definition of services and issues in negative list by shri shailesh sheth
TRANSCRIPT
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
1/80
07/06/14 Adv. Shailesh Sheth
RAJKOT BRANCH OF WIRC OF ICAI
Subject:Definition of Service & issues in Negative List andExemption
Date: Saturday, 7thJune, 2014Faculty:Shailesh P. Sheth, Advocate and Senior Advisor (Ind
BDO India LLPVenue: Hotel Jayson, RajkotEmail id:[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected] -
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
2/80
07/06/14 Adv. Shailesh Sheth
A. Provisions relating to Negative List-based levy of Service Ta
implications
B. Definition of Service as per Section 65B (44) of the Financ
1994 as amended & its meaning and scope
C. Issues in Negative List contained in Section 66D of the Fina
1994 as amended
D. Issues in Mega Exemption Notification No.25/2012-ST dated
20.06.2012 effective from 01.07.2012
SCOPE OF PRESENTATION
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
3/80
07/06/14 Adv. Shailesh Sheth
ABBREVIATIONS:
Bill Finance Bill, 2012CCR Cenvat Credit Rules, 2004ESR Export of Services Rules, 2005FA Finance Act, 1994 as amended by Finance
2012ISR Taxation of Services (Provided from Outs
and Received in India) Rules, 2006POTR Point of Taxation Rules, 2011 as amendedPPSR Place of Provision of Services Rules , 201
SP Service ProviderSR Service ReceiverSTR Service Tax Rules, 1994 as amended
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
4/80
07/06/14 Adv. Shailesh Sheth
A. Provisions relating to Negative Listbased Service Tax & its implications.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
5/8007/06/14 Adv. Shailesh Sheth
Evolution of Service Tax:
Chief contributor to GDP
Contribution to Revenue not commensurate with
contribution to GDP
Birth of Service Tax in 1994
Initially limited to only three services viz.
General Insurance
Stock Brokers
Telephone services
Gradual expansion of scope of levy
Presently covers 119 services
Revenue earned: Rs. 427.00 Crores (approx) in 1994
RE for 2011-12: Rs.95,000 Crores
RE for 2012-13: Rs. 1,32,697 Crores.
BE for 2013-14: Rs.1,80,141 Crores.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
6/8007/06/14 Adv. Shailesh Sheth
Positive List-based Levy & its shortcoming
Presently, levy is based on positive list (on selective approa
Shortcomings of the present tax regime:
No independent Legislation
Service is not defined
Service specified in Section 65 (105) are only taxable
Non-specified service are non-taxable
Independent definitions tend to be vague, broad and
overlapping
disputes relating to interpretation, classification andtaxability
Exemptions-raj rule
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
7/8007/06/14 Adv. Shailesh Sheth
Positive List-based Levy to Negative List-base
2012-Service Tax attains the ageof majority
Expanding horizon & Budget 2012 Shift from Positive List- based levy or Selective Approach to
based levy or Comprehensive Approach
A paradigm shift
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
8/80
07/06/14 Adv. Shailesh Sheth
Salient features of Negative List-based Lev
No separate Legislation, yet Term Service exhaustively defined for the first time
All services, other than those specified in Negative List, liab Introduction of Concept of Declared Services New charging Section 66B Expressions like Taxable Territory & Non-Taxable Territory
and defined Place of Provision of Service Rules, 2012 introduced
PPSR to replace ESR & ISR Exemption-raj continues: Mega Exemptions Independent exemptions Abatements
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
9/80
07/06/14 Adv. Shailesh Sheth
Salient features of Negative List-based Lev
Provisions relating to the new scheme of levy effective from 0
Provisions of existing Section 65, 65A, 66 & 66A ceased to appnotified date i.e. 01.07.2012
Re-birth result of your Karma in the present life?
A definite, concrete and inevitable step towards GST
Marriage with Central Excise in offing?
Engagement already announced
Common Excise & Service Tax Registration
Common Excise & Service Tax Return
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
10/80
07/06/14 Adv. Shailesh Sheth
SERVICE as defined
vide Section 65B (44)
MOLECULE OF NEGATIVE LIST- BASED LEVY STRUCTURE
NEGAT
SE[Se
CHARGING
PROVISIONS
[Sec. 66B]
DECLARED
SERVICES
[Sec. 66E]
PL
PROV
SERVIC
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
11/80
07/06/14 Adv. Shailesh Sheth
Charging Provisions of Section 66B w.e.f.01.0(Not. No. 19/12-ST dt. 05.06.2012 ref
There shall be levied a tax (i.e. Service Tax)
@ 12%
on the value of all services
other than the services specified in the Negative List
provided or agreed to be provided
in the taxable territory by one person to another and
collected in such a manner as may be prescribed
CHARGING PROVISION [S i 66B]
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
12/80
07/06/14 Adv. Shailesh Sheth
CHARGING PROVISION [Section 66B] Section 66B replaced old charging Section 66 w.e.f. 01.07.201 Comparison of present and old charging Sections:
Present Section 66B Old Section 66 read with Section 65(
There shall be levied a tax (Service Tax) Same
At the rate of 12% Same
Onthe value of Ofthe value of
All Services Taxable services referred to in sub-clau(zzzzw) of Section 65(105)
Other than those specified in negative list ----
Provided or agreed to be provided Provided or to be provided
In the taxable territory ----
By one person to another person To any person, client, etc. by any perso
Collected in such manner as may be prescribed Same
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
13/80
07/06/14 Adv. Shailesh Sheth
TAXATION SCHEME PARADIGM SHIFT w.e.f. 01
Shift from selective approach to comprehensive approach of taxation
Selective approach (present scheme of taxation):
Term service not defined
Statute lists out taxable services [Section 65(105)]
Only listed services are taxable. Non-listed services are not taxable
Exemptions are granted through notifications
Comprehensive approach (new scheme of taxation):
Term service is defined [Section 65B(44)] Concept of declared service [Section 66E] Deemed Service
Service includes declared service [Section 65B(44)]
Statute lists out non-taxable services [negative list Section 66D]
All services (including declared services) are taxable except those sp
list
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
14/80
07/06/14 Adv. Shailesh Sheth
TAXATION SCHEME PARADIGM SHIFT w.e.f. 01
Services provided in taxable territory would be taxable
Services provided in non-taxable territory would not be taxable
Taxable territory means whole of India (excluding Jammu & Kashmir)
read with Section 65B(52)]
Place of Provision of Services Rules, 2012 prescribes the place where
deemed to be provided
Self service not taxable: Service is a bilateral transaction
Only bilateral transactions can be taxed
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
15/80
07/06/14 Adv. Shailesh Sheth
TAXATION SCHEME PARADIGM SHIFT w.e.f. 01
Exception to above general rule:
Transactions between unincorporated association or body
and its members
Transactions between two establishments of same person
in taxable territory and other located in non-taxable terr
Exemptions granted through notifications (mainly mega NotifiNo. 25/12-ST dt.20.06.2012)
STEPS FOR DETERMINING SERVICE TAX LIABIL
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
16/80
07/06/14 Adv. Shailesh Sheth
STEPS FOR DETERMINING SERVICE TAX LIABILw.e.f. 01.07.2012
Whether activity amounts to Service as defined U/s.65B(44
Whether activity amounts to Declared service as defined U/
If answer to any of above is yes, check up whether said activiunder negative list of services U/s. 66D?
If answer to above is no, refer place of Provision of Service Ru
check up whether services are provided within taxable territo
If answer to above is yes, check up whether activity is exempMega Notification No.25/12-ST dt. 20.06.2012 or any other no
If answer to above is no, activities is liable to service tax
Determine value of taxable service considering Valuation Rule
required
STEPS FOR DETERMINING SERVICE TAX LIABIL
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
17/80
07/06/14 Adv. Shailesh Sheth
STEPS FOR DETERMINING SERVICE TAX LIABILw.e.f. 01.07.2012
Apply abatement Notification, if relevant, to work out abated
to tax
Calculate service tax by applying the applicable rate
Work out service tax payable for respective month or quarter
Determine the Point of Taxation as per POTR
Pay service tax by utilisation of Cenvat credit and/ or in cash
D i i f R l f bl S
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
18/80
07/06/14 Adv. Shailesh Sheth
Determination of Tax Rate, Value of Taxable ServExchange Rate [Section 67A] w.e.f. 28.05.2
Following prevailing on the date of provision of service / rece
advance will be relevant for discharging service tax liability: Tax rate
Value of taxable services
Exchange rate.
Subsequent change in any of above would not alter service talater date.
The exchange rate would mean the rate of exchange referred
Explanation to Section 14 of the Customs Act, 1962.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
19/80
07/06/14 Adv. Shailesh Sheth
Section 66B - A comprehensive provision:
nature of tax
taxable event
rate of tax
person liable to pay tax
measure of tax
situs of services i.e. Taxable Territory & Place ofProvision of Services Rules, 2012
Point of Taxation (Service provided or agreed to beprovided)
collection mechanism
Charging Provisions of Section 66B.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
20/80
07/06/14 Adv. Shailesh Sheth
Legal character of tax
Rate of tax:
Stands increased to 12% w.e.f. 01.04.2012
Value of services: Section 67 of FA Valuation Rules, 2006 Amendments to Valuation Rules, 2006 w.e.f.01.07.2012
All services (barring exceptions) are taxable: Term Service defined [S. 65B(44)] Term Taxable Service defined [Sec. 65B (51)] Comparison between Sec. 65 (105) & Sec. 65B (51)
Section 66B - various elements analyzed
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
21/80
07/06/14 Adv. Shailesh Sheth
Services specified in Negative List are excluded (Sec. 66D)
Phrase provided or agreed to be provided
linked to Point of Taxation Rules, 2011
S. 66B vis--vis S. 67 vis--vis S. 65B(44)
Insertion of Sec. 67A:
date of determination of
rate of Service Tax
value of taxable service
rate of exchange
in force or as applicable
at the time when taxable service provided or to be provided
Section 66B - various elements analyzed.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
22/80
07/06/14 Adv. Shailesh Sheth
Sec. 67A effective from 28.05.2012
Rule 5B of STR deleted w.e.f.01.07.2012 Amendments to POTR
Not. No. 4/12-ST dt.17.03.2012
Effective from 01.04.2012
Minor amendment w.e.f.01.07.2012 (Not. No.37/12-ST dt
refers)
Section 66B - various elements analyzed.
S ti 66B i l t l d
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
23/80
07/06/14 Adv. Shailesh Sheth
Situs of Levy:
Services provided in Taxable Territory alone taxable
Taxable Territory defined [Sec. 65B(52)] means the territory to which the provisions of the cha
Sec. 64(1) provisions apply to whole of India except t& K
Non Taxable Territory defined [Sec. 65B(35)]
means the territory which is outside the taxable territ
Provisions of ESR & ISR were not applicable to the state of
Concept has undergone fundamental change
Section 66B - various elements analyzed.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
24/80
07/06/14 Adv. Shailesh Sheth
Taxation based on Place of Provision of Services
Section 66C empowering Central Government to prescribe rules
for determination of Place of Provision of Service Rules
Place of Provisions of Services Rules, 2012 introduced vid
No.28/12-ST dt.20.06.2012 w.e.f.01.07.2012
Not. No.28/12-ST issued under S.66C r/w S.94(2)(hhh)-is No
valid?
Situs of levy..
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
25/80
07/06/14 Adv. Shailesh Sheth
Taxable Person
Term Taxable Person not defined
Revised Concept Paper
Section 68(1) of FA
Section 68(2) of FA
C.G.s powers to notify a person liable to pay Service
Rule 2(1)(d) of STR
Mechanism known as Reverse Charge
Section 68(2) stands amended from 01.07.2012
Insertion of proviso
C.G.s powers to apportion liability between SP & SR
Taxable Person.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
26/80
07/06/14 Adv. Shailesh Sheth
Not. No.30/12-ST dt.20.06.2012 w.e.f. 01.07.2012 person liable to pay Service Tax apportionment of liability expanding coverage of Reverse Charge
Earlier Not. No.15/12-ST dt.17.03.2012 alongwith Not. No.36/04-ST dt.31 Issue of Notification under S.68(2)
Powers of apportionment available only under proviso to S.68(2) effective
Implications vis--vis small scale exemption Not. No.33/12-ST dt.20.06.2001.07.2012
Duality of Persons Service Provider Service Recipient Term Person exhaustively defined [Sec. 65B (37)] Exceptions carved out under Section 65B(44)
Collection Mechanism
Taxable Person.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
27/80
07/06/14 Adv. Shailesh Sheth
B. DEFINITION OF SERVICE AS PER SECTION 6OF THE FA & ITS MEANING AND SCOPE.
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
28/80
07/06/14 Adv. Shailesh Sheth
SERVICE
Transfer of title ingoods or
immovableproperty
A transaction inmoney or
actionable claim
Provision ofservice by an
employee to theemployer
Any activity whichconstitutes merely
Declared services
For consideration
Carried out by aperson for another
Any activity
But shall notinclude
means And includes
or
Deemed Sale
under Article366(29A)
or
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
29/80
07/06/14 Adv. Shailesh Sheth
Definition of term Service & its analysis-[Sec.
Section 66B Charging provision
All services are taxable except those specified in the vide Section 66D
Definition of term Taxable Service [Sec. 65B(51)]
Importance of definition of term Service
Term Service defined vide Section 65B(44) First ever definition of the term Service
Is the definition concise, comprehensive, clumsy or co
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
30/80
07/06/14 Adv. Shailesh Sheth
Definition consists of three limbs viz.
Means Clause
Includes Clause
Excludes Clause
3 explanations at the end
Construction of definition
Old habits die hard
Definition of term Service & its analysis-[Sec. 65
DEFINITION OF SERVICE
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
31/80
07/06/14 Adv. Shailesh Sheth
Means Clause:
any activity
carried out by a person for another
for consideration
Any activity
A very broad term
not defined in the Act
few relevant definitions or explanations of activity
business
A few debatable issues
TRU Circular dt.16.03.2012
1. Guidance Note 2
2. Para 2.1.1
Education (?) Guide issued on 20.06.2012
DEFINITION OF SERVICE .
DEFINITION OF SERVICE
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
32/80
07/06/14 Adv. Shailesh Sheth
Includes clause:
Section 66E Declared Services
Section 65(22) Declared Service defined
Section 65B (44)- Service includes Declared Services
Section 66E list of Declared Services:
DEFINITION OF SERVICE .
i. Renting of immovable property
ii. Construction of a complex, building, civil structure or
including sale of under construction propertyiii. Temporary transfer or permitting the use or enjoyment
intellectual property right
iv. Development, design, programming, customization, ad
upgradation, enhancement and implmentation of soft
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
33/80
07/06/14 Adv. Shailesh Sheth
v. Agreeing to the obligation to refrain from an act or to tolerate
an act or a situation or to do an act
vi. Transfer of goods by hiring, leasing, licensing etc
vii. Activities in relation to delivery of goods on hire purchase or any
payment by installments.
viii. Service portion in execution of a works contract
ix. Service portion in an activity wherein food or any article of humaconsumption or any alcoholic/ non-alcoholic drink is supplied.
All above services were taxable earlier except Item No. V
Overlapping VAT on items (ii), (iii), (iv), (vi), (vii), (viii) and (ix)
DEFINITION OF SERVICE .
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
34/80
07/06/14 Adv. Shailesh Sheth
Person liable to pay Service Tax -
Term Taxable Person proposed to be defined in revised
Paper
A case of missing definition
word economic in relation to activity missing from th
of Service
Comparison with definition in enactments of other coun
issues arising out of proposed definition
Carried out by a person for another
self service excluded
DEFINITION OF SERVICE .
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
35/80
07/06/14 Adv. Shailesh Sheth
Exclusions:
Service does not include merely a transfer of title:
in goods
in immovable property
by way of gift or sale or in any other manner
Goods defined vide Section 65B (25)
Immovable Property not defined:
Definition as per Sec. 3(26) of General Clauses Act, applicable
DEFINITION OF SERVICE .
DEFINITION OF SERVICE
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
36/80
07/06/14 Adv. Shailesh Sheth
Transfer of Title
Signifies change in ownership
mere transfer of custody or possession not transfe
illustrations
Significance of word merely
Education Guide
Transaction involving an element of another activiaddition to transfer of title in goods or immovable
Clarification confusing and contradictory
Composite transaction BSNLs case
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
37/80
07/06/14 Adv. Shailesh Sheth
Goods includes Securities
transfer of title in securities
Treasury operations in a company & its implications on the entitCenvat credit on input services
Trading in goods covered under Negative List S.66D Trading in goods (including securities) Is it service? Is it exclu
S.65B(44)?
A transaction in money or actionable claim excluded
Money defined vide Section 65B (33)
Actionable Claim defined vide Sec. 65B(1)
Definition given in Section 3 of Transfer of Property Act, 1882 ad Activities considered as Deemed Sale under Article 366(29A)
excluded Amendment to Finance Bill, 2012 on 08.05.2012 and its purpose Dual taxation sought to be avoided
DECLARED SERVICE Vs. DEEMED SALES EXCLU
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
38/80
07/06/14 Adv. Shailesh Sheth
DECLARED SERVICE Vs. DEEMED SALES EXCLU
Transfer, delivery or supply of goods in deemed sale under Art
366(29A) of Constitution which is excluded from definition of
Transfer of property in goods otherwise than in pursuance
Transfer of property in goods involved in execution of wo Delivery of goods of hire purchase or installment system
Transfer of right to use any goods
Supply, by unincorporated association/body of persons to
Supply, by way or part of any service, of goods being food
other article for human consumption Are deemed sale and declared services in contradiction?
Construction contracts Use of IPRs Software development
Hire Purchase & Leasing Works contract Restaurant sale/Outdoor cater
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
39/80
07/06/14 Adv. Shailesh Sheth
Provision of service by an employee to the employer in the coursemployment excluded
Service by employer to employees not excluded?
Latest draft circular by CBEC Whether partner is an employee of the firm? Leviability of service tax on Directors remuneration
Fees taken in any court or tribunal excluded
Other Exclusions:
Functions performed by MPs, etc.
duties performed by any constitutional authorities
duties performed by any person as a chairperson or membe
in a government body or Local authority
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
40/80
07/06/14 Adv. Shailesh Sheth
Explanation 3to Sec.65B(44) Deemed Distinct Persons
1. Establishment of a person located in a taxable territanother establishment of such person located in non
territory Similar provision in Section 66A(2)
Illustration
2. An unincorporated association or body of persons anmembers thereof
Explanation to Section 65 vis--vis the presexplanation
Principle of Mutuality of interest, is it sti
Placement of Explanation 2 poor drafting?
DEFINITION OF SERVICE .
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
41/80
07/06/14 Adv. Shailesh Sheth
Person:
defined vide section 65B(37)
inclusive but exhaustive definition
Term Consideration not defined Definition includes abstained from doing or abstains fro
promises to abstain from doing
Is this service or consideration?
Consideration includes monetary payment and non- moneconsideration as well as deferred consideration
Illustrations in Education Guide Determination of value as per Sec.67 read with Valuation
of non-monetary consideration
Consideration shall it flow from the beneficiary only ?
Direct and immediate link required ?
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
42/80
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
43/80
07/06/14 Adv. Shailesh Sheth
c.ISSUES IN NEGATIVE LIST CONTAINED IN SECTOF THE FINANCE ACT, 1994 AS AMENDED
Negative List of Services [Section 66D] w.e.f. 01
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
44/80
07/06/14 Adv. Shailesh Sheth
Services provided by Central Government, State Government,Territory or a local authority except for following services(i) speed post, express parcel post, life insurance and agenc
provided by post department to a person other than Gove(ii) services in relation to an aircraft or a vessel, inside or ouprecincts of a port or an airport;
(iii) transport of goods or passengers; or(iv) support services, other than services covered under claus
above, provided to business entities.
Services by the Reserve Bank of India.
Services by a foreign diplomatic mission located in India.
Specified services relating to agriculture or agriculture produc
Negative List of Services [Section 66D] w.e.f. 01
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
45/80
07/06/14 Adv. Shailesh Sheth
Trading of goods.
Process amounting to manufacture or production of goods.
Selling of space or time slots for advertisements other than advertisements bro
or television.
Service by way of access to a road or a bridge on payment of toll charges.
Betting, gambling or lottery.
Admission to entertainment events or access to amusement facilities.
Transmission or distribution of electricity by Electricity Transmission or Distrib
Services by way of
(i) pre-school education and education up to higher secondary school or equ
(ii) education as a part of an approved vocational education course.
Negative List of Services [Section 66D] w.e.f. 01
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
46/80
07/06/14 Adv. Shailesh Sheth
(iii) education as a part of a curriculum for obtaining a qual
recognized by law;
Services by way of renting of residential dwelling for use
residence; Services by way of
(i) extending deposits, loans or advances in so far as the cois represented by way of interest or discount;
(ii) inter-se sale / purchase of foreign currency amongst ba
authorized dealers or amongst banks and such dealers;
Transportation of passengers(i) a stage carriage;
(ii) metro, monorail or tramway;
(iii) inland waterways;
(iv) metered cabs, radio taxis or auto rickshaws;
Negative List of Services [Section 66D] w.e.f. 01
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
47/80
07/06/14 Adv. Shailesh Sheth
(iv) railways in a class other than
first class; or
an air conditioned coach;
(v) public transport in a vessel other than predominantly for to
purpose between places located in India
Services by way of transportation of goods
(i) by road except the services of
a goods transportation agency; or
a courier agency;
(ii) by an aircraft or a vessel from a place outside India to custclearance
(iii) by inland waterways;
Funeral, burial, crematorium or mortuary services including tran
the deceased.
Implications of Negative List vis--vis CCR,
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
48/80
07/06/14 Adv. Shailesh Sheth
Implications of Negative List vis vis CCR,
Charging S.66B-Exclusion of services covered by Negativ
Rule 2(e)- Exempted Service definition amended to
Taxable service which is exempt under a Notification
Service on which no Service Tax is leviable under S.66B
Taxable service in respect of which abatement is availe
non-availment of Cenvat credit on inputs and input serv
Services covered by the Negative List are Exempted
terms of Rule 2(e)
Implications of Negative List vis--vis CCR,
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
49/80
07/06/14 Adv. Shailesh Sheth
Person providing taxable service (or manufacturing duti
and also providing services covered by Negative List H
CCR, 2004
Compliance with Sub-rule (2) or (3)(i) or (ii) or (iii) read
rule 3A of Rule 6 mandatory
Implications of services covered by exclusions under S.6
vis Rule 6 of CCR, 2004
Whether excluded activities under S.65B(44) are Exem
Service?
Implications of Negative List vis--vis CCR, 20
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
50/80
07/06/14 Adv. Shailesh Sheth
Trading in goods (including securities) covered under Negvide S.66D(e)
Manufacturer/ SP engaged in dutiable/ taxable activity & tra Implications under Rule 6 of CCR, 2004
Whether Trading in goods (including securities) a Service
excluded from the definition of Service vide S.65B(44)?
Legal position with regard to Trading prior to 01.04.2011
Legal position between 01.04.2011 and 30.06.2012 Implications of judgement of CESTAT in Orion Appliances Ca
Insertion of Explanation in Rule 2(e) of CCR, 2004 whether retrospective ?
Implications of Negative List vis--vis CCR, 20
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
51/80
07/06/14 Adv. Shailesh Sheth
Clause (f) of S.66D Any process amounting to manufactureproduction of goods
Meaning & Scope of the entry Clause (40) of S.65B Process amounting to manufacture or
goods defined
Relationship of entry at Clause (f) of S. 66D with Entry at serMega Exemption Notification No.25/2012-ST dated 20.06.20
Intermediate production process carried on as job work ex
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
52/80
07/06/14 Adv. Shailesh Sheth
D. Issues in Mega Exemption Notification No.25/2dated 20.06.2012 effective from 01.07.2012
Exemptions A paradoxical situation contin Notification No. 25/12-ST dt.20.06.2012 effective from 01.07.2012
M i ifi i i h d d d li N N 12/12 ST d 17 03 2012
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
53/80
07/06/14 Adv. Shailesh Sheth
Mega exemption notification with expanded scope compared to earlier Not. No.12/12-ST dt.17.03.2012 Other exemptions retained
Small service provider exemption or threshold exemption(Not.No.33/12-ST)
Rebate of Excise duty/ Service Tax to the exporters (Not. No.39/12-ST)
Taxable services received by SEZ unit or developer (Not.No.12/13-ST superseding Not 40/12-ST)
Services provided to diplomatic mission (Not. No.27/12-ST)
Services provided by:
Recognized technology business incubator (TBI) & Recognized Science and Technology Entreprene[Not. No. 32/12-ST]
Exemption in respect research and development cess (R&D cess) (Not. No.14/12-ST dt.17.03.2012
Exemption in respect of property tax on renting of immovable property (Not.No.29/12-ST)
GTA services to exporter of goods (Not. No.31/12-ST)
Rescinding of 81 Notifications w.e.f. 01.07.2012 (Not. No.34/12-ST)
Exemptions A paradox
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
54/80
07/06/14 Adv. Shailesh Sheth
Exemption raj continues
Not compatible with GST Breaking of credit cha
Exemption to copyright for recording of cinematog
films vide budget justification
Implications of Exemption raj
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
55/80
07/06/14 Adv. Shailesh Sheth
This notification is effective from 01.07.2012
Services provided to the UN/ specified international organizat- Also exempted earlier
Health care services by clinical establishment, authorized mepractitioner or paramedics- Non-taxable earlier
Services by a veterinary clinic- Non-taxable earlier
Specified Charitable activities by an entity registered U/s 12A
Income-tax Act, 1961- Earlier no such specific exemption for trust
Services of renting of precincts (land or building) of a religioumeant for general public conduct of any religious ceremony- Non-taxable earlier
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
56/80
07/06/14 Adv. Shailesh Sheth
Services provided by an arbitral tribunal to:a. Any person other than a business entityb. A business entity with a turnover upto Rs. 10 Lakh in the
financial year
- Earlier arbitration service was exempted under NotificatiNo.45/2011-ST dt. 12.09.2011
Services provided by an individual as an advocate or a partneadvocates by way of legal services to,:a. An advocate or partnership firm of advocates providing leb. Any person other than a business entity;
c. A business entity with a turnover upto Rs. 10 Lakh in the financial year
- Earlier legal consultancy provided by an individual to indirepresentation services provided by an individual to an in/ non-business entity was not taxable
Mega Exemption Notification 25/12-ST dt.20.0 Services provided by a person represented on an arbitral tribu
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
57/80
07/06/14 Adv. Shailesh Sheth
arbitral tribunal- Earlier arbitration service was exempted under Notificati
No.45/2011-ST dt. 12.09.2011
Technical testing/ analysis of newly developed drugs/ vaccineremedies on human participants by an approved clinical reseaorganization- Earlier exempted under Notification No.11/2007-ST dt. 0
Training/ coaching in recreational activities relating to arts, csports
- Earlier services relating to sports was not taxable.- Earlier services relating to recreational activities such as
singing, martial arts or hobbies were exempted under NoNo.3/2010-ST dt. 27.02.2010
Mega Exemption Notification 25/12-ST dt.20.0 Sponsorship of tournaments or championships organized by no
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
58/80
07/06/14 Adv. Shailesh Sheth
organizations- Earlier exempt vide Notification No.30/2010-ST dt. 01.07
Services of auxiliary educational services provided to or by an
institution in respect of education exempted from Service tax- No specific exemption earlier
Services of renting of immovable property provided to [or byremoved vide Not. No. 3/13-ST]an educational institution in education exempted from Service tax:- Earlier renting of immovable property to an education wa
Services provided to a recognized sports body by an indivplayer, referee, umpire, coach or manager for participatitournament or championship of another recognized sport
- Non taxable earlier
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
59/80
07/06/14 Adv. Shailesh Sheth
Services provided to the Government or local authority for coerection, commissioning, installation, completion, fitting outmaintenance, repair, alteration, renovation or restoration of
a civil structure meant predominantly for use other than focommerce, industry or any other business or profession a historical monument or archaeological site a structure meant predominantly for use as an educational
art or cultural establishment canal, dam or other irrigation works pipeline, conduit or pl
drinking water supply, water treatment, sewerage treatmedisposal; or
a residential complex predominantly meant for self-use or employees or others such as MP, MLA, Member of local auth
- Earlier above services were non taxable
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
60/80
07/06/14 Adv. Shailesh Sheth
Erection, construction, commissioning, installation, completioout, maintenance, repair, alteration, renovation or restorati
road, bridge, tunnel, transport terminal for use by genera
- Earlier non-taxable, even if provided to private parties (sucontroversy of maintenance and repairs)
civil structure or any original works pertaining to scheme uJawaharlal Nehru National Urban Renewal Mission/ Rajiv A- Also exempted earlier
building owned by an entity registered under section 12AAIncome-tax Act, 1961 and meant predominantly for religiogeneral public
- Being non-commercial construction, earlier it was non-taxto controversy of maintenance and repairs
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
61/80
07/06/14 Adv. Shailesh Sheth
pollution control or effluent treatment plant except located as a
factory or structure meant for funeral, burial or cremation of de
- No such exemption earlier
Erection or construction of original works pertaining to airport, port or railways, including monorail or metro;
- Non taxable earlier
single residential unit otherwise as a part of a residential compl
- Earlier complex having 12 or less residential units in complex an
construction for personal use were non taxable low-cost houses up to a carpet area of 60 square metres per hou
approved housing project
- Earlier only specified schemes were exempt
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
62/80
07/06/14 Adv. Shailesh Sheth
Storage infrastructure for agricultural produce including a
storages for such purposes; or
- Earlier erection of cold storage equipments were exempt
Notification No. 12/2010-ST dt. 27.02.2010
mechanized food grain handling system, machinery or eq
units processing agricultural produce
- Earlier exempted under Notification No. 12/2010-ST dt. 2
Temporary transfer or permitting the use or enjoyment o
relating to original literary, dramatic, musical, artistic wo
cinematograph films
Mega Exemption Notification 25/12-ST dt.20.0
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
63/80
07/06/14 Adv. Shailesh Sheth
[w.e.f. 01.04.2013 vide Not. No.3/13-ST dt.01.03.2
clause is substituted to exempt cinematograph film
exhibition in cinema hall or cinema theatre only]
- Earlier all such services were non-taxable except se
relation to cinematograph films
Mega Exemption Notification 25/12-ST dt.20.0
S i b f i ti t i f lk l i l t f f
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
64/80
07/06/14 Adv. Shailesh Sheth
Services by a performing artist in folk or classical art forms ofdance or theatre excluding services as a brand ambassador- Non-taxable earlier
Collecting or providing news by an independent journalist, PreIndia or United News of India- Non-taxable earlier
Accommodation in hotel, inn, guest house, club, campsite or commercial places having declared tariff of less than Rs.1000- Non-taxable earlier
Restaurant, eating joint or a mess not having air-conditioninair heating or license to serve alcoholic beverages
- Non-taxable earlier.
Mega Exemption Notification 25/12-ST dt.20.0
f 01 04 2013 l 19 i b tit t d id N t N 3/13
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
65/80
07/06/14 Adv. Shailesh Sheth
w.e.f. 01.04.2013, clause 19 is substituted vide Not. No.3/13-
01.03.2013
Services provided in relation to serving food or beverages by a
restaurant, eating joint or a mess, other than those having theair-conditioning or central air-heating in any part of the estab
at any time during the year.
Recent judgement of the Kerala H.C. declaring the levy of serv
restaurants etc. ultra vires and its implications.
Kerala Classified Hotels and Resorts Association and Others V/India & Others
2013-TIOL-533-HC-Kerala-ST
Mega Exemption Notification 25/12-ST dt.20.0 Rail or water transportation of specified/ essential goods:
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
66/80
07/06/14 Adv. Shailesh Sheth
Relief materials (for victims of natural or man-made disasters, calam
accidents or mishap), defence or military equipments, newspaper or
registered with the Registrar of Newspapers, railway equipments or m
agricultural produce, foodstuff (including flours, tea, coffee, jaggeryproducts, salt & edible oil, excluding alcoholic beverages), chemical
oilcakes
- Earlier exempt under various notifications (amended w.e.f.01.04
Not. No.3/13-ST dt.01.03.2013)
Road Transportation of : (substituted vide Not. No.3/13-ST)
Agriculture produce, foodstuff (including flours, tea, coffee, jaggeryproducts, salt & edible oil, excluding alcoholic beverages), chemical
oilcakes, newspaper or magazines registered with the Registrar of Ne
Relief materials (for victims of natural or man-made disasters, calam
accidents or mishap), defence or military equipments in a goods carr
- Earlier exempt under notification No.33/2004-ST dt.03.12.2004
Mega Exemption Notification 25/12-ST dt.20.0 goods in a single carriage where gross freight is less than Rs. 1500/-
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
67/80
07/06/14 Adv. Shailesh Sheth
g g g g g
- Earlier exempt under notification No.34/2004-ST dt.03.12.2004
goods where gross freight for single consignment is less than Rs.750/
- Earlier exempt under notification No.34/2004-ST dt.03.12.2004
Hiring of :
a motor vehicle (meant to carry more than twelve passengers) to a st
undertaking
motor vehicle for goods transportation to goods transport agency- Earlier exempt under notification No.1/2009-ST dt.05.01.2009
Mega Exemption Notification 25/12-ST dt.20.0
Transport of passengers by :
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
68/80
07/06/14 Adv. Shailesh Sheth
Transport of passengers by :
air where passengers are embarking or terminating in airports lo
specified states
- Earlier exempt under Notification 27/2010-ST dt. 22.06.2010
contract carriage other than for tourism, conducted tour, charte- Non taxable earlier
Ropeway, cable car or aerial tramway
- Non taxable earlier
Motor vehicle parking to general public excluding leasing of space to
providing such parking facility (omitted w.e.f.01.04.2013 vide Not. N
- Non taxable earlier but liable to tax w.e.f.01.04.2013
Following Services provided to the Government or a local authority o
authority by way of:
Mega Exemption Notification 25/12-ST dt.20.0 Carrying out any activity in relation to any function ordinarily en
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
69/80
07/06/14 Adv. Shailesh Sheth
municipality in relation to:
water supply,
public health, sanitation conservancy,
solid waste management,
slum improvement and upgradation
- Earlier non taxable
Repair or maintenance of a vessel or an aircraft (substituted a vvessel or an aircraft)
General insurance under specified schemes
- Earlier exemption was available for most of the specified schem
Services provided by an incubatee up to a total business turnove
lacs in a financial year subject to certain conditions- Earlier exempt under Notification No.10/2007-ST dt.01.03.2007
Mega Exemption Notification 25/12-ST dt.20.0 General insurance under specified schemes
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
70/80
07/06/14 Adv. Shailesh Sheth
p
- Earlier exemption was available for most of the specified schem
Life Insurance business under specified scheme:
- Janashree Bima Yojana (JYB); or
- Aam Aadmi Bima Yojana (AABY).
[inserted vide Not. No.49/12-ST dt. 24.12.2012]
Services provided by an incubatee up to a total business turnove
lacs in a financial year subject to certain conditions
- Earlier exempt under Notification No.10/2007-ST dt.01.03.2007
Mega Exemption Notification 25/12-ST dt.20.0
Services by an organizer to any person in respect of business exhibition held ou
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
71/80
07/06/14 Adv. Shailesh Sheth
Services by an organizer to any person in respect of business exhibition held ou
- Earlier exempt under Notification No.5/2011-ST dt.01.03.2011
Service by an unincorporated body / entity registered as a society to own mem
reimbursement of charges or share of contribution
as a trade union;
- No such specific exemption earlier
for the provision of exempt services by the entity to third persons; or
- Also exempted earlier
up to an amount of Rs. 5000/- per month per member of housing society/resid
towards common services.- Earlier exempt up to Rs.3,000/- p.m. Notification 8/2007-ST dt.0
- Latest clarification dated 10thJanuary 2014 by CBEC vide Circular N
/2014 -ST- F. No.354/237/2013-TRU Dated 10th January, 2014
Services provided by :
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
72/80
Mega Exemption Notification 25/12-ST dt.20.0
cut and polished diamonds and gemstones; or plain and st
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
73/80
07/06/14 Adv. Shailesh Sheth
cut and polished diamonds and gemstones; or plain and stjewellery of gold and other precious metals- Earlier exempt under Notification 19/2006-ST dt. 25
goods on which duty is payable by the principal manufact- Earlier exempt under Notification 8/2005-ST dt. 01.0
specified processes in the course of manufacture of partssewing machines up to specified limits- Also exempted earlier
Services of :
departmentally run public telephones guaranteed public telephones operating only for local cal free telephone at airport and hospitals where no bills are
issued- Earlier exempt under Notification 3/2006-ST dt. 01.03.20
Mega Exemption Notification 25/12-ST dt.20.0
Services of slaughtering of bovine animals (word Bovine omitted vid
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
74/80
07/06/14 Adv. Shailesh Sheth
Services of slaughtering of bovine animals (word Bovine omitted vid
44/12-ST dt.17.08.2012)
- Non taxable earlier
Services received from service provider located in non-taxable territo the Government, a local authority or governmental authority or
in relation to any purpose other than industry, business or comm
an entity registered under section 12AA of the Income-tax Act, 1
purposes of providing charitable activities
a person located in a non-taxable territory;
- Earlier no such specific exemption
Services of public libraries by way of lending of books, publications o
knowledge-enhancing content or material
- Non taxable earlier
Mega Exemption Notification 25/12-ST dt.20.0 Services by Employees State Insurance Corporation to persons governed under the Employee
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
75/80
07/06/14 Adv. Shailesh Sheth
1948- Non taxable earlier
Services by way of transfer of a going concern, as a whole or an independent part thereof;- Non taxable earlier
Services by way of public conveniences such as provision of facilities of bathroom, washroomurinal or toilets;
- Non taxable earlier
Services by a governmental authority by way of an activity in relation to any function entrusmunicipality under Article 243W of the Constitution;
- Non taxable earlier
Definition of Governmental authority amended to as "governmental authority" means an authany other body;
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by Government, with 90% or more participation by way of equity or control, to c
function entrusted to a municipality under article 243W of the Constitution
[notif no. 02 /2014 dated 30th January 2014]
Mega Exemption Notification 25/12-ST dt.20.0
Recent amendments in Notification:
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
76/80
07/06/14 Adv. Shailesh Sheth
Recent amendments in Notification:
Any service provided by
NSDC set up by GOI
Sector Skill Council approved by NSDC
An assessment agency approved by Sector Skill Coun
A training partner approved by NSDC or Sector Skill C
- In relation to (a) NSDP implemented by NSDC or (b) voc
development course under the National Skill Certificat
Monetary Reward Scheme or (c) any other Scheme im
by NSDC exempted (Entry 9A inserted by Not. No. 13
dt.10.09.2013)
Mega Exemption Notification 25/12-ST dt.20.0
Recent amendments in Notification:
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
77/80
07/06/14 Adv. Shailesh Sheth
Recent amendments in Notification:
Services provided in relation to serving of food or beverag
- by a canteen
- In a factory covered under the Factories Act, 1948
- Having the facility of air conditioning or central air heating
during the year
- Exempted vide Entry No.19 A (inserted vide Not. No.14/13
dt.22.10.2013)
Mega Exemption Notification 25/12-ST dt.20.0
Recent amendments in Notification:
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
78/80
07/06/14 Adv. Shailesh Sheth
Recent amendments in Notification:
Services provided by Cord Blood Banks by way of preserv
cells or any other service in relation to such preservation
- Entry No. 2A (inserted vide Not. No. 4/14-ST dt. 17.02.201
- Background of the insertion of Entry
- Whether such service could be considered as Healthcare
Services by way of loading, unloading, packing, storage or
warehousing of riceexempted
- Entry No. 40 (inserted vide Not. No. 4/14-ST dt. 17.02.201
- Background of the insertion of Entry
- Rice is not agricultural produce ? ! - Political slugfest
Mega Exemption Notification 25/12-ST dt.20.0
Nature and scope of the Entries at Sr. Nos. 12, 13 & 14
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
79/80
07/06/14 Adv. Shailesh Sheth
Nature and scope of the Entries at Sr. Nos. 12, 13 & 14
Distinction between the Entries at Sr. Nos. 12, 13 & 14
Exemption to Sub-contractor providing works contract service
at Sr. No. 29 (h)Scope of the Entry
Exemption to Job worker vide Sr. No. 30 of the Notification
Nature & Scope of the Entry No. 30
Impact of exemption on the entitlement to Cenvat credit in the h
worker
Input used in common for exempted Job work and for the provi
taxable servicewhether Rule 6 would apply?
-
8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth
80/80
07/06/14 Adv. Shailesh Sheth
Thank You