(i) THE SERVICE TAX (THIRD AMENDMENT) RULES 2005
In exercise of the powers conferred by sub‑section (1) and (2) of Sanction 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-
1. (1) These rules may be called the
Service Tax (Third Amendment) Rules 2005.
(2)
They shall come into force on the date of their publication in the Official
Gazette.
2. In rule 4 of the Service Tax Rules,
1994, in sub‑rule (1) in 3rd proviso for the figures, letters and
words,
"28th day of February, 2005 ", the
figures, letters and words " 31st day of March, 2005" shall be
substituted.
[F.No. 137/10/2004‑CX 4 (Pt)]
Sd/‑
(V Sivasubramanian),
Deputy Secretary to the Government of India
Note.‑ The principal rules were notified vide notification no.2/94‑Service
tax dated the 28th June 1994 and published in the Gazette of India,
Extraordinary vide number G.S.R. 546 (E), dated the 28th June 1994 and were
last amended vide notification No. 2/2005‑Service Tax, dated the 14th February,
2005 are published in the Gazette of India, Extraordinary vide number G.S.R.
71(E) dated the 14th February, 2005.
(ii)
NOTIFICATION NO. 04/2005‑
SERVICE TAX,
DATED 1ST MARCH, 2005
G.S.R. (E).‑ In exercise of the powers conferred by sub‑section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 15/2004Service Tax, dated the 10th September, 2004 which was published in the Gazette of India, Extraordinary, vide number G.S.R. 589 (E), dated the 10th September, 2004, namely:-
In the
said notification, the following Explanation shall be added at the end,
namely:-
‘Explanation,-.For the purposes of this notification, 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.'.
[F.
No. 334/t/2005‑TRU]
Sdl‑ (V Sivasubramanian)
Deputy Secretary to the Government
of India
Note.‑ The principal notification No. 15/2004-Service Tax,
dated the 10th September, 2004 was published in the Gazette of India, Extraordinary, vide
number G.S.R. 589 (E), dated the 10th September, 2004.
(iii) NOTIFICATION NO. 05/2005‑ SERVICE TAX,
G.S.R. (E).‑ In exercise of the powers, conferred by sub‑section (2) of section 68 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following amendment in notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 36/2004Service Tax, dated the 31st December, 2004 which was published in the Gazette of India, Extraordinary, vide number G.S.R. 849 (E), dated the 31st December, 2004, namely:-
In the
said notification, after sub‑paragraph (iv) of paragraph (A), the
following subparagraph shall be inserted, namely:-
"(v)
in relation to business auxiliary service of distribution of mutual fund by a
mutual fund distributor or an agent, as the case may be;".
2. This notification shall come into force
on the 1st day of April, 2005.
[F. No.
334/l/2005‑TRU]
Sd/‑ (V Sivasubramanian)
Note.‑ The principal notification No. 36/2004‑Service
Tax, dated the 31st December, 2004 was published in the Gazette of India, Extraordinary,
dated the 31st December, 2004 vide number G.S.R. 849 (E), dated the 31st
December, 2004.
(iv) NOTIFICATION NO. 06/2005‑
SERVICE TAX,
G.S.R. (E).‑ In exercise of the powers conferred by sub‑section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the said Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts taxable services of aggregate value not exceeding four lakh rupees in any financial year from the whole of the service tax leviable thereon under section 66 of the said Finance Act:
Provided
that nothing contained in this notification shall apply to,
(i) taxable services
provided by a person under a brand name or trade name, whether registered or
not, of another person; or
(ii) such value of taxable
services in respect of which service tax shall be paid by such person and in
such manner as specified under sub‑section (2) of section 68 of the said
Finance Act read with Service Tax Rules, 1994.
2. The exemption contained in this notification shall apply subject to the following conditions, namely:-
(i)
The provider of taxable service has the option not to avail
the exemption contained in this notification and pay service tax on the taxable
service provided by him and such option, once exercised in a financial year,
shall not be withdrawn during the remaining part of such financial year;
(ii)
The provider of taxable service shall not avail the CENVAT
credit of service tax paid on any input services, under rule 3 or rule 13 of
the CENVAT Credit Rules, 2004 (herein after referred to as the said rules),
used for providing the said taxable service, for which exemption from payment
of service tax under this notification is availed of;
(iii) The provider of taxable
service shall not avail the CENVAT credit under rule 3 of the said rules, on
capital goods received in the premises of provider of such taxable service
during the period in which the service provider avails exemption from payment
of service tax under this notification;
(iv) The provider of taxable
service shall avail the 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 the provision of taxable services for which service
tax is payable;
(v) The provider of taxable
service who starts availing exemption under this notification 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 the
provider of taxable service starts availing exemption under this notification;
(vi) The balance of CENVAT
credit lying unutilized in the account of the taxable service provider after
deducting the amount referred to in sub‑paragraph (v), if any, shall not
be utilized in terms of provision under sub‑rule (4) of rule 3 of the
said rules and shall lapse on .the day such service provider starts availing
the exemption under this notification;
(vii) Where a taxable service
provider provides one or more taxable services from one or more premises, the
exemption under this notification shall apply to the aggregate value of all
such taxable services and from all such premises and not separately for each
premises or each services; and
(viii) The aggregate value of
taxable services rendered by a provider of taxable service from one or more
premises, does not exceed rupees four lakhs in the preceding financial year.
3. For the purposes of determining aggregate value not exceeding
four lakh rupees, to avail exemption under this notification, in relation to
taxable service provided by a goods transport agency, the payment received
towards the gross amount charged by such goods transport agency under section
67 for which the person liable for paying service tax is as specified under
subsection (2) of section 68 of the said Finance Act read with Service Tax
Rules, 1994, shall not be taken into account.
Explanation.‑ For the
purposes of this notification,
(A) "brand name" or
"trade name" means a brand name or a trade name, whether registered
or not, that is to say, a name or a mark, such as symbol, monogram, logo, label,
signature, or 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 indication of the identity
of that person;
(B) "aggregate value not
exceeding four lakh rupees" means the sum total of first consecutive
payments received during a financial year towards the gross amount, as
prescribed under section 67 of the said Finance Act, charged by the service
provider towards taxable services till the aggregate amount of such payments is
equal to four lakh rupees but does not include payments received towards such
gross amount which are exempt from whole of service tax leviable thereon under
section 66 of the said Finance Act under any other notification.
4. This notification shall come into force
on the 1st day of April, 2005.
[E No. 334/l/2005‑TRU]
Sdl‑ (V Sivasubramanian)
Deputy Secretary to the Government
of India
(v) NOTIFICATION NO, 07/2005‑ SERVICE TAX,
G.S.R.
(E).‑ In exercise of the powers conferred by sub‑sections (1) and
(2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government
hereby makes the following rules further to amend the Service Tax Rules, 1994,
namely ‑
1. (1) These rules may be called the
Service Tax (Fourth Amendment) Rules, 2005.
(2) They
shall come into force on the 1st day of April, 2005.
2. In the Service Tax
Rules, 1994, (hereinafter referred to as the said rules), in rule 2, in sub
rule (1), in clause (d), after sub‑clause (v), the following sub‑clause
shall be inserted, namely:
"(vi) In relation to
business auxiliary service of distribution of mutual fund by a mutual fund distributor
or an agent, as the case be, the mutual fund or asset management company, as
the case may be, receiving such service;".
3. In the said rules, in rule 4,-
(i) for sub‑rules (2),(3) and (M),
the following sub‑rules shall be substituted, namely:-
"(2)
Where an assessee is providing a taxable service from more than one premises or
offices and has centralized billing systems or centralized accounting systems
in respect of such service, and such centralized billing or centralized
accounting systems are located in one or more offices or premises, he may, at
his option, register such premises or offices from where such centralized
billing or centralized accounting systems are located.
(3)
The registration under sub‑rule (2), shall be granted,
(a) by the Commissioner of Central Excise or the Chief Commissioner of
Central Excise, as the case may be, in whose jurisdiction all the premises or
offices providing taxable service and the premise or office from where
centralized billing or centralized accounting is done, are located; and
(b) in cases other than (a) above, by such
authority, as may be specified by the Board:
Provided
that nothing contained in this sub‑rule
shall have any effect on the registrations granted to the premises or
offices having such centralized billing or centralized accounting systems,
prior to 1st day of April, 2005.
(3A) Where an assessee is providing a taxable service from more than one
premises or offices, and does not have
any centralized billing systems or centralized. accounting systems, as the
case may be, he shall make separate applications for registration in respect of
each of such premises or offices to the jurisdictional Superintendent of
Central Excise.".
4. In the said rules, in rule 4A, in sub‑rule
(I),
(i)
after the words "Every person providing taxable service
shall", the words not later than fourteen days from the date of completion
of such taxable service or receipt of any payment towards the value of such
taxable service, whichever is earlier," shall be inserted;
(ii)
for the words "in respect of taxable service", the
words "in respect of such taxable service" shall be substituted.
5. In the said rules, in rule 6, for sub‑rule
(1), the following sub‑rule shall be substituted, namely:-
"(1) The service tax shall be paid to the credit of the Central
Government by the 5th of the month immediately following the calendar month in
which the payments are received, towards the value of taxable services:
Provided
that where the assessee is an individual or proprietary firm or partnership
firm, the service tax shall be paid to the credit of the Central Government by
the 5th of the month immediately following the quarter in which the payments
are received, towards the value of taxable services:
Provided
further that notwithstanding the time of receipt of payment towards the value
of services, no service tax shall be payable for the part or whole of the value
of services, which is attributable to services provided during the period when
such services were not taxable:
Provided
also that the service tax on the value of taxable services received during the
month of March, or the quarter ending in March, as the case may be, shall be
paid to the credit of the Central Government by the 31st day of March of the
calendar year.".
[F. No. 334/l/2005‑TRU]
Sdl‑ (V Sivasubramanian)
Deputy Secretary to the Government
of India
Note. ‑ The principal rules were notified vide notification
No. 2/94‑Service Tax, dated the 28th June 1994 and published in the
Gazette of India, Extraordinary vide number G.S.R.546 (E), dated the 28th June
1994 and were last amended vide notification No. 3/ 2005‑Service Tax,
dated the 26th February, 2005 which was published vide number G.S.R. 107(E),
dated the 26th February, 2005.
(vi) NOTIFICATION NO. 06/2005‑ SERVICE TAX,
G.S.R.
(E).‑ In exercise of the powers conferred by sub‑section (1) of
section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as
the Finance Act), the Central Government, on being satisfied that it is
necessary in the public interest so to do, hereby exempts the taxable service
of production of goods on behalf of the client referred in sub-clause (v) of
clause (19) of section 65 of the said Finance Act, from the whole of service tax
leviable thereon under section 66 of the said Finance Act:
Provided
that the said exemption shall apply only in cases where such goods are produced
using raw materials or semi‑finished goods supplied by the client and
goods so produced are returned back to the said client for use in or in
relation to manufacture of any other goods falling under the First Schedule to
the Central Excise Tariff Act, 1985 (5 of 1986), as amended by the Central
Excise Tariff (Amendment) Act, 2004 (5 of 2005), on which appropriate duty of
excise is payable.
Explanation.
‑ For the purposes of this notification,
(i) The expression
"production of goods" means working upon raw materials or
semi-finished goods so as to complete part or whole of production, subject to the
condition that such production does not amount to "manufacture"
within the meaning of clause (f) of section 2 of the Central Excise Act, 1944
(1 of 1944);
(ii) "Appropriate duty of excise"
shall not include 'Nil' rate of duty or duty of excise wholly exempt.
[F. No. 334/l/2005‑TRU]
Sd/‑ (V Sivasubramanian)
Deputy Secretary to the Government of India
(vii) THE EXPORT SERVICES RULES, 2005
In
exercise of the powers conferred by sub‑section (1) and sub‑section
(2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government
hereby makes the following rules, namely:-
1. Short title and commencement.‑ (1) These
rules may be called the Export of Services Rules, 2005.
(2) They shall come into force on
the 15th day of March, 2005.
2. Definitions.‑ In these
rules, unless the context otherwise requires,‑
(a) "Act" means the Finance Act,
1994 (32 of 1994);
(b) "input" shall
have the meaning assigned to it in clause (k) of rule 2 of the CENVAT Credit
Rules, 2004;
(c) "input
service" shall have the meaning assigned to it in clause (1) of rule 2 of
the CENVAT Credit Rules, 2004.
3. Export
of taxable service.‑ The export
of taxable service shall mean,
(1) in relation to taxable
services specified in sub‑clauses (d), (p), (q), (v) and (zzq) of clause
(105) of section 65 of the Act, such taxable services as are provided in
relation to an immoveable property which is situated outside India;
(2) in relation to taxable
services specified in sub‑clauses (a), (f), (h), (i), 0), (1), (m),' (n),
(o), (s), (t), (u), (w), (x), (y), (z), (zb), (zc), (zi), (zj), (zn), (zo), (zq), (zr), (zt), (zu), (zv), (zw), (zza), (zzc),
(zzd), (zzf), (zzg), (zzh), (zzi), (zzj),
(zzl), (zzm), (zzn), (zzo), (zzp), (zzs), (zzt), (zzv), (zzw), (zzx)
and (zzy) of clause (105) of section 65
of the Act, such services as are performed outside India:
Provided
that if such a taxable service is partly performed outside India, it shall be
considered to have been performed outside India;
(3) in
relation to taxable services, other than,
(i) the taxable services
specified in sub‑clauses (a), (f), (h), (i), (1), (in), (n), (o), (p),
(q), (s), (t), (u), (v), (w), (x), (y), (z), (zb), (zc), (zi), (zj), (zn),
(zo), (zq), (zr), (zt), (zu), (zv), (zw), (zza), (zzc), (zzd), (zzf), (zzg),
(zzh), (zzi), (zzj), (zzl), (zzm), (zzn), (zzo), (zzp), (zzq), (zzs), (zzt),
(zzv), (zzw), (zzx) and (zzy); and
(ii) the taxable service specified in sub‑clause
(d) as are provided in relation to an
immoveable
property, of clause (105) of section 65 of the Act,
(i) such taxable services which
are provided and used in or in relation to commerce or industry and the
recipient of such services is located outside India:
Provided
that if such recipient has any commercial or industrial establishment or any
office relating thereto, in India, such taxable services provided shall be
treated as export of services only if-
(a) order for provision of such service is made by the recipient of such
service from any of his commercial or industrial establishment or any office
located outside India;
(b)
service so ordered is delivered outside India and used in business outside
India; and
(c) payment for such service provided is received by the service
provider in convertible foreign exchange;
(ii) Such taxable services which are provided and used, other than in or
in relation to commerce or industry, if the recipient of the taxable service is
located outside India at the time when such services are received.
Explanation.‑ For the purposes of this rule "India"
includes the designated areas in the Continental Shelf and Exclusive Economic
Zone of India as declared by the notifications of the Government of India in
the Ministry of External Affairs Nos. S.0.429(E), dated the 18th July, 1986 and
S.0.643(E), dated the 19th September 1996.
4. Export
without payment of service tax.‑ Any service, which is taxable under clause . (105) of
section 65 of the Act, may be exported without payment of service tax.
5. Rebate
of service tax.‑ Where any
taxable service is exported, the Central Government may, by notification, grant
rebate of service tax paid on such taxable service or service tax or duty paid
on input services or inputs, as the case may be, used in providing such taxable
service and the rebate shall be subject to such conditions or limitations, if
any, and fulfillment of such procedure, as may be specified in the
notification.
[E No. B2/4/2004‑TRU]
Sdl‑ (V Sivasubramanian)
Deputy Secretary to the Government
of India
(viii) NOTIFICATION NO.
10/2005‑ SERVICE TAX,
In
exercise of the powers conferred by section 93 of the Finance‑ Act, 1994
(32 of 1994), the Central Government, on being satisfied that it is necessary
in the public interest so to do, hereby rescinds the following notifications of
the Government of India in the Ministry of Finance (Department of Revenue), as
specified in column (2) of the Table below, except as respects things done or
omitted to be done before such rescission, namely:
Table
|
S. No. |
Notification No. And date |
|
(1) |
(2) |
|
1. |
21/2003-Service Tax, dated the
20th November, 2003 which was Published in the Gazette of India,
Extraordinary, vide number G.S.R. 897(E), dated the 20th November,
2003. |
|
2. |
28/2004-Service Tax, dated the
17th September, 2004 which was Published in the Gazette of
India, Extraordinary, vide number G.S.R. 616(E), dated the 17th
September, 2004. |
2. This notification shall come into force
on the 15th day of March, 2005.
[F. No. B2/4/2004‑TRU]
Sdl‑ (V Sivasubramanian)
Deputy Secretary to the Government
of India
(ix)‑ EXPLANATORY NOTES ON SERVICE TAX
1. It has been proposed in the
Finance Bill to extend the levy of service tax to certain new services namely,-
1) Transport of goods through pipeline or
other conduit;
2) Site preparation and
clearance, excavation, earth moving and demolition services, other than those
provided to agriculture, irrigation and watershed development;
3) Dredging services of rivers, ports,
harbors, backwaters and estuaries;
4) Survey and map making other than by
Government Departments;
5) Cleaning services other than
in relation to agriculture, horticulture, animal husbandry or dairying;
6) Membership of clubs or associations;
7) Packaging services;
8) Mailing list compilation and mailing;
and
9) Construction of
residential complexes having more than twelve residential hous6 or apartments
together with common areas and other appurtenances.
For
details, clause 88 of the Finance Bill, 2005 may be referred.
1. 1 The service tax on these
new services will come into force only from a date to be notified after the
enactment of the Finance Bill, 2005.
2. Certain amendments have been proposed to
extend the scope of certain existing services as follows:
(1) Commercial or industrial construction
service to:
(i)
Include renovation of such building or civil structure;
(ii) Include post construction completion and finishing services for
such building or civil structure;
(iii)
Include construction, repair, alteration, renovation or restoration of pipeline
or conduits;
(2)
Erection, commissioning or installation services to include
specified installation services.
(3)
Maintenance or repair services to include:
(a)
Maintenance or management of immovable properties.
(b) Maintenance or repair including reconditioning or restoration
undertaken as part of any contract or agreement.
(4) Broadcasting services to
include charges recovered by broadcasting agencies from multi-system operator
(MSO) and provision of direct to home (DTH) signals to the customers.
(5) Sound recording to
include recording of sound on any media and includes post production services
such as sound mixing or re‑mixing.
(6) Video‑tape
production to include recording of any programme, event or function on any
media and includes postproduction services.
(7) Taxable services provided
by authorized service station to include reconditioning or restoration of motor‑cars,
two-wheeled and light motor vehicles;
(8) Beauty parlors service
to include all services provided by beauty parlors;
(9) Manpower recruitment service to include
supply of manpower, temporary or otherwise.
(10) The franchisee service to
cover all agreements by which, the franchiser grants representational rights to
franchisee to sell or manufacture goods or provide services identified with the
franchiser;
(11) Business Auxiliary
Service to include production or processing of goods for or on behalf of the
client;
(12) Outdoors catering
service, to include catering from a place or premises provided, by way of
tenancy or otherwise, by the person receiving such services.
The
above changes will come into effect from a date to be notified after the
enactment of the Finance Bill, 2005. Services continue to be leviable at 10% of
the value of taxable services.
3. Certain changes have
been proposed in service tax legislation (Chapter V of the Finance Act, 1994).
These are summarized below.
3.1 Section 65 is proposed to
be amended to extend the scope of 'taxable services', outside India to a
recipient in India.
3.2 Section 67 is proposed to
be amended to clarify that payments received either before, during, or after
the provision of taxable service, are treated as amount received for the
taxable service and service tax is required to be paid on such amount received.
3.3 Section 69 and 70 is
proposed to be amended to incorporate enabling provisions requiring
registration and filing of return by any person or class of persons other than
the person liable to pay service tax.
3.4 Section 73 is proposed to
be amended to extend the powers to issue show cause notice and determine the
amount of short levy to a Central Excise Officer. Consequential changes have
also been made in sections 74 (Rectification of mistake), 78 (Penalty for
suppressing value of taxable service), 84 (Revision of orders by the
Commissioner of Central Excise), 85 [Appeals to the Commissioner of Central
Excise (Appeals)] and 86 (Appeals to Appellate Tribunal).
3.5 Section 83 is proposed to
be amended for making adjudication procedures in Central Excise applicable to
service tax and section 83A has been inserted to make provisions on powers of
adjudication in service tax cases.
3.6 Section 96A is proposed
to be amended to allow an existing Joint Venture in India to avail the benefit
of Advance Ruling. The Central Government is also being empowered to notify any
class or category of persons who become eligible for availing of the benefit of
Advance Ruling.
The change
specified in paragraph 3.1 above will come into effect from a date to be
notified after the enactment of the Finance Act, 2005. Other changes mentioned
in paragraph 3 above will come into effect from the date of enactment of the
Finance Act, 2005.
4. Notification No. 15/2004
has been amended to clarify that the gross amount charged for the purpose of
abatement includes value of goods and materials supplied or provided or used by
provider of construction service. (For details refer notification No. 4/2005
Service Tax, dated 1.3.2005).
4.1 An exemption scheme for small
service providers has been prescribed. Service providers whose aggregate value of
taxable services provided during the preceding financial year up to Rs. 4
lakhs, have been exempted from service tax up to an aggregate value of taxable
services of Rs. 4 lakhs in a financial year. The proposed exemption scheme
would be applicable from 1st April 2005 (For details refer notification No.
6/2005‑ServiceTax, dated 1.3.2005).
4.2 Exemption has been provided from service tax on business auxiliary
service, to a person producing goods, from the inputs received from a
manufacturer and sending the resultant product to the same manufacturer for
further manufacture of final products, which are cleared on payment of excise
duty. The above change will come into effect immediately (For details of
notification No.8/2005 – Service Tax, dated 1.3.2005).
4.3 The Service Tax Rules are being amended so as to (For details refer
notification No. 7/2005‑Service Tax, dated 1.3.2005):
(a) Prescribe that the invoice is
to be issued within 14 days from date of completion of provision of service or
receipt of payment, whichever is earlier [Rule 4A(l)];
(b) Prescribe that due
date for service tax payment by all service tax assesses would be 5th of the
following month or quarter, as the case may be (Rule 6);
(c) Enable registration of more
than one premises by a service provider having centralized billing or
centralized accounting system (Rule 4); and
(d) Prescribe that liability of
payment of service tax on business auxiliary services provided by the
distributors of mutual funds will be on the recipient of service, namely,
mutual funds (Rule 2).
The
above changes will be effective from 1st April 2005.
5.
Significant changes are proposed in the provisions of
Finance Act, 1994 relating to service tax and also in Service Tax Rules. Some
of the changes as indicated earlier comes into force immediately and others
either after enactment of the Finance Act, 2005 or from the date to be notified
after enactment of the Finance Act, 2005. Fresh levy of service tax is proposed
on a number of new services and on the existing services with the larger
coverage. Commissioners of Central Excise and Service Tax are requested to
study these changes carefully and convey their views and suggestions. As
regards new services and expanded services, immediate necessary action may be
taken to identify the potential taxpayers and the revenue potential. Problems,
if any, in implementing the proposed changes and the levy may be brought to the
notice of Board. A report communicating the comments, views and suggestions may
be sent by 15th March 2005 and thereafter by 30th march,
2005.