Procedure for e-payment

PROCEDURE FOR E-PAYMENT

1.   To pay Excise Duty and Service Tax online, the Assessee has to enter the 15 digit Assessee Code allotted by the jurisdictional Commissionerate.

2.   There will be an online check on the validity of the Assessee Code entered.

3.   If the Assessee code is valid, then corresponding assessee details like Name, Address, Commissionerate code  etc. as present in the Assessee Code Master will be displayed.

4.   Based on the Assessee Code, the duty / tax i.e. excise duty or service tax to be paid will be automatically selected.

5.   The Assessee is required to select the type of duty / tax to be paid by clicking on <91>Select Accounting Codes for Excise<92> or <91>Select Accounting Codes for Service Tax<92> depending on the type of duty / tax to be paid.

6.   At a time the assessee can select upto six Accounting Codes.

7.   The assessee should also select the bank through which payment is to be made.

8.   On submission of data entered, a confirmation screen will be displayed. If the taxpayer confirms the data entered in the screen, it will be directed to the net-banking site of the bank selected.

9.   The taxpayer will login to the net-banking site with the user id/ password provided by the bank for net-banking purpose and enter payment details at the bank site.

10. On successful payment, a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made.

Note:

Excise or service tax payment done through ICICI Bank, HDFC Bank and Axis Bank can be done by assesses for select commissionerates only. For all other banks authorized for collection of excise duty or service tax, payment can be made for all commissionerates.  

Circular No. 152/3 /2012-ST,dated 22nd February, 2012

Toll in the nature of ‘user charge’ or ‘access fee’ paid by roads users under  Business Auxiliary Service [section 65(105) (zzb) in certain case.

           

1.         Not Liable to service tax

Service tax is not leviable on toll paid by the users of roads, including those roads constructed by a Special Purpose Vehicle (SPV) created under an agreement between National Highway Authority of India (NHAI) or a State Authority and the concessionaire (Public Private Partnership Model, Build-Own/Operate-Transfer arrangement).

Reason:            1.Tolls collected under the PPP model by the SPV is collection on own account and not on behalf of the person who has made the land available for construction of the road.

                        2. SPV formed as a result of agreement between NHAI or State Authority and the concessionaire under the BOT arrangement, cannot be considered as an agent of the NHAI.

3. Renting, leasing or licensing of vacant land by the NHAI or State Authority to an SPV for construction of road and such construction do not attract service tax.

2.         Liable to service tax

If the SPV engages an independent entity :

a. To collect toll from users on its behalf and a part of toll collection is retained by that independent entity as commission or is compensated in any other manner

b. Then  service tax liability arises on such commission or charges, under the Business Auxiliary Service [section 65(105) (zzb) read with section 65(19) of the Finance Act, 1994].

A Study on Sec 65(105)(zzzza) Works Contract Service:

1. Means a contract of service in which transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods (VAT etc).

2.  Does not include Works Contracts in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.

3. To differentiate with Work Contact  services with Other Construction services under various other sections, If transfer of property is not involved leviable under VAT then it shall be  classified  as Works Contract  or in all other cases it taxable as services  under the respective their sections. Assesee may make  pre analysis, plan and choose the best alternative as a matter of tax planning.

Rules related to Works Contract Services:

            1. Rule 2A of Service Tax ( Determination of Value)Rules 2006

            2. Works Contract (Composition Scheme for payment of Service Tax) Rules,2007

A.Provisions of  Rule 2A of Service Tax ( Determination of Value)Rules 2006

1. Value of transfer of property in goods involved  - the valve adopted for the purpose of VAT

2. Gross values does not include VAT or sales Tax amount.

3. Value of Works contact service shall include:

            a. Labour charges

            b. Amount paid to Sub contactors for labour and Services.

            c. Planning, designing, and architect fee charges.

            d. Hire charges for machines, tools used.

            e. Cost of consumables ,water, electricity, fuels etc.

            f. Profit earned.

4. No Cenvat credit on inputs whose property is transferred under VAT.

B. Provisions of  Works Contract (Composition Scheme for payment of Service Tax) Rules,2007

1.     Has an option to pay 4% of gross amount as Service Tax instead of rate specified U/s 66 (10.3%).

2.      Gross Amount shall be:

a. Includes-    1. Value of all goods used in the contract whether supplied under any contract or not (Eg: Goods provided by the service receiver).

2. Value of any services required to be provided.

b. Excludes-   1.       Value of VAT or Sales Tax.

2. Value of Machines and Tools used in the execution ( ie, Value of asset owned by service provider which is  used for the service).

3.  Cenvat Credit

a. No Cenvat credits on Inputs ( ie, on goods), but credits on capital goods can be taken.

b. Full Cenvat credit on Input services.

c. But Cenvat credit on Input services on following services only @40 % thereof ( Applicable only if the input service provider has paid tax on full value of service, ie , without availing abatement U/n no 1/2006 ST dt 1/3/2006).

1. Erection, commissioning & Installation Services (Sec 65(105)(zzd).

2. Commercial or Industrial construction Service (Sec 65(105)(zzq).

3. Construction of Complex Services (Sec 65(105)(zzzh).

4. Option once exercised cannot be withdrawn until completion of works contract.

5. Option permissible only when declared value of works contract is less than or equal to the gross amount charged (Actual bill).

6. Works contract on the following cases is exempt:

1. In relation to port or other port (Finishing and repairing services are not exempted).

2. Canals used primarily for other than commercial and industry.

3. Construction or finishing of residential complex under JNNURM & RAY (Even completion and finishing services is exempt).

4. Construction of Dams, Buildings, Infrastructure etc by Government.

C. Illustration

Service tax liability U/s Sec 65(105)(zzza)  Works Contract Service

Details of M/s Veda Constructions Mumbai is as follows in respect  of a proposed project which as the following budgeted figures.

Particulars	Amount in Lakhs (Rs)
Value of Contract (Inclusive of VAT)	520
VAT @ 4%
Value of inputs used  (Incl: Excise duty @8.24%)-Treated as sale for VAT	324.72
Value of Services used (Input credit @10.3%)	100
The above services includes 1. Commercial or Industrial construction Service U/s 65(105)(zzq).- input service provider has paid tax on full value of service, ie ,without availing abatement U/n no 1/2006 ST dt 1/3/2006.	20
Capital goods purchased during the year (Excise duty @8.24%)	75

Assesee can choose either of the options ( Rule 2A or Composition scheme)

A. Value  under the Provisions of  Rule 2A of Service Tax ( Determination of Value) Rules 2006 and Service tax Liabilitiy – IF OPTED

Particulars	Amount in Lakhs (Rs)
Value of Contract (Inclusive of VAT)	520
Less :VAT @ 4% (520*4/104)	20
Gross Value	500
Less:  Value of inputs used Treated as sale for VAT (Inclusive of Cenvat credit, because i.e.  the actual cost to the assesee)	324.72
Gross Value under the  Provisions of  Rule 2A	175.28
Service tax liability@ 10.3%	18.054
Less:
Cenvat credit on inputs	NIL
Cenvat credit on input services (on all services) ( Rs 100@10.3%)	10.3
Cenvat credit on capital goods (Rs 75*8.24%)@50%	3.09
Net Service tax liability	4.664

B. Value under the  Provisions of  Works Contract (Composition Scheme for payment of Service Tax) Rules,2007 and Service tax Liability – IF OPTED    

Particulars	Amount in Lakhs (Rs)
Value of Contract (Inclusive of VAT)	520
Less :VAT @ 4% (520*4/104)	20
Gross Value under the  Provisions of  Composition Scheme	500
Service tax liability@ 4.12%	20.6
Less:
Cenvat credit on inputs	NIL
Cenvat credit on input services (Rs 100- Rs 20)@10.3%	8.24
Cenvat credit on input services on Commercial or Industrial construction Service  U/s 65(105)(zzq).- input service provider has paid tax on full value of service, ie ,without availing abatement U/n no 1/2006 ST dt 1/3/2006.  (Rs 20 @10.3% but limited to 40%)	0.824
Cenvat credit on capital goods (Rs 75*8.24%)@50%	3.09
Net Service tax liability	8.446

On the basis of above it can be concluded that opting the Provisions of  Rule 2A of Service Tax ( Determination of Value) Rules is the best option  for the assesee.

U/s 65 (105)(zzzh) Construction of Residential Complex Service.

Assesees has to find the optimum Liability (Least) from the following available options:

1.If Cenvat credit taken on inputs/Capital goods/input services.

2. If avails Notification 12/2003-ST.

3. If Abatement @ 75% when Gross Amount include Value of Materials And Land

4. If Abatement @ 67% when Gross Amount include Value of Materials BUT NOT Land

Abatements shall not apply if the following is availed:

1. Cenvat credit on inputs/Capital goods/input services.

2. Service Provider availed benefit of exemption U/n 12/2003-ST.( in respect of value of goods and materials sold by him to the service recipient )

Quantum of Abatements if Gross amount Charged included:

                        1. Value of Materials And Land: Abatement @ 75%.

                        2. Value of Materials BUT NOT Land:  Abatement @ 67%.

Illustration:

Ms Abbat Constructions Mumbai has the following details                            Particulars                                                                             Rs in Lakhs

1. Value of Land used for Building apartment                                    50000

2.  Value of the apartment ( Inc: Service & Inputs )                           120000

            ( Service - 50000 , Inputs - 70000)

                        Total                                                                            170000

Costs Incurred for Ms Abbat:

1. Value of Excisable inputs used                                                       60000

2. Value of Specific Capital goods used                                             15000

3. Value of Input services used                                                          10000

Excise duty @ 8.24% and Service Tax @ 10.3% extra

                                                           

Selection of the optimum Liability:

Step 1

If Cenvat credit taken on inputs / Capital goods /

input services.

Value of Apartment (Gross amount charged)                                    120000

Service Tax  Liability @10.3%                                                           12360

Less: Cenvat credit Taken on

            1. Inputs 60000 @ 8.24%                                                       4944

            2. Capital Goods 15000 @ 8.24% (100% taken)                   1236

            3. Input Services 10000 @ 10.3%                                          1030   

            Service tax payable                                                              5150

Step 2

If Service Provider avails benefit of exemption

U/n 12/2003-ST

Value of Services (Gross amount charged)                                       50000

Service Tax Liability @10.3%                                                                        5150

Less: Cenvat credit Taken on

            1. Inputs 60000 @ 8.24%( Not Available U/n 12/2003)          Nil

            2. Capital Goods 15000 @ 8.24% (100% taken)                   1236

            3. Input Services 10000 @ 10.3%                                          1030   

            Service tax payable                                                              2884

Step 3

If Abatement @75% - when Gross Amount include

Value of Materials And Land

Total Value (Gross amount charged)                                                 170000

Less:    Abatement @75%                                                                  127500

            Taxable Value                                                                         42500

             Service tax payable @ 10.3%                                             4378

Step 4

If Abatement @ 67% - when Gross Amount include Value

of Materials BUT NOT Land

Total Value (Gross amount charged)                                                 120000

Less:    Abatement @ 67%                                                                 80400

            Taxable Value                                                                         39600

             Service tax payable @ 10.3%                                             4079

Summary Analysis:

Option	Cenvat Credit	12/2003 ST	Abetment	Abetment
	Taken	Availed	67%	75%
Service Tax Payable	5150	2884	4378	4079

It shall be concluded that Availing Notification no 12/2003 ST is the best option in the case of Ms Abbat Constructions Mumbai