(i) Recent Notifications on Service Tax with analysis Reporter
REPORTED BY ‑ POONAM JOSHI
Tax Consultant
Note: Comments
are given at the end of each notification by reporter.
Notification No.
21/2005‑Service Tax, Dated : June 7. 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) (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 or
processing of goods for, or on behalf of, the client, referred to in sub‑clause
(v) of clause (19) of section 65 of the said Finance Act, provided by a
commercial concern, in the course of manufacture of,
(a) cut and polished diamonds and gem stones; or
(b) plain and studded jewellery of gold and
other precious metals, falling under Chapter 71 of the Central Excise Tariff
Act, 1985 (5 of 1986), from the whole of service tax leviable thereon under
section 66 of the said Finance Act.
2. This notification shall come into force on the 16th day of
June, 2005.
[F. No.
B11512005‑TRU]
Comments: Vide
this notification the services provided by the job workers as regard job work
of cut and polished diamonds and gems and as regard plain and studded jewellery
of gold and other precious metals, which are falling under Chapter 71 of the
Central Excise Tariff Act, 1985 has been exempted from service tax.
Notification No.
22/2005‑Service Tax, Dated : June 7, 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) (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 services specified in sub‑clauses
(h), (i), 0), (zn), (zr), (zza),
(zzg), (zzi) and (zzl) of clause (105) of section 65 of the Finance Act
provided by a non‑resident person outside India and consumed outside
India, in the course of sailing of a ship which is,
(a) registered as an Indian ship under the Merchant Shipping Act,
1958 (44 of 1958);
(b) registered under the Coasting Vessels Act, 1838 (19 of 1838);
(c) registered under the Inland Vessels Act, 1917 (1 of 1917); or
(d) chartered and licensed under the Merchant Shipping Act, 1958,
and such ship is owned or chartered, as the case may be, by,-
(i) a citizen of India;
a company or a body established by or under
any Central Act or State Act
which has its principal place of
business in India; or
(iii) a ‑co‑operative society which
is registered or deemed to be registered under the Co‑operative Societies
Act, 1912 (2 of 1912), or any other law relating to co‑operative societies
for the time being in force in any State, 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 such cases where the said taxable services are
provided in relation to,-
(a) handling of ships in a port outside India;
(b) handling or storage of goods carried in a ship in a port
outside India; or
(c) any other services related to the handling of ships or goods
carried in a ship.
Explanation.- For
the purposes of this notification, "non‑resident person" means
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.
2. This notification shall come into force on the 16th day of
June, 2005.
[E No.
B11712005‑TRU]
Comments: The
specified services as mentioned above in proviso to this notification, if
provided to shipping companies by non‑resident outside India and consumed
outside India in the course of sailing of ship is exempt from 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 (Fifth
Amendment) Rules, 2005.
(2) They shall come into force on the 16th day of June, 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),-
(i) for sub‑clause
(iv), the following sub‑clause shall be substituted, namely:
"(iv) in relation to any taxable service 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 such service provider does not have any office in India, the person who
receives such service and has his place of business, fixed establishment,
permanent address or, as the case may be, usual place of residence, in
India;";
(ii) in sub‑clause
(v), in item (b), for the words "established by or under", the words
I "formed or
registered under" shall be
substituted.
3. In the said rules, in rule 4A, in sub‑rule
(1), after the second proviso, the following proviso shall be inserted,
namely:-
"Provided also that
where any payment towards the value of taxable service is not received and such
taxable service is provided continuously for successive periods of time and the
value of such taxable service is determined or payable periodically, an
invoice, a bill, or as the case may be, a challan shall be issued by a person
providing such taxable service, not later than fourteen days from the last day
of the said period.".
4. In the said rules, in rule 6, after sub‑rule (4), the
following sub‑rule shall be inserted, namely:-
"(4A) Notwithstanding
anything contained in sub‑rule (4), where an assessee has opted for registration under sub‑rule (2) of
rule 4 of these. rules and has paid to the credit of Central Government any amount
in excess of the amount required to be paid towards service tax liability for a
month or quarter, as the case may be, for the reason of not receiving details
of payments received towards the value of taxable services at his other
premises or offices, the assessee may adjust such excess amount so paid as
service tax by him against his service tax liability for the subsequent period
and the details of such adjustment shall be intimated to the jurisdictional
Superintendent of Central Excise within a period of fifteen days from the date
of such adjustment.".
[F No. B‑11612005‑TRU]
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. 7/ 2005‑Service Tax, dated the 1st March, 2005 which was
published vide number G.S.R. 141 (E), dated the 1st March, 2005.
Comments: Point
wise amendments and insertions made under Service
Tax Rules 2002
·
Date of enforcement of the amendments made in Service Tax Rules 2002:-
The amendments made in
Service Tax Rules 2002 vide this notification shall be enforced and come into
effect from 16.6.2005
·
Prior to 16.6.2005 following sub clauses of Rule 2 of Service Tax Rules,
2002 read as under:
" iv) in
relation to any taxable service provided by a person who is a non‑resident
or is from
outside India, does not have any office in India, the person receiving
taxable
service in India."
"(v)(b),
any company established by or under the Companies Act, 1956 (1 of 1956);"
·
Invoice when service is provided on continuous basis:
As per proviso introduced
w.e.f 16.6.2005 in rule 4A, in sub‑rule (1), of Service Tax Rules,2002
the cases in which service is provided continuously for successive periods of
time and value of such taxable service is determined or payable periodically,
in such cases, the invoice or challan shall be issued within 14 days from last
date of the period.
·
Person having centralized registration can himself adjust excess payment
made:
As it is difficult for a
person to get details from various branches in time as the service tax is to be
paid on 5th of the subsequent month or quarter as the case may be. In this
regard a sub rule 4A to Rule 6 has been inserted, which provides a person with
a facility to pay the service tax on higher side and to adjust the excess tax
paid against tax liability of subsequent period.
G.S.R. (E).‑ In
exercise of the powers conferred by sub‑section (2) of section 68 bf 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
further amendments in notification of the Government of India in the Ministry
of Finance (Department of Revenue) No. 36/2004‑Service 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,
(i) in paragraph (A), in sub‑paragraph
(iv), in item (b), for the words "established by or under", the words
"formed or registered under" shall be substituted‑,
(ii) for paragraph (B), the following paragraph shall be
substituted, namely:
"any taxable service
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 such service provider does not have any office in India.".
2. This notification shall come into force on the 16th day of
June, 2005.
[F. No.
B11612005‑TRU]
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 and
was last amended vide notification No. 5/2005‑Service Tax, dated the 1st
March, 2005 [G.S.R. 139 (E) dated the 1st March, 2005];
Comments:- This
notification has made the following highlighted
changes in Notification No. 36 /2004‑Service Tax, Dated: December 31,
2004
In exercise of the powers
conferred by sub‑section (2) of section 68 of the Finance Act, 1994 (32
of 1994), the Central Government hereby notifies the following taxable services
for the purposes of the said sub‑section, namely:
(A) the services,-
(i) in relation to a telephone connection
or pager or a communication through telegraph or telex or a facsimile
communication or a leased circuit;
(ii) in relation to general insurance business;
(iii) in. relation to insurance auxiliary
service by an insurance agent; and
(iv) in relation to transport of goods by road in
a goods carriage, where the consignor or consignee of goods is,
(a) any factory registered under or governed
by the Factories Act, 1948 (63 of 1948);
(b) any company formed or registered under the Companies Act, 1956 (1 of 1956);
(c) any corporation established by or under
any law;
(d) any society registered under the
Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to
that Act in force in any part of India;
(e) any co‑operative society established by or under any
law;
(f) any dealer of excisable goods, who is
registered under the Central Excise Act, 1944 (1 of 1944) or the rules made
thereunder; or
(g) any body corporate established, or a
partnership firm registered, by or under any law;
(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; (point no. (v) has been
added vide notification no. 5/2005 dated
1‑3‑2005 and this change
will be effective from 1st day of April, 2005).
(B) any taxable service 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 such service provider does
not have any office in India. (This
paragraph has been substituted vide Notification No. 24/2005, Dt 7‑6‑05)
2. This notification shall come into force on the first day of
January, 2005.
[F No.
34111812004‑TRU (Pt.)]
In paragraph (A), in sub‑paragraph (iv), in item (b), for the
words "established by or under", the words "formed or registered
under" shall be substituted vide Notification No. 24/2005, Dt 7‑6‑05
Notification No.
25/2005‑Service Tax, Dated : June 7, 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) (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 any taxable service provided to an individual
by a service provider, where the said taxable services are received and
consumed outside India, by such individual, not in the course or furtherance of
commerce or industry or any other business, from the whole of service tax
leviable thereon under section 66 of the Finance Act.
2. This notification shall come into force on the 16th day of
June, 2005.
[E No.
B11612005‑TRU]
Comments:- An
individual if utilizes some taxable services abroad which are not in the course
or furtherance of business rather for personal use, the service so consumed
have been made exempted by this notification.
G.S.R. (E).‑ In
exercise of the powers conferred by sub‑section (2) of section 69 of the
Finance Act, 1994 (32 of 1994), the Central Government hereby specifies the
following person or class of persons who shall make an application for
registration under the provisions of the said sub‑section, namely:-
(i) an input service distributor; and
(ii) any provider of taxable service whose aggregate value of taxable service in
a financial year exceeds three lakh rupees.
Explanation 1.‑ For the purposes of this clause, where a provider of taxable
service provides one or more taxable services from one or more premises, the
aggregate value of all such taxable services and from all such premises and not
separately for each services or each premises shall be taken into account for
computation of aggregate value of taxable service.
Explanation 2,- For the purposes of this notification,
(a) "input service distributor"
has the meaning assigned to it in clause (m) of rule 2 of the CENVAT Credit
Rules, 2004;
(b) "aggregate value of taxable
service" 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
but does not include payments received towards such gross amount which are
exempt from the whole of service tax leviable thereon under section 66 of the
said Finance Act under any notification other than Notification No. 6/2005‑Service
Tax, dated the 1st March, 2005 [G.S.R. 140 (E), dated the 1st March, 2005].
2. This notification shall come ; ) force on the 16th day of
June, 2005.
Comments: Prior to 16.6.2005, there
was no provision for registration of Input Service. Distributor. This notification
provided that existing Input Service Distributor should shall make an
application for registration with service tax cell within thirty days i.e.,
till 16.7.2005. However, in case of new Input Service Distributor, he should
get registered within 30 days from the commencement of business.
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, namely:
1.
Short title and commencement.-
(1) These rules may be called the Service
Tax (Registration of Special Category of Persons) Rules, 2005.
(2) They shall come into force on the 16th
day of June, 2005.
2.
Definitions.‑ In these rules, unless the context otherwise
requires,-
(a) "Act" means the Finance Act,
1994 (32 of 1994);
(b) "aggregate value of taxable
service" means the sum total of first consecutive payments received during
a financial year towards the gross amount, as prescribed under section 67 of
the Act, charged by the service provider towards taxable services but does not
include payments received towards such gross amount which are exempt from the
whole of service tax leviable thereon under. section 66 of the Act under any
notification other than Notification No. 6/2005Service Tax, dated the 1st
March, 2005 [G.S.R. 140 (E), dated the 1st March, 2005];
(c) "input service distributor" shall have the meaning assigned to it
in clause (m) of rule 2 of the CENVAT Credit Rules, 2004.
3.
Registration.-
(1) The input service distributor shall make
an application to the jurisdictional Superintendent of Central Excise in such
form as may be specified, by notification, by the Board, for registration
within a period of thirty days of the commencement of business or the 16th day
of June, 2005, whichever is later.
(2) Any provider of taxable service whose
aggregate value of taxable service in a financial year exceeds three lakh
rupees shall make an application to the jurisdictional Superintendent of
Central Excise in such form as may be specified, by notification, by the Board,
for registration within a period of thirty days of exceeding the aggregate
value of taxable service of three lakh rupees.
(3) The provisions of sub‑rules (2) to
(7) of rule 4 of Service Tax Rules, 1994 shall be applicable to the persons or
class of persons who make an application for registration under the provisions
of these rules, with such modifications and alterations as may be prescribed by
the Board.
4. Furnishing of returns.‑ The input
service distributor shall furnish a return to the jurisdictional Superintendent
of Central Excise in such form and at such frequency as prescribed under sub‑rule
(10) of rule 9 of CENVAT Credit Rules, 2004.
[F. No. B11612005‑TRU]
Comments:- This notification has introduced new rules for Registration of Special
Category of Persons) Rules, 2005, defining the various terms and procedures.
Following shall be required to take registration as per these rules:
i) Input Service Distributors
ii) Service provider who is exempt but whose
aggregate value of taxable service exceeds Rs.3 lakhs.
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 to amend the Export of Services Rules, 2005, namely :
1. (1) These rules may be called the Export of Services
(Amendment) Rules, 2005.
(2) They shall
come into force on the 16th day of June, 2005.
2. In the Export of Services Rules, 2005, in rule 3,-
(i) in sub‑rule (1),-
(a) for the word, brackets and letters "and (zzq) ", the brackets, letters and word", (zzq), (zzza), (zzzb),
(zzzc) and (zzzh)" shall be substituted;
(b)
the following proviso shall be inserted at the end, namely: ‑"Provided
that for the purposes of this sub‑rule, any taxable services provided
shall be treated as export of services only if(a) such service is delivered outside India and used in
business or for any other purpose outside India; and
(b) payment for such service provided is received
by the service provider in convertible foreign exchange.";
(ii) in sub‑rule
(2),-
(a) for the word, brackets and letters "and
(zzy)", the brackets, letters and word", (zzy), (zzzd), (zzze) and
(zzzf)" shall be substituted;
(b) after the first proviso, the following
proviso shall be inserted, namely:-
“Provided further that for
the purposes of this sub‑rule, any taxable services provided shall be
treated as export of services only if
(a) such service is
delivered outside India and used in business or for any other
purpose outside India; and
(b) payment for such
service provided is received by the service provider in
convertible foreign exchange.";
(iii) in sub‑rule
(3),-
(a) in clause
(i), for the word, brackets and letters "and (zzy)", the brackets,
letters and word ", (zzy), (zzza), (zzzb), (zzzd), (zzze), (zzzf) and
(zzzh)" shall be substituted;
(b) in clause
(ii), for the brackets and letter "(d)", the brackets, letters and
word "(d) and (zzzc)" shall be substituted.
[F. No. B11612005‑TRUI
Comments: Export of Service Rules have been amended w.e.f
16.6.2005 to the effect that, service falling in rule 3(l) and 3(2) of Export
of Service Rules, the service will be export of service only if a) the service
is delivered outside India and used in the business or for any other purpose
outside India and b) Payment is received by service provider in free foreign
exchange.
(II) New
Services under Service Tax w.e.f. 16‑6‑2005
As per Ministry of Finance, Department of Revenue,
Tax Research Unit notification F.No. 15/2005‑Service Tax dated 7th June,
2005, the following new services have come under the Service Tax levy w.e.f. 16.6.2005.
|
SI. No. |
Name of Service |
Account
Code |
|
|
|
|
Tax
Collection |
Other
Receipts* |
|
1. |
Transport of goods through pipeline or other conduit |
00440302 |
00440303 |
|
2. |
Site formation and clearance, excavation and
earth |
00440306 |
00440307 |
|
|
Moving and demolition services, other than those |
|
|
|
|
provided to agriculture, irrigation and watershed |
|
|
|
|
development |
|
|
|
3. |
Dredging service of river, port, harbour,
backwater |
00440310 |
00440311 |
|
|
or estuary. |
|
|
|
4. |
Survey and map making other than those by |
00440314 |
00440315' |
|
|
Government departments |
|
|
|
5. |
Cleaning other than in relation to agriculture, |
00440318 |
00440319 |
|
|
horticulture, husbandry or dairying. |
|
|
|
6. |
Membership of club or association with specified |
00440322 |
00440323 |
|
|
exclusions. |
|
|
|
7. |
Packaging services. |
00440326 |
00440327 |
|
8. |
Mailing list compilation and mailing |
00440330 |
00440331 |
|
9. |
Construction of residential complexes having more |
00440334 |
00440335 |
|
|
than twelve residential houses or apartments
together |
|
|
|
|
with common areas and other appurtenances |
|
|
",Other Receipts"
is meant for interest, penalty leviable on delayed payments.