an introduction to – service tax by g. natarajan advocate, swamy associates

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AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

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Page 1: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

AN INTRODUCTION TO – SERVICE TAX

by g. natarajanadvocate, swamy associates

Page 2: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

GENESIS OF THE LEVY

Entry 97 of List I – The residual power to tax.

Effective from 2003 – Entry 92 C of the List I.

Finance Act, 1994 – An adhoc Act for 18 years!

Page 3: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

FinancialYear

RevnueRs. Crores

1994-95 410

1995-96 846

1996-97 1022

1997-98 1515

1998-99 1787

1999-00 2072

2000-01 2612

2001-02 3305

2002-03 4125

2003-04 7890

2004-05 14196

2005-06 23053

2006-07 37482

2007-08 51133

2008-09 60702

2009-10

2010-11

58319

71175

GROWING REVENUE

Page 4: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

Challenges to the levy.

Renting of immovable property serviceHome Solutions Retail India Limited

Vs Union of India

2009 (14) STR 433 Delhi HC

Construction of Residential complex service

Maharashtra Chamber of Housing Industry Vs

Union of India2012-TIOL-78 Mum HC

Page 5: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

Challenges to the levy.

Financial Leasing Services. Association of Leasing and Financial Service

CompaniesVs

Union of India2010 (20) STR 417 SC

Chartered Accountants, etc. serviceAll India Federation of Tax Practitioners Vs

Union of India2007 (7) STR 625 SC

Page 6: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

BASIC FEATURES

Levy on service providers. - Exceptions.

Positive List of Taxable service {Section 65 (105) (a) to (zzzzw)}

Move towards negative list.

Value – Gross amount. - Abatements - Reimbursements.

Classification of Services – Section 65 A.

Point of Taxation.

Page 7: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

EXPORT / IMPORT OF SERVICES

Export of Service Rules, 2005 – Pre & Post.

Property based services. Performance based services. Location based services.

- Benefits for Export of Services.

Import of Services. Section 66 A. Indian National Shipowners Association – 2009 (13) STR 235 Bom HC.

Page 8: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

CERTAIN IMPORTANT SERVICES

Legal services – Born in 2009 & Graduated in 2011.

Medical services – the story of “misery tax”.

Professional services – CAs, ICWAs, CSs, Architects, Engineers, etc.

Construction related services.

Business Auxiliary service / Business Support Service.

“Celebrity” services.

Hotels and Bars.

Page 9: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

PROCEDURES

Registration.

Issue of Invoice.

Self Assessment.

Monthly / Quarterly Payment.

Half yearly return.

Self Adjustment.

Cenvat Credit.

Page 10: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

IMPORTANT EXEMPTIONS

Small Scale Exemption. - Threshold limit – Rs. 10 lakhs. - Eligibility limit – Rs. 10 lakhs.

Notification 12/2003 - Exclusion for value of goods sold. BSNL Vs UOI – 2006 (2) STR 161 SC Agarwal Colour Advance Photo Systems – 2012 (23) STR 608 Tri-LB.

Notification 1/2006 - Abatements.

Page 11: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

PENAL PROVISIONS

Penalties.

- Section 76 – Rs.100 per day of default or 1 % pm, whichever is higher. - Section 77 - General penalty for specified offences. - Section 78 – Equal penalty. - Section 80 – Power to waive – rarely used!

Prosecution – Section 89. - Providing service without issue of invoice. - Irregular availment of cenvat credit. - Maintenance of false records, failure to give information. - Collects service tax and not remitting it.

Page 12: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

APPELLATE REMEDIES

Show Cause Notice

Adjudication below

Commissioner

Adjudication by

Commissioner

Appeal to Commissioner

(Appeals)

Appeal to Tribunal

Appeal to SC(Classification,

Value, exemption)

Appeal to HC(Question of law)

Page 13: AN INTRODUCTION TO – SERVICE TAX by g. natarajan advocate, swamy associates

g. natarajan93400 [email protected]