an introduction to – service tax by g. natarajan advocate, swamy associates
TRANSCRIPT
AN INTRODUCTION TO – SERVICE TAX
by g. natarajanadvocate, 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!
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
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
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
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.
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.
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.
PROCEDURES
Registration.
Issue of Invoice.
Self Assessment.
Monthly / Quarterly Payment.
Half yearly return.
Self Adjustment.
Cenvat Credit.
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.
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.
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)
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