Service Tax

We have with us extensive experience in handling the demands of Service Tax Consultancy services that comprise areas like –

  • Service Tax Registration
  • Consultancy on Services as per the applicability of Service tax Act
  • Filing of Service Tax returns in ST-3
  • Consultancy on deposit of monthly service tax of corporate and individuals
  • Maintenance of Service Tax Records
  • Liasioning with respective Authorities
  • Here, our rich experience allows us to successfully handle all matters pertaining to services including handling of departmental audits. Working in close relation with client organizations, we analyze their needs and based on that perform execution of services, thus ensuring best possible service support is offered from our end. Some of the factors that distinguish us from others include:
  • Rich experience in the field
  • Capability to offer prompt and reliable services

Service areas include:

  • Preparation of returns & challans
  • Handling departmental audit
  • Regarding credit claims
What is Service ?

‘Service’ has been defined and means-any activity for consideration carried out by a person for another and includes a declared service.
The said definition further provides that ‘Service’ does not include

  • Any activity that constitutes only
  • A transfer in title of goods or immovable property by way of sale, gift or in any other manner or
  • A transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of article 366 of the Constitution
  • A transaction only in money or actionable claim
  • A service provided by an employee to an employer in the course of the employment.

Fees payable to a court or a tribunal set up under a law for the time being in force

To determine whether you are providing a ‘Service’ Pose the following questions to yourself

S.NOQUESTIONANSWER
1Am I doing an activity (including, but not limited to, an activity specified in section 65E of the Act) for another person*?Yes
2Am I doing such activity for a consideration?Yes
3Does this activity consist only of transfer of title in goods or immovable property by way of sale, gift or in any other manner?No
4Does this activity constitute only a transfer, delivery or supply of goods which is deemed to be a sale of goods within the meaning of clause (29A) of article 366 of the ConstitutionNo
5Does this activity consist only of a transaction in money or actionable claim?No
6Is the consideration for the activity in the nature of court fees for a court or a tribunal?No
7Is such an activity in the nature of a service provided by an employee of such person in the course of employment?No
8Is the activity covered in any of the categories specified in Explanation 1 or Explanation 2 to clause (44) of section 65B of the ActNo
[*if you are a person doing business through an establishment located in the taxable territory and another establishment located in non taxable territory OR a association or body of persons or a member thereof then please see Explanation 3 to clause (44) of section 65B of the Act before answering this question] If the answer to the above questions is as per the answers indicated in column 2 of the table above THEN you are providing a service.

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Taxability of a ‘service’

The taxability of services or the charge of service tax has been specified in section 66B of the Act. To be a taxable a service should be – provided or agreed to be provided by a person to another in the taxable territory and should not be specified in the negative list.

The phrase “agreed to be provided” has been retained from the definition of taxable service as contained in the erstwhile clause (105) of section 65 of the Act. The implications of this phrase are.

Services which have only been agreed to be provided but are yet to be provided are taxable Receipt of advances for services agreed to be provided become taxable before the actual provision of service

Advances that are retained by the service provider in the event of cancellation of contract of service by the service receiver become taxable as these represent consideration for a service that was agreed to be provided.

Negative List

In terms of Section 66B of the Act, service tax will be leviable on all services provided in the taxable territory by a person to another for a consideration other than the services specified in the negative list. The services specified in the negative list therefore go out of the ambit of chargeability of service tax. The negative list of service is specified in the Act itself in Section 66D. In all, there are seventeen heads of services that have been specified in the negative list.

  • Services provided by Government or local authority
  • Services provided by Reserve Bank of India
  • Services by a foreign diplomatic mission located in India
  • Services relating to agriculture or agricultural produce.
  • Trading of goods
  • Processes amounting to manufacture or production of goods
  • Selling of space or time slots for advertisements other than advertisements broadcast by radio or television
  • Access to a road or a bridge on payment of toll charges
  • Betting, gambling or lottery
  • Entry to Entertainment Events and Access to Amusement Facilities
  • Transmission or distribution of electricity
  • Specified services relating to education
  • Services by way of renting of residential dwelling for use as residence
  • Financial activity
  • Services relating to transportation of passengers
  • Service relating to transportation of goods
  • Funeral, burial, crematorium or mortuary services including transportation of the deceased
Declared Services

In the definition of ‘service’ contained in clause (44) of section 65B of the Act it has also been stated that service includes a declared service. The phrase ‘declared service’ is also defined in the said section as an activity carried out by a person for another for consideration and specified in section 66E of the Act. The following nine activities have been specified in section 66E:

1. Renting of immovable property;
2. Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;
3. Temporary transfer or permitting the use or enjoyment of any intellectual property right;
4. Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software;
5. Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
6. Transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods;
7. Activities in relation to delivery of goods on hire purchase or any system of payment by installments;
8. Service portion in execution of a works contract;
9. Service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity.

Exemptions

Under the present system there are 88 exemption notifications. The need for exemptions is not obviated with the introduction of negative list. While some existing exemptions have been built into the negative list, others, wherever necessary, have been retained as exemptions. In addition some new exemptions are also proposed to be introduced. For ease of reference and simplicity most of the exemptions are now a part of one single mega exemption notification 25/2012-ST dated 20/6/12

Partial Reverse Charge

With effect from 1.7.2012 a new scheme of taxation is being brought into effect whereby the liability of payment of service tax shall be both on the service provider and the service recipient. Usually such liability is affixed either on the service provider or the service recipient, but in specified services and in specified conditions, such liability shall be on both the service provider and the service recipient.

The enabling provision has been provided by insertion of Proviso to section 68 in the Finance Act, 2012 as per which Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of Chapter V shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider.

Under this clause the Central government has issued notification no. 30/ 2012 dated 20.6.2012 notifying the description of specified services when provided in the manner so specified where part of the service tax has to be paid by the service receiver. The extent to which tax liability has to be discharged by the service receiver has also been specified in the said notification.

The manner of operation of the reverse charge mechanism has been explained in this point.

Export of Services

Export of services shall now be governed by new provisions in the Service Tax Rules 1994, namely Rule 6A. The essential requisites before a service can be designated as export service are:

  • It must be a service as defined under sub-section 44 of section 65B
  • By a service provider located in the taxable territory
  • To a service receiver is located outside India
  • The service is not a service specified in the negative list
  • The place of provision of the service is outside India
  • The payment for such service is received by the service provider in convertible foreign exchange
  • The service provider and service receiver are not merely establishments of a distinct person by virtue of item (b) of Explanation 2 of clause 44 of section 65B of the Act
Mukesh Raj & Company provide New Service Tax Regime

Review of Existing and Proposed Business Transactions

Review of existing and proposed business transactions from the perspective of new service tax law with a view to achieve the following key objectives :-

  • Analyse the new service tax provisions and mapping the same with the Company business operations;
  • Review of service agreement ( covering both input and out legs) from the perspective of new service tax law;
  • Identify gaps and / or areas of improvements, if any and suggest indicative solutions;
  • Verify other commercial agreements and and expenditure schedules including expenditure in foreign currency to flag the
  • Additional service tax liability if any under the new service tax regime;
  • Revisit the business operation to explore the avenues to improve tax efficiency

Conduct Workshop to Create the Awareness on the basis of outcomes of phase-1

We will conduct a full day workshop to discuss our observations and also to make the people aware of the changes which will have impact on their business.

Service Tax Compliance Outsourcing on going basis

Service Tax Outsourcing Compliance Services (on-going) Client can seeks assistance of the MRC to supplement the efforts of its in-house personnel in the areas of service tax matters.

Sr. No.Areas of complianceServices to be provided
1.Assistance in computation of tax payableAssistance in computation of tax payable as per the relevant provisions in the service tax laws. This activity will include:
Assisting in collating the data for output (including data for payment of service tax under reverse charge basis) and input services (month wise) for computation of tax liability;
Reviews of the data collated and compute the tax liability taking into consideration the applicable deductions, exemptions and calculation of service tax, cess and E cess.
Examining and calculating set off / input tax credit to ascertain the tax liability
Intimating the Company of the service tax liability payable and assistance in making the payment of service tax to the authority.
Preparation of the service tax challan.
Review the service tax exemption/ abatement adopted by the management for various services and provide our comments on the same.
Please NOTE : MRC shall rely upon the entries passed in the Books of Accounts by the Company with respect to Service Tax Liability and input tax credit for set off
2.Assistance in filing of returnsAssistance in filing of returns as per the relevant provisions of the service tax law:
Preparation of service tax returns on half yearly basis ( to become monthly soon);
Filing of the service tax return
3.Assistance with respect to Assessment proceedingsAssistance during service tax assessments (first level), comprises of:
Assistance in collating information and preparation of Assessment files;
Representations before the authorities, and attend the assessment proceedings if required; and
Review and analyze assessment orders issued by the service tax authorities and discuss the possible future course of action such as appeals. etc.
4.Assistance in relation to service tax auditAssist company in preparation to response to audit query. Attend the audit to clarify the doubts of the auditor.
5.Other compliance related servicesMeeting at client office periodically (monthly / quarterly) to discuss and update client on the tax consequences of the new developments, etc in connection with service tax matters enumerated above;
Advising on the tax consequences of budgetary changes and other amendments in the service tax legislation that may affect their tax payments or filing of returns;
Assistance in undertaking compliance formalities with respect to intimation to the department for any additional place of business / change in Authorised signatory in the identified states.

The services rendered by us will eventually help client primarily in:

  • Reducing the overall cost of handling compliance work.
  • Single window service tax compliance service with sustained quality.
  • To ensure smooth co-ordination with the service tax authorities.

On Call Advisory Services:

  • Advice on the issue raised by client pertaining to service tax implications.
  • Advise on the other issues as and when raised by client pertaining to service tax implications.
  • Assist in drafting reply to departmental queries, demand notices, show cause notices etc.
  • Assist in drafting appeals upto first and second appellate level.
  • Represent before the various service tax appellate authorities.
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