follows:

For example :

Value of taxable service (AV) = Rs. 1000
Amount Billed = Rs.1000 + Service Tax Rs.103.00 = Rs.1103.00
Amount paid = Rs.1000. Treat Rs.1000 as gross amount inclusive of service
tax.

In case the gross amount, including service tax, received is, say, Rs
1000. In such cases the service tax liability may be arrived at by reverse
calculation in the following manner.

1000
AV = ---------------- X 100 = Rs. 906.62 (Rs.907)
110.3
Amount of Service Tax + Education Cess Payable = Rs.93

Note: If the recipient of service pays full billed amount later, the
differential service tax must be paid forthwith.


8. Exemptions

8.1. What are the conditions of exemption to small scale service providers ?

Taxable services provided by the small scale service provider were exempted
from whole of service tax leviable there-on upto the aggregate taxable value
Rs.4 lakhs in any financial year of vide Notification No.06/2005-ST dated
01.03.2005 (effective from 01.04.2005). The exemption limit of aggregate
taxable was enhanced to Rs.8 lakhs vide Notification No.4/2007-ST dated
01.03.2007 (effective from 01.04.2007) and the same has been further
enhanced to Rs.10 lakhs vide Notification No.8/ 2008-ST dated 01.03.2008
(effective from 01.04.2008).

(i) Above exemption is not admissible to :-

(a) taxable service provided by a person under a brand name or trade
name, whether registered or not, of another person or

(b) such value of taxable services in respect of which service tax shall be
paid by recipient of service under section 68 (2) of Finance Act read
with Service Tax Rules, 1994.

(ii) Above exemption is admissible subject to following conditions :-

(a) taxable service provider has the option not to avail the said exemption
and pay service tax on the taxable service and such option are
exercised in a financial year shall not be withdrawn during the
remaining part of such financial year ;

(b) the provider of taxable service shall not avail Cenvat credit of service
tax paid on any input used for providing taxable service on which
exemption of small scale is availed.
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(c) The provider of taxable service shall not avail Cenvat credit under
Rule 3 of the Cenvat Credit Rules 2004, during the period in which the
service provider avail small scale exemption.

(d) The provider taxable service shall avail CENVAT Credit only on such
inputs or input services received on or after the date on which the
service provider starts paying service tax and used for provision of
taxable services on which service tax is payable.
(e) The provider of taxable service shall be required to pay an amount
equivalent to the CENVAT credit taken by him, if any, in respect of
such inputs lying in stock or in process on the date on which he starts
availing exemption under this notification.

(f) The balance CENVAT Credit lying unutilized if any after the
adjustment of credit under (e) above, shall lapse on the day such
service provider starts availing the exemption under this notification.

(g) This notification shall apply to the aggregate value of one or more
taxable services provided from one or more premises and not
separately for each premises or each service.

(h) The aggregate value of taxable services rendered by a provider of
such service from one or more premises does not exceed exemption
limit fixed (i.e. Rs.Ten lakhs) in the proceeding financial year.

8.2 Whether Gross Value of taxable services on which recipient has paid
service tax as specified under Section 67(2) of the Finance Act, 1994
read with Service Tax Rules 1994, charged by goods Transport Agency
shall be counted for determining aggregate value of small scale
exemption ?

No. The Gross amount charged by Goods Transport Agency under Section
67 ibid to the recipient of service shall not to be taken into account for
determining the aggregate taxable value under the small scale exemption.

8.3 What is the meaning of brand name or Trade name in Para 8(i) (a)
above?

A brand name or trade name means brand name or trade name, whether
registered or not i.e. to say, a name or a mark, such as symbol, monogram,
logo, label, signature, or a invented word or writing which is used in relation to
such specified services for the purpose of indicating or so as to indicate a
connection in the course of trade between such specified services and some
person using such name or mark with or without any identification of the
identity of that person.

8.4 How to determine the aggregate value of Rs 10 lakh under small scale
exemption notification?

The aggregate taxable value means the sum of total of first consecutive
payments received during financial year towards gross amount, as prescribed
under Section 67 of F.A. 1994 towards the taxable services

8.5 Are there any other General exemptions?

The following general exemptions from payment of whole of the amount of
Service Tax are available for the Service Providers:

8.5.1 Services provided to the United Nations or International Organisations
(Notification No.16/2002-ST dated 02.08.2002).

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8.5.2 Services provided to a developer of Special Economic Zone or a unit of
Special Economic Zone as prescribed in the notification.(Notifn. No.04/2004-
ST dated 31.03.2004).

8.5.3 The value of the goods and materials sold by the service provider to the
recipient of the service is exempted from payment of the Service Tax, if there
is a documentary proof specifically indicating the value of the goods and
materials and no credit of duty paid on such goods and material sold, has
been taken under the provisions of CENVAT Credit rules, OR where such
credit has been taken by the service provider on such goods and materials,
but such service provider has paid the amount equal to such credit availed
before the sale of such good and materials. (Notifn.12/2003-ST dated
20.06.2003 as amended from time to time).

8.5.4 Exemptions to Diplomatic Missions for official use of taxable services and
also to the officers and their families of a Diplomatic Mission for personal use
of taxable services- Refer Notification Nos. 33/2007-ST and 34/2007-ST, both
dated 23.5.2007.

8.5.5. Specified taxable services, as listed below, received by an exporter and used
for export of goods (Notification No. 17/2009 dated 07.07.2009 as amended).
Under this notification, the service tax paid by an exporter on these services
is refunded to the exporter on compliance of conditions mentioned in that
notification.

1. General Insurance

2. Port Service

3. Technical Testing & analysis

4. Technical Inspection & Certification

5. Other Ports

6. Transport of Goods by Road (Goods Transport Agency)[from the inland
container depot to the port of export]

7. Transport of goods in containers by Rail [from the inland container
depot to the port of export]

8. Cleaning Service

9. Storage & Warehousing

10. Courier

11. Transport of Goods by Road (Goods Transport Agency)[directly from
the place of removal, to inland container depot or port or airport,]

12. Transport of goods in containers by Rail [from the place of removal
to inland container depot or port or airport]

13. Custom House Agent

14. Banking & other Financial Services

15. Business Auxiliary Services

16. Service of sale or purchase of foreign currency including money
changing by a banking company or financial institution including non-
banking financial company or a body corporate or a financial concern.

17. Service of sale and purchase of foreign currency including money
changing provided by a person other than those referred at S.No 16.
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18. Service of supply of tangible goods for use without transferring the
right of possession and effective control.

19. Clearing and forwarding service

20. Terminal handling charges.

8.6 Is there any exemption from payment of Service Tax if the
receiver/provider of the service is the Central/State Government
organization and Public Sector Undertakings?

8.6.1. No. There is no such exemption. All service providers, including the
Central/State Government Organisations and the Public sector undertakings
rendering the specified taxable service, are liable to pay Service Tax.

8.6.2. If a Government Department (sovereign)/public authorities performs any
mandatory or statutory function under the provisions of any law and collect
any fees, such activity shall be treated as activity purely in public interest and
will not be taxable. (Refer Boards Circular No.96/7/2007-ST dated 23.8.2007)

8.6.3 However, if such authority performs a service, which is not in the nature of
statutory activity, for a consideration, the same shall be taxable.

8.6.4 The taxable services provided by a Banking company or a financial institution
including a non banking financial company, or any other body corporate or
any other person, to the Government of India or the Government of a State, in
relation to collection of any duties or taxes levied by the Government of India
or the Government of a State, are exempted from the payment of Service
Tax. (Notifn.No.13/2004-ST dated 10.09.2004 as amended).

8.6.5 Whether cleaning of export cargo by fumigation is taxable under
cleaning services?

No. Fumigation of export cargo including agricultural/horticultural produce,
whether loaded into containers or otherwise, does not satisfy the statutory
definition of cleaning activity under Section 65(24b) of the Finance Act,
1994. Further the cleaning of the containers used for exporting the cargo are
also exempted from the scope of cleaning services.

8.6.6 Is any Service Tax exemption provided for group insurance policy schemes
such as Janata Personal Accident Policy scheme floated by Insurance
companies?

Yes. Service Tax exemption is available to customized group insurance
policy schemes known as JPAP, floated by various insurance companies as
specified by state governments, to extend risk cover to certain specified
target populations, under varying terms of insurance. The sum assured in
these JPAP policies is often as low as Rs. 25, 000/- , so that even people
without regular income can afford to purchase a risk cover for themselves.
The customized group JPAP insurance schemes floated by various
insurance companies as per the specifications of state governments
concerned, to extend risk cover to target populations, and to fulfill the
prescribed rural or social sector obligation, are covered by the subject
service tax exemption.

8.6.7 Whether service is to be paid on processing of visa applications?

Yes. Service tax is leviable on any service provided other than assistance
directly to individuals for obtaining visa, falling under the description of any
taxable service, as classifiable under the appropriate heading. To cite a few
instances, where in addition to rendering assistance directly to individuals for
obtaining visa, visa facilitators may also act as agents of recruitment or of
foreign employer, in which case, service tax is leviable to the extent under the
service of supply of manpower. In certain other cases, for example, a visa
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facilitator, may be rendering visa assistance to individuals who are employed
in a business entity, but the service charge may be paid by the business
entity on behalf of those individuals, to the visa facilitator, in which case,
service tax is leviable under business support service.

8.6.8 Who is a sub-contractor? Whether the services provided by a sub-
contractor are liable for service tax?
A taxable service provider outsources a part of the work by engaging another
service provider, generally known as sub-contractor. Service tax is paid by
the service provider for the total work. In such cases, whether service tax is
liable to be paid by the service provider known as sub-contractor who
undertakes only part of the whole work. A sub-contractor is essentially a
taxable service provider. The fact that services provided by such sub-
contractors are used by the main service provider for completion of his work
does not in any way alter the fact of provision of taxable service by the sub-
contractor. Services provided by sub-contractors are in the nature of input
services. Service tax is, therefore, leviable on any taxable services provided,
whether or not the services are provided by a person in his capacity as a sub-
contractor and whether or not such services are used as input services. The
fact that a given taxable service is intended for use as an input service by
another service provider does not alter the taxability

8.6.9 Whether Service Tax is to be paid for processing of tobacco involving
threshing and drying of tobacco leaves and client processing of raw
cashew involving roasting/drying, shelling and peeling of raw cashew to
recover kernel,?
No. the agricultural produce namely tobacco or raw cashew, which are subject
to client processing retains their essential characteristics at the output stage and
therefore the processes undertaken on or behalf of client should be considered
as covered by the expression in relation to agriculture. Client processing which
falls under business auxiliary service undertaken on the primary agricultural
produce namely tobacco or raw cashew, does not result in any change in their
essential character of tobacco or cashew. In the light of the above principle (i)
process of threshing and drying of tobacco leaves and thereafter packing the
same and (ii) processing of raw cashew and recovering kernel, undertaken for, or
on behalf of, the clients by processing units are covered by the expression ...
processing of goods for, or on behalf of, the client.....and provided in relation to
agriculture,... appearing in the Notification.No. 14/2004-ST (as amended) dated
10
th
September, 2004. Therefore they are not Service Taxable.

8.6.10 Whether Country of Origin Certificate (COOC) issued by Chambers of Commerce-
is Service taxable ?

Yes. The activity carried out by the Chambers, involving certification of the
national character of the export goods, squarely falls under technical
inspection or certification, as defined in section 65(108) of Finance Act, 1994.
In certain cases, when COOC is issued with reference to national character of
the goods upon examination of the origin of their composition, requirements of
the definition provided in section 65(108) of Finance Act, 1994 is clearly
fulfilled. A chamber or EPC or Trade Association which issues COOC acts as
a technical inspection and certification agency, and issuance of COOC attracts
service tax under technical inspection and certification agency service, which
is a specific description when compared to a general description like club or
association service, by the application of the principles of classification
provided in section 65A of Finance Act, 1994.

8.6.11 Whether delayed payment charges received by the stock brokers to be
included in the taxable value?

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As per the clarification issued by the Board vide Circular No. 137/25/201 dtd.
03.08.2011, delayed payment charges received by the stock brokers are not
includible in taxable value as the same are not the charges for providing
taxable services. Such charges are on account of penal charges for not
making the payment within the stipulated time and hence are not included in
the taxable value for charging service tax.
However, Section 67 of the Finance Act 1994 provides that service tax is
chargeable on taxable value which shall be the gross amount charged by the
service provider. Delayed payment charges would not be includible in gross
value charged only if these charges are shown separately in the account
statement/invoice/bill.

8.6.12 Whether the value of SIM cards is liable to be included in the value of
taxable services being provided by cellular companies?

Yes. As per the clarification received from the Board vide circular No.
137/41/2011 dtd. 06.04.2011, the SIM cards are never sold as goods
independent from services provided by the cellular telephone company. The
value of the SIM cards forms a part of the activation charges and the taxable
value is calculated on the gross total amount received by the operator from
the subscribers. Hence the amount received by the cellular telephone
company from its subscribers towards SIM cards will form a part of the taxable
value for levy of service tax.

8.6.13 Whether computer embroidery work carried out on job work basis is
taxable under Business Auxiliary Service (BAS)?

As per clarification received from the Board vide Dy.No.
2305/Commr(ST)/2011 dtd. 15.07.2011, embroidery work is a manufacturing
activity falling under Chapter 5810 of the Central Excise Tariff Act. Since the
activity is a manufacturing activity of goods specified under Central Excise
Tariff Act, the said activity is not covered in the purview of BAS.


9 Penal Provisions

9.1 What are the penal provisions for various contraventions of the Service
Tax Law?

The Penal provisions for various contraventions of the Service Tax Law are
as follows:-

i. Non registration or delayed registration: An amount which may
extend to Rs. 10000/- or Rs.200/- for every day during which such
failure continues, whichever is higher could be imposed as penalty
under sec 77(1)(a) of the Act.

ii. Non payment or delayed payment of service tax- A mandatory
penalty, not less than Rs.100/- for every day during which such failure
continues or @1% of such tax per month, whichever is higher, shall be
imposed by the adjudicating authority. However, the penalty amount
payable shall not exceed fifty percent of the service tax payable.
[Section 76 of the Act]

iii. Non-filing / delayed filing of returns: A mandatory penalty has been
prescribed under Rule 7C of the Service Tax Rules, 1994, as also an
amount not exceeding TenThousand Rupees could be imposed as
penalty under sec 77(1)(a) of the Act. (see para 4.11 of this Booklet)

iv. Contravention of any of the provisions of the Finance Act, 1994
(Chapter V) or the Rules made there-under for which no penalty is
separately provided: An amount which may extend to Rs.10000/-
shall be liable to be imposed as penalty under Sec.77(2) of the Act.

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v. Failure to keep, maintain or retain books of account and other
documents as required in accordance with the provisions of the
Finance Act, 1994 (Chapter V) or the Rules made there under: An
amount which may extend to Ten thousand rupees shall be liable to be
imposed as penalty. [Section 77(1)(b) of the Act]

vi. Failure to

(1) furnish information called by an officer in accordance with
the provisions of the Finance Act,1994 (Chapter V) or rules
made thereunder; or

(2) produce documents called for by a Central Excise Officer
in accordance with the provisions of this Chapter or rules
made thereunder; or

(3) appear before the Central Excise Officer, when issued
with a summon for appearance to give evidence or to
produce a document in an inquiry,

An amount which may extend to Ten thousand rupees or two hundred rupees
for every day during which such failure continues, whichever is higher, shall
be liable to be imposed as penalty. [Section 77(1)(c) of the Act]

vii. Person who is required to pay tax electronically, through internet
banking, but fails to pay the tax electronically: An amount which may
extend to Ten thousand rupees shall be liable to be imposed as penalty.
[Section 77(1)(d) of the Act]

viii. Person who issues invoice in accordance with the provisions of
the Act or rules made thereunder, with incorrect or incomplete details or
fails to account for an invoice in his books of account: An amount which
may extend to ten thousand rupees shall be liable to be imposed as penalty.
[Section 77(1)(e) of the Act]

ix. where Service Tax was not levied or paid or erroneously refunded, by
reason of fraud, collusion, willful mis-statement, suppression of facts; or
contravention of any of the provisions of the Act or the rules made thereunder
with an intent to evade payment of Service Tax, penalty shall be equal to the
amount of Service Tax so not levied, paid or short-levied or short-paid or
erroneously refunded. Such liability towards penalty shall be in addition to the
Service Tax amount evaded or erroneously refunded and the interest thereon
(Section 78 of the Act).

x. Reduced Penalty in respect of Sl. No. (ix):
(a) where true and complete details of the transactions are available in the
specified records, penalty shall be reduced to 50%.
(b) If the Service Tax amount as determined by the competent authority is paid
within 30 days from the date of communication of the order, along with
interest, the amount of penalty liable to be paid shall only be 25% of the
Service Tax amount so determined.
(c) The benefit of reduced penalty equivalent to 25% of the said Service Tax is
available only if such lesser penalty amount is also paid within thirty days (First
and second proviso to Section 78 of the Act).

xi. Launching of Criminal Prosecution :- A new Section 89, has been
inserted to provide launching of criminal prosecution for Service Tax offence.
In cases, where the amount involved exceeds Rs. 50 lakhs, there is a
provision for imprisonment upto three years and in other cases it will be one
year. For this prosecution, prior sanction of the Chief Commissioner will be
required ( Section 89 of the Finance Act, 1994).

9.2 Is there any provision to waive the penalty under Service Tax law?

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The penal provisions under Service Tax are provided under Sections 76, 77
and 78 of Finance Act, 1994. Although the penalty is liable to be imposed for
the circumstances covered under the said provisions, the Section 80 of the
Finance Act, 1994, provides provisions not to impose penalty, for any failure
referred to in the said provisions, if the Service Tax assessee proves that
there was sufficient cause for such failure.

9.3 Why does Department issue show cause notice?

When any amount is demanded as Service Tax or other dues from any
person under the Finance Act, 1994 and rules made thereunder towards
recovery of service tax or other dues which is not levied or paid or short
levied or short paid by any person, or erroneously refunded to any person,
and/or any person is liable to penalty under the said Act/Rules, notices are
issued in the interest of natural justice to enable such person to understand
the charges and defend his case before an adjudicating officer.

9.4 Can show cause notice be waived?

Where any service tax has not been levied or paid or has been short-levied or
short-paid or erroneously refunded, the person chargeable with the service
tax, or the person to whom such tax refund has erroneously been made, may
pay the amount of such service tax on the basis of his own ascertainment
thereof, or on the basis of tax ascertained by a Central Excise/Service Tax
Officer before service of notice on him and inform the Central Excise/Service
Tax Officer of such payment in writing, in such a case show cause notice will
not be issued. [Refer Section 73(3) of Finance Act, 1994]. However, sub-
section (3) of Section 73 of Finance Act, 1994, is not applicable to the cases
involving fraud or collusion or willful mis-statement or suppression of facts or
contraventions of any of the provisions of Chapter V of the Finance Act,1994
and the rules made thereunder with intent to evade payment of Service Tax
[Refer sub-section (4) of Section 73 of Finance Act, 1994].


10 Adjudication and determination of tax

10.1 What is meant by adjudication?


10.1.1 When show cause notices are issued under provisions of the Finance Act,
1994 charging any person for contravention of any provisions of the said Act
and rules and/or notifications issued thereunder and penal action is proposed,
the competent officers of the Department adjudge the case and issue orders.
This process is called adjudication.

10.1.2 Often notices are issued under section 73 of the Finance Act, 1994 for
determination of tax, and the matter is decided by a competent officer. This is
also referred to as adjudication in common parlance.


10.2 Who are competent officers for adjudication?

10.2.1 The Central Board of Excise and Customs has issued notification No.
48/2010-Service Tax dated 08.09.2010 to amend the Notification No.30/2005-
Service Tax dated 10.08.2005, as amended by Not. No. 16/2008-Service Tax
dated 11.03.2008 specifying monetary limit of each adjudicating authority,
which is as follows,-



Sr.No Central Excise Officer
Amount of service tax or
CENVAT credit specified in a
notice for the purpose of
adjudication under section 83A
(1) (2) (3)
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1 Superintendent of Central Excise Not exceeding Rs. One lakh
(excluding the cases relating to
taxability of services or
valuation of services and cases
involving extended period of
limitation.)
2 Assistant Commissioner of
Central Excise or Deputy
Commissioner of Central Excise
Not exceeding Rs. 5 lakhs (except
cases where Superintendents are
empowered to adjudicate.)

3 Joint Commissioner of Central Excise Above Rs. 5 lakhs but not
exceeding Rs. 50 lakhs
4 Additional Commissioner of Central
Excise
Above Rs. 20 lakhs but not
exceeding Rs. 50 lakhs
5 Commissioner of Central Excise Without limit.


10.2.2 The monetary limits for the purpose of adjudication [determination of tax]
under section 73 are as specified in the Table below (Based on C.B.E.C.
Circular No. 97/8/2007-S.T., dated 23.08.2007).

Sr.No Central Excise Officer
Amount of service tax or
CENVAT credit specified in a
notice for the purpose of
adjudication
(2) (3)
1 Assistant Commissioner of
Central Excise or Deputy
Commissioner of Central Excise
Not exceeding Rs. 5 lakhs

2 Joint Commissioner of Central Excise Above Rs.5 lakhs but not
exceeding Rs. 50 lakhs
3 Additional Commissioner of Central
Excise
Above Rs. 20 lakhs but not
exceeding Rs. 50 lakhs
4 Commissioner of Central Excise Without limit.


10.3 Is the presence of a Chartered Accountant or lawyer necessary for
adjudication?
No. The noticees can defend their case themselves. However, they may also
engage any person, duly authorized to defend their case before an
adjudicating officer.

11 Appellate Remedies

11.1 Who should be approached when an assessee is aggrieved by an
order/decision of the Adjudicating authority subordinate to the
Commissioner of Central Excise/Service Tax in respect of Service Tax?
What is the procedure for filing the Appeal?

i. An assessee aggrieved by such order / decision may file an Appeal to
the Commissioner (Appeals), in Form ST-4, in duplicate.

ii. A copy of the order / decision appealed against should be enclosed.

iii. The Appeal should be filed within 3 months from the date of receipt of
the order/decision.

iv There is no fee for filing an Appeal before the Commissioner of Central
Excise (Appeals) [Section 85 of the Act and Rule 8 of the STR, 1994].

11.2 Can the time limit of three months for filing the appeal to the
Commissioner (Appeals) be extended? If yes, under what
circumstances?

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Yes. If the Commissioner (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. The law does not provide for further extension
of time. [Proviso to Section 85(3) of the Act].

11.3 Can an Appeal be filed against the order / decision of the Commissioner
of Central Excise or Commissioner (Appeals)? If so, what is the
procedure for that?

Yes. The procedure is as follows:-

i. The Appeal against the order of the Commissioner of Central
Excise or Commissioner (Appeals) can be filed before the Customs,
Excise and Service Tax Appellate Tribunal (in short, CESTAT). The
Appeal should be filed within three months of the date of receipt of the
order sought to be appealed against.

ii. It should be filed in the prescribed Form (ST-5) in quadruplicate.

iii. It should be accompanied by a certified copy of the order appealed
against.

iv. The Appeal should be accompanied by the prescribed fee based on
the amount of Service Tax and interest demanded and penalty levied
i.e. Rs.1000/- if the amount involved is Rs.5 lakhs or less, Rs.5000/- if
the amount involved is more than Rs.5 lakhs but not exceeding Rs.50
lakhs and Rs.10,000/- if the amount involved is more than Rs.50 lakhs.
[Section 86 of the Act and Rule 9 of the STR, 1994].


12 CENVAT Credit Scheme

12.1 What is CENVAT Credit Scheme with reference to Service Tax
assessees?

The CENVAT Credit Rules, 2004, introduced with effect from 10.9.2004,
provides for availment of the credit of the Service Tax paid on the input
services/Central Excise duties paid on inputs/capital goods/Additional
Customs duty leviable under section 3 of the Customs Tariff Act, equivalent to
the duties of excise. Such credit amount can be utilized towards payment of
Service Tax by an assessee on their output services. (Refer to Rule 3 of
CENVAT Credit Rules, 2004). Such credit availed by a manufacturer can also
be utilized for discharging their liability towards Service Tax and / or Central
Excise duties [Refer Rule 3 of CENVAT Credit Rules, 2004 read with
Notfn,.No.27/2007-CE(NT) dated 12.05.2007].

12.2 What are the duties / taxes that can be availed as credit?

As mentioned at para 12.1, Duties paid on the inputs and capital goods, and
the Service Tax paid on the input services can be taken as credit. Education

Cess paid on the Excise duty and Service Tax can also be taken as credit.
However, the credit of such Education Cess availed can be utilized only for
payment of Education Cess relating to output service.

The interest and penalty amounts cannot be taken as credit.


12.3 What is meant by input, input service and capital goods for a service
provider?

These terms have been defined in the CENVAT Credit Rules, 2004. (Refer
Rule 2).

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12.4 Is it compulsory that the inputs / capital goods are to be purchased only
from the manufacturers for the purpose of availment of credit?

No. The inputs/capital goods can be procured from the First stage and
Second stage dealers also. Those dealers should have registered themselves
with the Central Excise Department. The invoices issued by them should
contain proper details about the payment of duty on those goods. (Refer Rule
9 of CENVAT Credit Rules, 2004.)

12.5 What are the documents prescribed for availment of the CENVAT
Credit?

The documents on which CENVAT credit can be availed are as follows:-

i. Invoice issued by the manufacturers and his depot/ consignment agents
ii. Invoice issued by the Importer and his depot/consignment agents

iii. First stage and Second stage dealer registered with the Central Excise
Department

iv. Bill of Entry

v. Invoice/Bill/Challan issued by the provider of input Services

vi. Invoice/Bill/Challan issued by the Input Service distributor.

vii. Certificate issued by the Appraiser of Customs in respect of the goods
Imported through Foreign Post Office.

viii. A Challan evidencing payment of service tax by a person liable to pay
service tax in the service category of auxiliary insurance, goods transport,
recipient of service from a foreign country and sponsorship.


12.6 Whether it is necessary to avail credit only after receipt of the bill
/invoice/challan in respect of input services?

Yes. Cenvat credit can be availed only on or after the day on which the
invoice/bill or challan as per Rule 9 of CENVAT Credit Rules 2004 is
received. However in case of service tax paid on reverse charge by the
receipent of the service, the CENVAT credit in respect of such input service
shall be allowed on or after the day on which payment is made of the value of
the service tax paid or payable as indicated in invoice, bill or challan.

12.7 Who is an Input Service Distributor?

An office of the manufacturer or provider of output service who receives
invoices for the procurement of input services and issues invoices for the
purpose of distributing the credit of Service Tax paid to such manufacturer or
provider of output service is an Input Service Distributor. [Refer Rule 2(m) of
CENVAT Credit 2004].

The credit of the tax amount so distributed to various places shall not exceed
the total Service Tax amount contained in the original invoice / bill. [Refer rule
7(a) of CENVAT Credit Rules, 2004].



12.8 What is the format of the invoice / bill / challan to be issued by the input
service distributor?

No specific format has been prescribed. However, the same should contain
the following information:-

(i) Name, address and Registration No. of the service provider.
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(ii) Sl. No and date.
(iii) Name and address of the input service distributor.
(iv) The name and address of the recipient to whom the Service Tax
credit is distributed.
(v) The amount of credit being distributed.

12.9 Whether the input service distributors should get themselves registered
with the Department? Whether they have to file any returns with the
Department?

Yes. They have to register themselves as per the provisions under Service
Tax (Registration of Special Category of Persons) Rules, 2005. They have to
file half yearly returns by the end of the month following the half year. [Refer
Rule 3 of Service Tax (Registration of Special Category of Persons) Rules,
2005].

12.10 What are the records to be maintained by the persons availing credit?

The manufacturer of final products or the provider of output service shall
maintain proper records for the receipt, disposal, consumption and inventory
of the input and capital goods in which the relevant information regarding the
value, duty paid, Cenvat Credit taken and utilized, the person from whom the
input or capital goods have been procured is recorded and the burden of
proof regarding the admissibility of the Cenvat Credit shall lie upon the
manufacturer or provider of output service taking such credit.
(Refer Rule 9(5) of CENVAT credit Rules 2004)


12.11 What should be done, if an assessee is rendering both taxable services
as well as exempted services, but the inputs and input services are
common?

12.11.1 Separate accounts are to be maintained for the receipt, consumption and
inventory of input and input service meant for providing taxable output service
and for use in the exempted services. Credit should be taken only on that
quantity of input /input services which are used for the service on which
Service Tax is payable. (Ref. Rule 6 of Cenvat Credit Rules, 2004).

12.11.2 If separate accounts are not maintained, the provider of output service
shall pay an amount equal to 5% percent of value of exempted goods and
exempted services; or pay an amount as determined under sub-rule (3A); or
in relation to provision of exempted services; subject to the conditions
specified in sub-rule (3A) ibid. (Ref. Rule 6(3 & 3A) of Cenvat Credit Rules,
2004 read with Not.No.3/2011 CE (NT) dt.1.03.2011).

12.12. Whether Cenvat credit is admissible on capital goods which are
exclusively used in providing exempted goods ?
No.

12.12 Is unutilized CENVAT credit refundable?

Refund of accumulated credit is admissible only in case of exports of finished
goods or output service. Where any input or input service is used in providing
output service or manufacture of goods which are exported, the CENVAT
credit in respect of the input or input service so used shall be allowed to be
utilized towards payment of service tax on any other output service or excise
duty on other excisable goods. If such adjustment is not possible due to any
reason, it will be allowed as refund subject to the safeguards, conditions and
limitations specified by the Central Government.

13 Export of Services and taxable service used in relation to export of
goods.

13.1 What is Export of Services? Whether export of services is exempted
from Service Tax?
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What constitute export of service is defined in the Export of Service Rules,
2005. The export of taxable services is exempted from Service Tax.

13.2 What constitutes export of services?

The Export of Services, Rules, 2005 specifies 3 categories of cross border
transaction of services and conditions that will be construed as export of
services in cases of:

i. Specified services which are provided in relation to immovable
properties situated outside India [See list of services in Appendix-4]
(Refer Rule 3(1)(i) of Export of Service Rules,2005).

ii. Specified services which are partly performed outside India [See list
of services in Appendix 4] (Ref. Rule 3(1)(ii) of Export of Service
Rules,2005).

iii. the remaining taxable services, barring a few exceptions, when
provided in relation to business or commerce, to a recipient located
outside India, and when such services are provided not in relation to
business or commerce, it should be provided to a recipient located
outside India at the time of provision of such service.

However, where such recipient has commercial establishment or any office
relating thereto, in India, such taxable services provided shall be treated as
export of service only when order for provision of such service is made from
any of his commercial establishment or office located outside India. [See list
of services in Appendix 4] (Ref. Rule 3(I)(iii) of Export of Service
Rules,2005).

Further condition to be met for treating the provision of any taxable service as
export of service - payment for such service is received by the service
provider in convertible foreign exchange.

[Ref. Rule 3(2) of the Export of Service Rules, 2005].

Thus, each transaction has to be seen individually to ascertain if it constitutes
export of services, fulfilling the requisite parameters.

13.3 If export proceeds are received in Indian currency, will it be denied
export benefit?

If export proceeds are received in Indian currency, no export benefits shall be
available.
[Ref. Rule 3(2)(b) of Export of Service Rules, 2005].


13.4. What are the incentives for export of services?

13.4.1 Taxable services may be exported without payment of service tax, provided
the conditions specified in Export of Service Rules, 2005 are fulfilled.

13.4.2 Where service tax has already been paid on export of services to countries
(other than Nepal and Bhutan), rebate/refund of such service tax, can be
availed under notification no 11/2005-ST dated 19.4.2005;

13.4.3 Where excise duty / service tax has already been paid on the inputs and
input services used in export of services to countries (other than Nepal and
Bhutan), rebate/refund of such excise duty on inputs and service tax paid on
input services can be availed under notification no. 12/2005- ST dated
19.4.2005;

13.4.4 Where taxable services are exported without payment of tax, but CENVAT
Credit was availed, the refund of accumulated CENVAT Credit (if cannot be
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fully used for payment of service tax), may be claimed as refund under rule 5
of the CENVAT Credit Rules, 2004.

13.5 Whether service tax paid on taxable services used in relation to export
of goods, Refundable?

Under Notification No.05/2006-CE(NT) dated 14.03.2006, as amended by
Notification No.07/2010-CE(NT) dated 27.02.2010, refund of CENVAT credit
is allowed in respect of:

(a) input or input service used in the manufacture of final product which is
cleared for export under bond or letter of undertaking;
(b) input or input service used in providing output service which has been
exported without payment of service tax, subject to safeguards, conditions
and limitations, as set out in the said notifications.

13.6 Where can one file the rebate claims or refund of unutilized CENVAT
Credit?

The rebate claims or refund of utilized CENVAT Credit application has to be
filed in the Central Excise or Service Tax Division/Group where the assessee
is registered.


13.7. Where can one file claims for refund of service tax paid on taxable
services used by the exporter of goods, allowed under Notification No
17/2009 ST dated 7.7.2009?

The manufacturer-exporter / exporter has to file the claim for refund to the
Assistant Commissioner of Central Excise or the Deputy Commissioner of
Central Excise, as the case may be, having jurisdiction over the factory of
manufacture / the registered office or the head office, as the case may be, of
such exporter.

Under Notification No.18/2009-ST dated 07.07.2009, the following two
services have been exempted, if they are used for export of goods and where
the liability to pay the tax on such services is on the exporter himself, on
reverse charge basis,-

(i) Transport of goods by road, from the place of removal to any ICD,
CFS, port or airport; or from any CFS or ICD to the port or airport; and

(ii) Services provided by a foreign commission agent for procuring orders.

subject to fulfillment of conditions as set out in the said notifications.

14 Service Tax on receipt of services from outside India [Import of
services]

14.1 What is the statutory provision regarding taxing of services provided
from outside India and received in India ?

Section 66A of the Finance Act, 1994, inserted with effect from 18.4.2006,
provides that where any taxable service is provided or to be provided by a
person who has established a business or has a fixed establishment from
which the service is provided or to be provided or has his permanent address
or usual place of residence, in a country other than India, and is received by a
person who has his place of business, fixed establishment, permanent
address or usual place of residence, in India, such service shall be taxable
service, and such taxable service shall be treated as if the recipient had
himself provided the service in India.

14.2 Is the recipient of service liable to pay tax for the taxable service is
provided from outside India?

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The recipient of service shall be liable to pay tax if the provider of service do
not have any established business or a fixed establishment in India. However,
a person carrying on a business through a branch or agency in any country
shall be treated as having a business establishment in that country (including
India).

14.3 Where provider of the service has his business establishments in more
than one country, which country should be treated as the country from
which service is provided?

If the provider of the service (from outside India) has his business
establishments in more than one country, the country, where the
establishment of the provider of service directly concerned with the provision
of service is located, shall be treated as the country from which the service is
provided or to be provided. (Ref.: Section 66A (2) of the Finance Act,1994.).


14.4 What will be usual place of residence of a body corporate?

Usual place of residence, in relation to a body corporate, means the place
where it is incorporated or otherwise legally constituted. (Ref.: Explanation 2
to sub-section 2 of Section 66A of the Finance Act,1994.)

14.5 What constitutes import of services?

The Taxation of Services (Provided from Outside India and Received in India)
Rules, 2006 specifies 3 categories of cross border transaction of services and
conditions that will be construed as import of services, namely, -

I. specified services which are provided in relation to immovable
properties situated in India [See list of services in Appendix-4]
(Ref. Rule 3(i) of The Taxation of Services Rules 2006).
ii. specified services which are provided partly in India
[ See list of services in Appendix -4]
(Ref. Rule 3(ii) of The Taxation of Services Rules 2006).
iii. the remaining taxable services, barring a few exceptions, when
provided in relation to business or commerce, to a recipient located in
India. [ See list of services in Appendix -4]
(Ref. Rule 3(iii) of The Taxation of Services Rules 2006).

Thus, each transaction has to be seen individually to ascertain if it constitutes
import of services, fulfilling the requisite parameters.

15 Advance Ruling

15.1 What is meant by advance ruling?

Advance ruling means the determination, by the Authority, of a question of
law or fact specified in the application regarding the liability to pay service tax
in relation to service proposed to be provided, by the applicant. Activity
means service to be provided. (See Section 96A of the Finance Act, 1994)

15.2 What is the scheme of advance rulings?
Authority for Advance Rulings for Excise and Customs is meant to provide
binding ruling on important issues so that intending investors will have a
clear-cut indication of their duty/tax liability in advance.
Since advance rulings are not appealable under the Finance Act, 1994, it
assures the applicant of the finality of the tax liability and hence freedom from
spending time, energy and money in legal battles which mostly become long-
drawn.

15.3 Who can apply for an advance ruling?

i. A non-resident setting up a joint venture in India in collaboration with a
nonresident or a resident; or
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ii. A resident setting up a joint venture in India in collaboration with a non-
resident; or

iii. A wholly owned subsidiary Indian company, of which the holding company
is a foreign company, which proposes to undertake any business activity
in India;

iv. A joint venture in India,
(Ref.: Section 96A of the Service Tax, Provisions under Finance Act,
1994).

v. A resident falling within any such class or category of persons, as the
Central Government may, by notification in the official Gazette, specify in
this behalf, and which or who, as the case may be, makes application for
advance ruling under subsection (1) of section 28H of the Customs Act or
Section 23C of Central Excise Act or Section 96C of Service Tax
provisions of Finance Act, 1994.

vi. A resident as an applicant who proposes to import any goods from the
Republic of Singapore under Comprehensive Economic Co-operation
Agreement (CECA). Refer Notification No.69/2005 dated 29.07.2005

15.4 On which questions can an advance ruling be sought?
Advance rulings, concerning service tax matters, can be sought in
respect of

i. Classification of any service as a taxable service under Chapter V of
the Finance Act, 1994;

ii. Principles to be adopted for the purposes of determination of value of
taxable service under the said Act;

iii. Determination of the liability to pay service tax on a taxable service
under the said Act;

iv. Valuation of taxable services for charging Service Tax; and

v. Applicability of notifications issued under said Act.
(Ref.: Section 96C(2) of Finance Act,1994).

15.5 Where is the Authority located and who can be contacted for
information/guidance?

Office of the Authority for Advance Rulings (Central Excise, Customs &
Service Tax), 4
th
Floor (Room No. 445 to 465, 467 & 469), Hotel Samrat,
Kautilya Marg, Chanakyapuri, New Delhi 110 021, Phone 91-11-
26876402/26876406, Fax No. 91-11-26876410, Email :aarcce@hub.nic.in,

Further information, including those relating to the procedure for filing
application, fees and formats of annexure, is available on Website:
www.cbec.gov.in/cae/aar.htm
7

16 Where can the department be contacted?

In Ahmedabad, Bangalore, Chennai, Delhi, Kolkata & Mumbai (Mumbai I & II)
there are exclusive Service Tax Commissionerates . The contact informations
in respect of all the locations are given below:

Sr.No. Zone Phone No. E-mail Address / Web site

1 Ahmedabad 079-6305087
079-26309079
cexd2308@excise.nic.in
http://sevakarahmedabad.nic.in
ccahmdbd@excise.nic.in
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40

2 Delhi 011-23378711 st.delhi@gmail.com
http://delhiservicetax.gov.in
3 Bangalore 080-22245739 adcstaxblr@eth.net
http://servicetaxbangalore.gov.in
4 Chennai 044-24330840-
42
chennaiservicetax@dataone.in
http://servicetaxchennai.gov.in
5 Kolkata

033-22428922 Servicetax_kolkata@yahoo.com
http://kolkata-servicetax.gov.in
6 Mumbai-I 022-22060619 commissioner@servicetaxmumbai.gov.in
7 Mumbai-II 022-24131285
022-24147945
022-24133335
ccozone2ofice@yahoo.com
8 Bhopal 0755-2765208 cec2006@dataone.in,
9 Bhubaneshwar 0674-2581135 ccbbsr@rediffmail.com
10 Chandigarh 0172-2704180 ccchandi@msn.com
11 Kerala 0484-2394100 cccochin@excise.nic.in
12 Coimbatore 0422-2221981 ccocbe@vsnl.net
13 Hyderabad 040-23232028 ccehyd@excise.nic.in
14 Jaipur 0141-2385463 cexjaipu@excise.nic.in
15 Lucknow 0522-2612606 ccolkwzone@yahoo.co.in
16 Mysore 0821-2476912 ccmysore@rediffmail.com
17 Meerut 0121-2769785 ccmeerut@excise.nic.in
18 Nagpur 0712-2565375 cccexnag_ngp@sacharnet.in
19 Pune 020-26051815 ccexpune@pn3.vsnl.net.in
20 Ranchi 0651-2330022 enexranchi@rediffmail.com
21 Shillong 364-2504178 ccshillo@excise.nic.in
22 Vadodara 0265-2331002 chiefcomgujrat@hotmail.com
23 Visakhapatnam 0891-2568837 ccvizag@excise.nic.in

Besides this, the Commissionerates could also be contacted at the address
and numbers published in the Help Center menu in the Service Tax section
of the CBEC website, www.cbec.gov.in.

17. Web enabled facility for the Assessee

17.1 What is ACES?

ACES is abbreviated form of Automation of Central Excise and Service Tax.
It is a Centralized, web based software application.

17.2 What are the Service Tax application covered in ACES?

Service Tax applications such as Registration, Returns, Refunds, ST-3A,
Audit, Dispute Resolution are covered in ACES.

17.3 Who can make use of ACES?

Any assessee or person who wants to transact any business with Service Tax
or Central Excise Department can use ACES.

17.4 For what exactly can ACES be used?

i. Online registration and amendment of registrations details.
ii. Electronic filing of documents such as returns, claims, letter for
permission/ intimation etc.
iii. Online tracking of status of applications filed for claims, permission/
intimation etc.
iv. Online facility to view documents like Registration Certificates,
Returns, Show Cause Notice, Order-in-Original etc.

17.5 From where can ACES Home page be accessed?

ACES Homepage can be accessed Directly accessing through
http://www.aces.gov.in
Clicking on Automation of Central Excise and Service Tax (ACES)
hyperlink.
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41


17.6 What are the salient features of ACES homepage?

ACES homepage is an interface for users/ assessees to access the Central
Excise and Service Tax application. The website also enable users to make
online payment through e-payment, download the return and keep track of
latest updates of ACES application and gives link to various sites under
Central Board of Excise and Customs.

Appendix- 1
List of Taxable Services

Sr.
No.

Service Category

Date of
Introduction

Accounting Codes

Tax
Collection
Other
Receipts

Deduct
Refunds

Education
Cess

Secondary
&
Higher
Education
Cess

1 Advertising 01.11.1996 00440013 00440016 00440017 00440298

00440426

2 Air Travel Agent 01.07.1997 00440032 00440033 00440034 00440298

00440426

3
Airport Services

10.09.2004 00440258 00440259 '00440260 00440298 00440426
4
Architect

16.10.1998 00440072 00440073 00440074 00440298 00440426
5
Asset management
(by other than
Banking company
01.06.2007 00440418 00440419 00440420 00440298

00440426

6
ATM Operations,
Management or
Maintenance

01.05.2006 00440346 00440347 00440348 00440298

00440426

7
Auctioneers'
service, other than
auction of property
under directions or
orders of a count
of or auction by
Central Govt.
01.05.2006 00440370 00440371 00440372 00440298

00440426

8
Authorised Service
Station
16.07.2001 00440181 00440182 00440183 00440298

00440426

9
Auxiliary to Gen.
Insurance / Life
Insurance
16.07.2001 /

16.08.2002

00440169 00440170 00440171 00440298
00440426

10
Banking & Other
Financial Services
also includes
foreign exchange
broking and
purchase or sale of
foreign currency
16.07.2001 00440173 00440174 00440175 00440298
00440426

11
Beauty Parlour

16.08.2002 00440209 00440210 00440211 00440298 00440426
12
Broadcasting

16.07.2001 00440165 00440166 00440167 00440298 00440426
13
Business Auxiliary
Service including
promotion or
marketing or all
games of chance
whether or not
conducted online
i.e. lottery, lotto,
bingo etc.
01.07.2003 00440225 00440226 00440227 00440298

00440426

14
Business
Exhibition Service
10.09.2004 00440254 00440255 00440256

00440298
00440426
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42


15
Business Support
Service
01.05.2006 00440366 00440367 00440368

00440298

00440426
16 Cable Operator 16.08.2002 00440217 00440218 00440219
00440298

00440426
17
Cargo Handling
also covers packing
with transportation
16.08.2002 00440189 00440190 00440191

00440298

00440426
18
Chartered
Accountant
16.10.1998 00440092 00440093 00440094

00440298

00440426
19 Cleaning Service 16.06.2005 00440318 00440319 00440320

00440298

00440426
20
Clearing &
Forwarding Agent
16.07.1997 00440045 00440046 00440047

00440298

00440426
21
Clubs and
Associations
16.06.2005 00440322 00440323 00440324

00440298

00440426
22
Commercial or
Industrial
Construction
10.09.2004 00440290 00440291 00440292

00440298

00440426
23
Commercial
Training or Coaching
01.07.2003 00440229 00440230 00440231

00440298

00440426
24 Company Secretary 16.10.1998 00440100 00440101 00440102

00440298

00440426
25
Construction of
Residential Complex
16.06.2005 00440334 00440335 00440336

00440298

00440426
26 Consulting Engineer 07.07.1997 00440057 00440058 00440059

00440298

00440426
27 Convention Centre 16.07.2001 00440133 00440134 00440135

00440298

00440426
28 Cost Accountant 16.10.1998 00440096 00440097 00440098

00440298

00440426
29 Courier 01.11.1996 00440014 00440018 00440019

00440298

00440426
30
Credit Card, Debit
Card, Charge Card
or other payment
and related services
01.05.2006 00440394 00440395 00440396

00440298

00440426
31 Credit Rating Agency 16.10.1998 00440088 00440089 00440090

00440298

00440426
32 Custom House Agent 15.06.1997 00440026 00440027 00440028

00440298

00440426
33
Commodity exchange
service
16.05.2008 00440438 00440439 00440440

00440298

00440426
34
Cosmetic & Plastic
Surgery
01.09.2009 00440460 00440463 00440298 00440426
35 Design Service 01.06.2007 00440422 00440423 00440424

00440298

00440426
36
Development &
Supply of Content
01.06.2007 00440414 00440415 00440416

00440298

00440426
37 Dredging 16.06.2005 00440310 00440311 00440312

00440298

00440426
38 Dry Cleaning 16.08.2002 00440221 00440222 00440223

00440298

00440426
39 Erection, 01.07.2003 00440233 00440234 00440235 00440298 00440426
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43

Commissioning or
Installation

40
Event
Management
16.08.2002 00440197 00440198 00440199

00440298

00440426
41 Fashion Designer 16.08.2002 00440213 00440214 00440215
00440298

00440426
42
Forward Contract
Services
10.09.2004 00440282 00440283 00440284

00440298

00440426
43 Franchise Service 01.07.2003 00440237 00440238 00440239

00440298

00440426
44 General Insurance 01.07.1994 00440005 00440006 00440120

00440298

00440426
45
Health Club &
Fitness Centre
16.08.2002 00440205 00440206 00440207

00440298

00440426
46
Information
Technology Software
16.05.2008
00440452

00440450

00440451

00440298

00440426
47
Intellectual Property
Service
10.09.2004 00440278 00440279 00440280
00440298

00440426
48 Interior Decorator 16.10.1998 00440076 00440077 00440078

00440298

00440426
49 Internet Caf 01.07.2003 00440241 00440242 00440243

00440298

00440426
50
Internet
Telecommunication
16.05.2008 00440382 00440383 00440384

00440298

00440426
51 Life Insurance 10.09.2004 00440185 00440186 00440187

00440298

00440426
52
Legal Consultancy
Service
01.09.2009 00440480 00440483 00440298 00440426
53
Mailing List
Compilation and
Mailing
16.06.2005 00440330 00440331 00440332

00440298

00440426
54
Management
Consultant
16.10.1998 00440116 00440117 00440118

00440298

00440426
55
Management of
Investment ULIP
16.05.2008 00440430 00440431 00440432

00440298

00440426
56
Management,
Maintenance or
Repair Service
01.07.2003 00440245 00440246 00440247

00440298

00440426
57 Mandap Keeper 01.07.1997 00440035 00440036 00440037

00440298

00440426
58
Manpower
Recruitment or
Supply Agency
07.07.1997 00440060 00440061 00440062

00440298

00440426
59
Market Research
Agency
16.10.1998 00440112 00440113 00440114

00440298

00440426
60
Mining of Mineral,
Oil or Gas
01.06.2007 00440402 00440403 00440404

00440298

00440426
61
On-line
Information &
Database Access
or Retrieval Service
16.07.2001 00440153 00440154 00440155

00440298

00440426
62 Opinion Poll Service 10.09.2004 00440274 00440275 00440276

00440298

00440426
63
Outdoor Catering
Service
10.09.2004 00440051 00440052 00440053

00440298

00440426
64 Packaging Service 16.06.2005 00440326 00440327 00440328 00440426
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44

00440298

65
Pandal & Shamiana
Service
10.09.2004 00440054 00440055 00440056

00440298

00440426
66 Photography 16.07.2001 00440129 00440130 00440131

00440298

00440426
67 Port Service 16.07.2001 00440177 00440178 00440179

00440298

00440426
68 Port Service (other) 01.07.2003 00440177 00440178 00440179

00440298

00440426
69
Processing &
Clearing Houses in
relation to securities,
goods and forward
contracts
16.05.2008 00440442 00440443 00440446

00440298

00440426
70
Public Relations
Service
01.05.2006 00440374 00440375 00440376

00440298

00440426
71 Rail Travel Agent 16.08.2002 00440201 00440202 00440203

00440298

00440426
72
Real Estate Agent /
Consultant
16.10.1998 00440104 00440105 00440106

00440298

00440426
73
Recognized
Association goods/
Forward contracts
16.05.2008 00440438 00440439 00440440

00440298

00440426
74
Recognized Stock
Exchanges
16.05.2008 00440434 00440435 00440436

00440298

00440426
75 Recovery Agent 01.05.2006 00440350 00440351 00440352

00440298

00440426
76
Registrar to an Issue

01.05.2006 00440338 00440339 00440340

00440298

00440426
77
Rent - a Cab
Operator
16.07.1997 00440048 00440049 00440050

00440298

00440426
78
Renting of
Immovable
Property inclusive of
permission to use
such property
irrespective of
transfer of
possession or control
of property.
01.06.2007 00440406 00440407 00440408

00440298

00440426
79
Sale of space or
time for
advertisement,
other than print
media
01.05.2006 00440354 00440355 00440356

00440298

00440426
80
Scientific & Technical
Consultancy
16.07.2001 00440125 00440126 00440127

00440298

00440426
81 Security Agency 16.10.1998 00440108 00440109 00440110

00440298

00440426
82 Share Transfer Agent 01.05.2006 00440342 00440343 00440344

00440298

00440426
83
Ship Management
Service
01.05.2006 00440378 00440379 00440380

00440298

00440426
84
Site Preparation

16.06.2005 00440306 00440307 00440308 00440426
85 Sound Recording 16.07.2001 00440161 00440162 00440163

00440298

00440426
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45

86
Sponsorship service
provided to anybody
corporate or firm,
other than
sponsorship of
sports event

01.05.2006 00440358 00440359 00440360

00440298

00440426
87 Steamer Agent 15.06.1997 00440029 00440030 00440031

00440298

00440426
88 Stock Broker 01.07.1994 00440008 00440009 00440121

00440298

00440426
89
Storage &
Warehousing

16.08.2002 00440193 00440194 00440195

00440298

00440426
90
Supply of tangible
goods

16.05.2008 00440445 00440447 00440448
00440298


00440426
91
Survey & Exploration
of Minerals
10.09.2004 00440270 00440271 00440272

00440298

00440426
92
Survey and Map
Making
16.06.2005 00440314 00440315 00440316

00440298

00440426
93
T.V. & radio
Programme
Production Services

10.09.2004 00440286 00440287 00440288
00440298

00440426
94
Technical Testing
& Analysis
,
01.07.2003 00440249 00440250 00440251
00440298

00440426
95
Technical Inspection
&
Certification
01.07.2003 00440249 00440250 00440251
00440298

00440426
96
Telecommunicatio
n Service
01.06.2007 00440398 00440399 00440400

00440298

00440426
97
Tour Operator except
for the use of
educational bodies.

01.09.1997 00440063 00440064 00440065

00440298

00440426
98
Transport of goods
by Air
10.09.2004 00440266 00440267 00440268

00440298

00440426
99
Transport of goods
by Road
01.01.2005 00440262 00440263 00440264

00440298

00440426
100
Transport of goods
in containers by
rail by any person
other than
Government railway
01.05.2006 00440390 00440391 00440392

00440298

00440426
101
Transport of goods
other than water,
through Pipeline or
other conduit
16.06.2005 00440302 00440303 00440304

00440298

00440426
102
Transport of
Passengers
embarking on
international
journey by air, other
than economy class
passengers
01.05.2006 00440362 00440363 00440364

00440298

00440426
103
Transport of persons
by cruise ship
01.05.2006 00440386 00440387 00440388

00440298

00440426
104
Travel Agent other
than Air & Rail Travel
10.09.2004 00440294 00440295 00440296

00440298

00440426
105
Transport of goods
through waterways
01.09.2009 00440470 00440473

00440298

00440426
106 Transport of goods 01.09.2009 00440390 00440391 00440298 00440426
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by rail
107 Underwriter 16.10.1998 00440084 00440085 00440086 00440298 00440426
108 Video Tape roduction 16.07.2001 00440157 00440158 00440159

00440298

00440426
109 Works Contract 01.06.2007 00440410 00440411 00440412

00440298

00440426
110
Services of promoting
, marketing or
organizing of games
of change, including
lottery.
01.07.2010 00440595 00440596 00440597

00440298

00440426
111
Health services
undertaken by
hospitals or medical
establishments for
the employees of
business organization
and health services
provided under health
insurance scheme
offered by Insurance
companies.
01.07.2010 00440598 00440599 00440600

00440298

00440426
112
Services provided for
maintenance of
medical records of
employees of a
business entity.
01.07.2010 00440601 00440602 00440603

00440298

00440426
113
Promoting a brand
of goods, services,
events, business
entity etc.

01.07.2010 00440604 00440605 00440606

00440298

00440426
114
Services of permitting
commercial use or
exploitation of any
event organized by a
person or an
organization.

01.07.2010 00440607 00440608 00440609

00440298

00440426
115
Services provided by
Electricity
Exchanges.

01.07.2010 00440610 00440611 00440612

00440298

00440426
116
Services related to
two types of
copyrights hitherto
not covered under
existing taxable
services Intellectual
Property Right(IPR),
namely, that on (a)
cinematographic films
and (b) sound
recording.

01.07.2010 00440613 00440614 00440615

00440298

00440426
117
Special services
provided by builder
etc. to the
prospective buyers
such as providing
preferential location
or external or internal
development of
complexes on extra
charges.
01.07.2010 00440616 00440617 00440618

00440298

00440426
118
Services of Air-
conditioned restaurants
having license to serve
alcoholic beverages in
relation to service of
food or beverages.
1.5.2011
00441067 00441068
00441069

00440298

00440426
119
Services of providing of
accommodation in
1.5.2011
00441070 00441071
0441072

00440298
00440426
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47

hotels / inns/ cubs/
guest houses/ campsite
for a continuous period
of less than three
months


Note:

1. 2 new services ( Sr. No. 118 to 119 above) have become taxable with effect from
01.05.2011 vide Notfn. No. 29/2011-ST dated 25/4/2011.
2. The sub-head Other Receipts is meant for interest, penalty leviable on delayed
payment of service tax
3. The sub-head Deduct Refunds is not to be used by the assessees. It is meant
for the Central Excise Department while allowing refund.

Appendix- 2
Abatements

Sl.No. Sub
clause
of
section
65(105)

Description of taxable
service
Conditions Percentage
amount of value
on which ST is
required to be
paid

1 (m)

(1) The use of mandap,
including the facilities
provided to any person in
relation to such use and also
for the catering charges.



This exemption shall apply only in
such cases where the mandapkeeper
also provides catering services, that
is, supply of food and the invoice, bill
or challan issued indicates that it is
inclusive of the charges for catering
service.
60

(2) Taxable service provided
by a hotel as mandap keeper
in such cases where services
provided include catering
services, that is, supply of
food alongwith any service in
relation to use of a mandap.


The invoice, bill or challan issued
indicates that it is inclusive of
charges for catering services.
Explanation.-The expression hotel
means a place that provides
boarding and lodging facilities to
public on commercial basis.

60
2
(n)
(i) Services provided or to be
provided to any person, by a
tour operator in relation to a
package tour.
Explanation.-The expression
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.
The bill issued for this
purpose indicates that it is
inclusive of charges for such
a tour.









25










(ii) Services provided or to be
provided to any person, by a
tour operator in relation to a
tour, if the tour operator is
providing services solely of
arranging or booking
accommodation for any
person in relation to a tour.

(a) The invoice, bill or
challan issued indicates that
it is towards charges for such
accommodation, and
(b) 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.
10


(iii) Services, other than
services specified in (i) and (ii)
above, provided or to be
provided to any person, by a
tour operator in relation to a
The bill issued indicates that
the amount charged in the
bill is the gross amount
charged for such a tour.

40
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tour.

3

(o) or
(zn) or
(zzl) or
(zzm)
Renting of a cab
--- 40
4

(zc) Holding of a convention,
where service provided
includes catering service
The gross amount charged
from the recipient of service is
inclusive of the charges for the
catering service.


60

4A (zm)
Services provided in relation
to chit.

Explanation.- Chit means a
transaction whether called
chit, chit fund, chitty, kuri, or
by any other name by or
under which a person enters
into an agreement with a
specified number of persons
that every one of them shall
subscribe a certain sum of
money (or a certain quantity
of grain instead) by way of
periodical installments over a
definite period and that each
subscriber shall, in his turn,
as determined by lot or by
auction or by tender or in
such other manner as may be
specified in the chit
agreement, be entitled to the
prize amount.



------




70

4A (zzb)
Business auxiliary service in
relation to production or
processing of parts and
accessories used in the
manufacture of cycles, cycle
rickshaws and hand-operated
sewing machines, for, or on
behalf of, the client.


The gross amount charged
from the client is inclusive of the cost
of inputs and input services, whether
or not supplied by the client




70

5 (zzd) or
(zn) or
(zzl) or
(zzm)
Erection, commissioning or
installation, under a contract
for supplying a plant,
machinery or equipment or
structures and erection,
commissioning or
installation of such plant,
machinery or equipment or
structures

This exemption is optional to
the commissioning and installation
agency. Explanation.- The gross
amount charged from the recipient
of service shall include the value of
the plant, machinery, equipment,
structures, parts and any other
material sold by the commissioning
and installation agency, during the
course of providing erection,
commissioning or installation service.




33

6 (Omitted by Notfn. No.
12/2008 ST dated
1/3/2008)


7 (zzq) or
(zn) or
(zzl) or
(zzm)
Commercial or Industrial
Construction service

This exemption shall not
apply in such cases where
the taxable services provided
are only completion and
finishing services in relation
to building or civil structure,
referred to in sub-clause
of clause (25b) of section 65
of the Finance Act.

Explanation.- The gross
Amount charged shall include the
value of goods and materials
supplied or provided or used by the
provider of the construction service
for providing such service.



33

7(a)
(
zzq) or
(zn) or
(zzl) or
(zzm)
Commercial or Industrial
Construction

This exemption shall not
apply in cases where
the taxable services provided
are only completion and
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finishing services in relation
to building or civil structure,
referred to in sub-clause
of clause (25b) of section 65
of the Finance Act.

Explanation.- The gross
Amount charged shall include the
value of goods and materials
supplied or provided or used for
providing the taxable service by the
service provider.
This exemption shall not apply in
cases where the cost of land has
been separately recovered from the
buyer by the builder or his
representative.

8 (zzt) Catering
This exemption shall apply in cases
where,-

(i) the outdoor caterer also
provides food; and

(ii) the invoice, bill or challan issued
indicates that it is inclusive of
charges for supply of food.





50

9 (zzw)
Services in relation to pandal
or shamiana in any manner,
including services rendered
as a caterer.

This exemption shall apply
only in cases where,-

(i) the pandal or shamiana
contractor also provides
catering services, that is,
supply of food; and

ii)the invoice, bill or challan issued
indicates that it is inclusive of
charges for catering service.






70

10 (zzzh)
or (zn)
or (zzl)
or
(zzm)
Construction of Complex
This exemption shall not apply in
cases where the taxable services
provided are only completion and
finishing services in relation to
residential complex, referred to in
sub-clause (b) of clause (30a) of
section 65 of the Finance Act.

Explanation.- The gross amount
charged shall include the value of
goods and materials supplied or
provided or used for providing the
taxable service by the service
provider.



33







10(a) (zzzh)
or (zn)
or (zzl)
or
(zzm)
Construction of Complex
This exemption shall not apply in
cases where the taxable services
provided are only completion and
finishing services in relation to
residential complex, referred to in
sub-clause (b) of clause (30a) of
section 65 of the Finance Act.

Explanation.- The gross amount
charged shall include the value of
goods and materials supplied or
provided or used for providing the
taxable service by the service
provider.
This exemption shall not apply in
cases where the cost of land has
been separately recovered from the
buyer by the builder or
representative.



25







11 (zzzp)
or (zn)
or (zzl)
19
[Transport of goods in
containers by rail]

--- 30


12 (zzzzl)
Services provided or to be
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50

provided, to any person, by
any other, in relation to
transport of
(i) Coastal goods;
(ii) Goods through
national water-way;
or
(iii) Goods through
inland water.
13 (zzzzv)
Services provided or to be
provided, to any person, by a
restaurant, by whatever name
called, having the facility of
air-conditioning in any part of
the establishment, at any time
during the financial year,
which has licence to serve
alcoholic beverages, in
relation to serving of food or
beverage, including alcoholic
beverages or both, in its
premises;
- 30
14 (zzzzw)
Services provided or to be
provided, to any person, by a
hotel, inn, guest house, club
or campsite, by whatever
name called, in relation to
providing of accommodation
for a continuous period of less
than three months;
- 50

Appendix 3

Sections of the Central Excise Act, 1944 applicable to Service Tax

Sr.No.
Section of Central Excise
Act, 1944

Description

1 9C Presumption of culpable mental state
2 9D
Relevancy of statements under certain circumstances

3 11B Claim for refund of duty
4 11BB
Interest on delayed refunds

5 11C
Power not to recover duty of excise not levied or
short levied as a result of general practice

6 12
Application of the provisions of Act No.52 of
1962 to Central Excise Duties

7 12A
Price of goods to indicate the amount of duty paid thereon


8 12B
Presumption that the incidence of duty has been
passed on to the buyer

9 12C
Consumer Welfare Fund

10 12D
Utilization of the Fund

11 12E
Powers of Central Excise Officers

12 14
Power to summon persons to give evidence and
produce documents in inquiries under this Act

13 14AA
Special audit in cases where credit of duty availed
or utilized is not within the normal limits, etc.

14 15
Officers required to assist Central Excise Officers

15 33A
Adjudication procedure

16 35F
Deposit, pending appeal, of duty demanded or
penalty levied

17 35FF
Interest on delayed refund of amount deposited
under the proviso to Section 35F

18 35G
Appeal to High Court

19 35H Application to High Court
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20 35I
Power to High Court or Supreme Court to require
statement to be amended

21 35J
Case before High Court to be heard by not less
than two judges
22 35K
Decision of High Court or Supreme Court on the
case stated

23 35L
Appeal to the Supreme Court

24 35M
Hearing before Supreme Court

25 35N
Sums due to be paid notwithstanding reference, etc

26 35O
Exclusion of time taken for copy

27 35Q
Appearance by authorized representative

28 36 Definitions
29 36A
Presumption as to documents in certain cases

30 36B
Admissibility of micro films, facsimile copies of
documents and computer printouts as documents
and as evidence

31 37A
Delegation of powers

32 37B
Instructions to Central Excise Officers

33 37C
Service of decisions, orders, summons, etc.

34 37D
Rounding off of duty, etc.

35 38A
Effect of amendments, etc. of rules, notifications
or orders

36 40
Protection of action taken under the Act


Appendix - 4
Export of Service Rules, 2005 & Taxation of Services (Provided from Outside
India and Received in India) Rules, 2006 List of Service Categories

Rule 3 [1(i)] Category I

Sr.No. Clause Service Category

1 d
General Insurance

2 m
Mandap Keeper

3 p
Architect

4 q
Interior Decorator

5 v
Real Estate Agent

6 zzq
Commercial or Industrial Construction

7 zzza
Site Formation

8 zzzb
Dredging

9 zzzc
Survey and Map making

10 zzzh
Construction of Complex

11 zzzr
Auctioneers

12 zzzy Mining of Minerals, Oil or Gas
13 zzzz
Renting of Immovable Property

14 zzzza
Works Contract

15 zzzzm Legal Consultancy
16 zzzzu Construction Service Preference of Location & Development
17 zzzzv Restaurant Service
18 zzzzw Short-term Accommodation
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Rule 3[1(ii)] Category II

Sr.No. Clause Service Category

1 a
Stock Broker

2 f
Courier

3 h
Custom House Agent

4 i
Steamer Agent

5 j
Clearing & Forwarding

6 l
Air Travel Agent

7 n
Tour Operator

8 o
Rent-a-cab

9
w

Security Agency

10 z
Underwriter

11 zb
Photography

12 zc
Convention Centre

13 zi
Video Production

14 zj
Sound Recording

15 zn
Port Service

16 zo
Authorised Service Station

17 zq
Beauty Parlour

18 zr
Cargo Handling

19 zt
Dry Cleaner

20 zu
Event Manager

21 zv
Fashion Designer

22 zw
Health Club & Fitness Centre

23 zz Rail Travel Agent
24 zza
Storage & Warehousing

25 zzc Commercial Training or Coaching
26 zzd
Erection Commissioning & Installation

27 zzf
Internet Caf

28 zzg
Management, Maintenance or Repair

29 zzi
Technical Inspection & Certification

30 zzl
Other Port

31 zzm
Airport Authority

32 zzo
Business Exhibition

33 zzt
Outdoor Caterer

34 zzv
Survey & Exploration

35 zzw
Pandal & Shamiana

36 zzx
Travel Agent

37 zzy
Forward Contract

38 zzzd
Cleaning

39 zzze Club or Association
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40 zzzf
Packaging

41 zzzzg
Recognized Stock Exchange

42 zzzzh
Recognized or Registered Association

43 zzzzi Processing and Clearing House
44 zzzzk Cosmetic or Plastic Surgery
45 zzzzl Coastal Goods Transport and Transport of Goods by Waterways
46 zzzzo Health Services


Rule 3 [1(iii)] (a)

Sr.No Clause Service Category

1 zzzo Passenger embarking on international flight

2 zzzv Cruise service


Rule 3[1(iii)] (b)

Sr.No Clause Service Category

1 d General Insurance

2 zzzc Survey & map making

3 zzzr Auctioneers

4 zzzzm Legal Consultancy

Rule 3[1(iii)] (c) Category III

Sr.No. Clause Service Category

1 b Telephone

2 c Pager

3 d General Insurance

4 e Advertising

5 g Consulting Engineer

6 k Manpower Recruitment or Supply

7 m Mandap Keeper
8 p Architect

9 q Interior Decorator

10 r Management Consultant

11 s Chartered Accountant

12 t Cost Accountant

13 u Company Secretary

14 v Real Estate Agent

15 x Credit Rating Agency
16 y Market Research Agency
17 za Scientific or Technical Consultancy

18 zd Leased Circuit

19 ze Telegraph

20 zf Telex

21 zg Fax
22 zh On-line Information

23 zk Broadcasting

24 zl Insurance Auxiliary
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25 zm Banking and Other Financial Services

26 zp ----- omitted

27 zs Cable Operator & MSO

28 zx Life Insurance
29 zy Insurance Auxiliary to Life Insurance

30 zzb Business Auxiliary Service

31 zze Franchise Service

32 zzh Technical Testing and Analysis Service
33 zzj ------ omitted
34 zzk Forex Broker (other than in relation to Banking)
35 zzn Transport of Goods by Air Service
36 zzp Goods Transport Agency Service
37 zzq Commercial or Industrial Construction Service
38 zzr Intellectual Property Service
39 zzs Opinion Poll Service
40 zzu Programme Producer
41 zzz Transport through Pipeline
42 zzza Site formation, Clearance, Excavation, Earthmoving & Demolition Service
43 zzzb Dredging Service
44 zzzc Survey and Map making
45 zzzg Mailing List Compilation & Mailing
46 zzzh Construction of Complex Service (Residential)
47 zzzi Registrar to an issue
48 zzzj Share Transfer Agent
49 zzzk ATM Operation, Maintenance & Management
50 zzzl Recovery Agent
51 zzzm Sale of Space for Advt. other than Print Media
52 zzzn Sponsorship other than for Sports
53 zzzo Domestic journey or International journey
54 zzzp Transport of Goods in containers by Rail Service
55 zzzq Business Support Service
56 zzzr Auctioneers
57 zzzs Public Relations Service
58 zzzt Ship Management Service
59 zzzu Internet Telecommunication
60 zzzv Cruise Ship
61 zzzw Credit Card, Debit Card & other payment Cards
62 zzzx Telecommunication Service
63 zzzy Mining Service
64 zzzz Renting of Immovable Property Service
65 zzzza Works Contract Service
66 zzzzb Development & Supply of Content
67 zzzzc Asset Management other than Banking company
68 zzzzd Design Service
69 zzzze Information Technology Software
70 zzzzf Management of Investment-ULIP
71 zzzzj Supply of Tangible Goods

72 zzzzm Legal Consultancy Service
73 zzzzn Lottery & Other Games of Chance Service


















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