[as
introduced by the Finance (No. 2) Act, 2004]
Opinion
poll services are brought under the service tax net by the Finance (No. 2) Act,
2004, w.e.f. 10-9-2004. The services shall be taxed if provided by
an opinion poll agency.
Rate of Service Tax: The rate
of service tax is specified in section 66 of the Act. As per section 66, which
covers charging of tax on aforesaid service, introduced by the Finance (No. 2)
Act, 2004, rate of service tax on this service shall be 10% ad valorem.
Further, the Finance (No. 2) Act, 2004 has also levied an education cess @ 2%
of the service tax. The cess paid on inputs services shall be available as
credit for payment of cess on output services. For further discussion in this
regard, refer to 'Payment of Service Tax'.
The
definition of opinion poll has been given under clause (75A) of section 65.
That is:
"opinion
poll means any service designed to secure information on public opinion
regarding social, economic, political or other issues"
In India
many agencies are working for conducting opinion poll particularly opinion poll
for the election. The Government has brought all the opinion poll services
under the service tax net which are related to social, economic, political or
any other issues. Even the exit poll will be covered under the service tax net.
Opinion
poll means securing, information on public opinions regarding social, economic,
political and other issues. The term 'securing' would include activities like
selecting the target groups, preparing questionnaires, gathering opinions from
such target groups, collating their responses, drawing conclusions or analyzing
trends and preparing reports based thereon.
The
definition of taxable service provided by an opinion poll agency has been given
under sub-clause (zzs) of clause (105) of section 65. That is;
"any
service provided "to any person, by an opinion poll agency, in relation to
opinion poll"
(1) Opinion Poll service and market research
agency service are same
No.
'Market research agency service' is taxable service w.e.f. 16-10-1998.
However, that service includes conducting of market research in relation to
products, services and utilities. Opinion polls conducted to secure information
on economic issues do not include such market researches about specific
products, services or utilities. The Government in its Circular/letter F. No.
B2/8/2004-TRU, dated 10th September, 2004 (appended as Annexure 1) has
clarified that "obtaining opinion of general public on economic issues
like price rise, reaction of people to certain government or corporate policies
etc., would fall under the category of opinion poll services while information
gathered in relation to specific products, services etc. would fall under
'market research agency service"'.
Service
tax is liable to be paid when opinion poll services are rendered by an opinion
poll agency.
(1) 'Opinion poll agency'
"opinion
poll agency means any person engaged in providing any service in relation to
opinion poll" [clause (75b) of section 65].
The
definition of opinion poll agency is very specific, an opinion poll agency
means
§
any person
§
engaged in providing any service in relation to opinion poll
The term
'person' has not been defined in the context of service tax. But, the term
'person' has been defined as "person shall include any company or
association or body of individual, whether incorporated or not" [clause
(42) of section 3 of General Clauses Act, 1897]. In the context of service tax,
it was held that a 'firm' may be organized as a sole proprietorship,
partnership, a Private or a Public Limited Company - reference Tata
Consultancy Services v Union of India 2001 (130) ELT 726 (Kar.) also refer M.N.
Dastur & Company Limited v Union of India 2002 (140) ELT 341 (Cal).
Therefore, in the present context, service tax shall be applicable even if such
service is provided by a company or any individual or firm.
(2) Meaning of a 'person'
The term
'person' has not been defined in the context of service tax. But, the term
'person' has been defined as "person shall include any company or
association or body of individual, whether incorporated or not" [clause
(42) of section 3 of General Clauses Act, 1897].
Therefore,
even though, in general, person is understood as only natural person (i.e.
human being) but in the context of service tax, it includes both natural and
artificial and juristic person also. Thus, partnership firm, company,
corporation, societies, government enterprises, Hindu undivided family (HUF),
etc. will also fall under the definition of person.
Therefore,
when service is provided to any of the aforesaid person, it will fall under the
service tax net.
Opinion
poll services are liable to be charged to tax
Opinion
poll services are liable to be charged to service tax when provided to
§
any person
§
in relation to opinion poll
Value of taxable services for charging tax
The value
of taxable services in relation to opinion poll services provided by an opinion
poll agency to any person shall be the gross amount charged from any person in
relation to opinion poll [section 67]. The words 'gross amount' are used in
contrast to the 'net amount', therefore, no abatement shall be allowed in
respect of administrative/ office expenses incurred in respect of such
services.
An Explanation has also been added to section 67, which provides that, for the removal of doubt, in respect of only certain specific services, it is declared that certain amount shall be part of value of taxable services and certain amount shall not be part of the value of taxable services, but nothing has been specified in respect of opinion poll services.
(A) Exemption for the amount received prior to
10-9-2004
The
Government, w.e.f. 10-9-2004 has exempted from whole of service tax
the portion of the taxable value, in respect of the 'opinion poll services',
which is received by the service provider prior to the 10th day of September
2004 [vide Notification No. 18/2004-ST, dated 10-9-2004 appended
as Annexure VIII in the - 'Outdoor Caterer's Services']. It may be noted
that the Government in its Circular No. 65/14/2003, dated 5th November, 2003
(appended as Annexure VII in the - 'Payment of Service Tax') had
clarified that 'where the value of taxable service has been received in advance
for a service which became taxable subsequently, service tax has to be paid on
the value of service attributable to the relevant month/quarter which may be
worked out on pro rata basis". Further, w.e.f. 9-7-2004 the
Service Tax Rules, 1994 have been amended vide Notification No. 5/2004-ST,
dated 9-7-2004. As per the aforesaid amendment, where the value of
taxable service is received before providing the taxable service, the service
tax shall be paid on the value of service attributable to the relevant month,
or quarter, as the case may be. In other words, where payment is received in
advance, service tax will be payable on pro rata basis. Therefore, if the above
exemption Notification would not have been issued then a service provider would
be held liable to pay service tax on the portion of amount so received in
advance before the imposition of levy of service tax which related to the
portion of taxable services rendered on or after the date of imposition of service
tax.
(B) General Exemption
The
Government has granted exemption from the whole of Service Tax in respect of
all taxable services, for services provided to United Nations or an
International Organisation. Similarly, the exemption, subject to certain
conditions, has also been granted for taxable service provided to a developer
or units of Special Economic Zone (SEZ). The Government, w.e.f. 20 November,
2003 has restored the exemption, as an interim measure, from the whole of
service tax when payment is received in convertible foreign exchange for the
taxable services rendered in India provided it was not repatriated from or sent
outside India, such exemption was earlier withdrawn w.e.f. 1-3-2003.
The reader may note that detailed discussion about aforesaid exemptions along
with relevant notifications have been given in the 'Exemption from Whole of
Service Tax - Some Cases'.
N.B. The
readers may note that provisions, procedures and other related discussion
related to registration, payments of service tax, filing of return, interest
and penalty, assessment procedure, appeal, refund of tax, etc., which are same,
as applicable in respect of other taxable services, have been given in separate
of this Book.
Issues pertaining to service tax -
Regarding
8. Opinion poll services: Services
provided by an opinion poll agency (i.e. any person providing that service) in
relation to opinion polls are taxable under this category. Opinion poll means
securing information on public opinions regarding social, economic, political
and other issues. The term 'securing' would include activities like selecting
the target groups, preparing questionnaires, gathering opinions from such
target groups, collating their responses, drawing conclusions or analyzing
trends and preparing reports based thereon. A similar service i.e. 'market
research agency service' is taxable since 1998. However, that service includes
conducting of market research in relation to products, services and utilities.
Opinion polls conducted to secure information on economic issues do not include
such market researches about specific products, services or utilities.
Therefore, obtaining opinion of general public on economic issues like price
rise, reaction of people to certain government or corporate policies etc.,
would fall under the category of opinion poll services while information
gathered in relation to specific products, services etc. would fall under
'market research agency service'.