A PICTORIAL REPRESENTATION
1. Liability to pay the service tax on a taxable service arise:
As per these Rules point of taxation Rules
2011:
a. the
time
when the invoice for the service provided or agreed to be provided is
issued;
b. if invoice is not issued within prescribed time period( 30 days
except for specified financial sector where it is 45 days) of completion of
provision of service then the date of completion of service;
c. the date of receipt of payment where payment is received before issuance of
invoice or completion of service (Advance).
2.The scope of Taxability of Services
A.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 :
1.
provided or agreed to be provided by a person to another,
2. in
the taxable territory,
3. and
should not be specified in the negative list.
B. Apart from the above, if a service is declared as declared
service U/s 66E then the liability for service tax if provided by a person form
another person on consideration. However exemptions can be availed on those
taxable services which are covered under exemption notification that have been
issued under section 93 of the Act of which the main exemption no. 25/2012-ST
dated 20/6/12 has 39 heads (mega notification).
.
C. And again Exemption Notification no 33/2012 dt
20/6/2012. can be claimed by small service providers:
a. If in the previous
financial year the aggregate value of taxable services provided by you was
less than Rs. 10 lakh
b.
And in the present financial year the aggregate value of taxable
services provided by you is also less than Rs.10 lakh,
c.
Once the threshold of Rs 10 lakh is crossed Service Tax liability arises in that
financial year and cannot claim the exemption for the next financial year.
3. An Analysis of Section
66B:
A. Provided or agreed to be provided means:
a. Services which have only been agreed to be
provided but are yet to be provided are taxable.
b. Receipt
of advances for services agreed to be provided become taxable before
the actual provision of service
c. 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.
B. Provided in the
taxable territory
a.
Taxable territory has been defined in section 65B of the Act as the territory
to which the Act applies i.e. the whole of territory of India other than the State
of Jammu and Kashmir.
b.
"India" includes not only the land mass but its territorial waters,
continental shelf, exclusive economic zone or any other maritime zone as
defined in the Territorial Waters, Continental Shelf, Exclusive Economic Zone
and Other Maritime Zones Act, 1976 (- of 1976); the sea-bed and the subsoil
underlying the territorial waters; the air space above its territory and
territorial waters; and the installations structures and vessels located in the
continental shelf of India and the exclusive economic zone of India, for the
purposes of prospecting or extraction or production of mineral oil and natural
gas and supply thereof.
c.
Place of Provision of Service Rules, 2012 have been made which determine the
place of provision of service depending on the nature and description of
service.
C. Service specified in
the 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 66 D.
The following nine activities have been specified in section 66D.
(a) Services by Government or a local authority
excluding the following services to the extent they are not covered elsewhere:
(i) services by the Department of Posts by
way of speed post, express parcel post, life insurance, and agency services
provided to a person other than Government;
(ii) services in relation to an aircraft or a
vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers; or
(iv) support services, other than services covered
under clauses (i) to (iii) above, provided to business entities.
(b) Services by the Reserve bank of India.
(c) Services by a foreign diplomatic mission
located in India.
(d) Services relating to agriculture or
agricultural produce by way of -
(i) agricultural operations directly related
to production of any agricultural produce including cultivation, harvesting,
threshing, plant protection or seed testing;
(ii) supply of farm labour;
(iii) processes carried out at an agricultural farm
including tending, pruning, cutting, harvesting, drying, cleaning, trimming,
sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and
such like operations which do not alter essential characteristics of
agricultural produce but make it only marketable for the primary market;
(iv) renting or leasing of agro machinery or vacant
land with or without a structure incidental to its use;
(v) loading, unloading, packing, storage or
warehousing of agricultural produce;
(vi) agricultural extension services;
(vii) services by any Agricultural Produce
Marketing Committee or Board or services provided by a commission agent for
sale or purchase of agricultural produce.
(e) Trading of goods.
(f) Any process amounting to manufacture or
production of goods.
(g) Selling of space or time slots for
advertisements other than advertisements broadcast by radio or television.
(h) Service by way of access to a road or a bridge
on payment of toll charges.
(i) Betting, gambling or lottery.
(j) Admission to entertainment events or
access to amusement facilities.
(k) Transmission or distribution of electricity by
an electricity transmission or distribution utility.
(l) Services by way of -
(i) pre-school education and education up to
higher secondary school or equivalent;
(ii) education as a part of a curriculum for
obtaining a qualification recognized by law;
(iii) education as a part of an approved vocational
education course.
(m) Services by way of renting of residential
dwelling for use as residence;
(n) Services by way of -
(i) extending deposits, loans or advances in
so far as the consideration is represented by way of interest or discount;
(ii) inter-se sale or purchase of foreign
currency amongst banks or authorized dealers of foreign exchange or amongst
banks and such dealers;
(o) Service of transportation of passengers, with
or without accompanied belongings, by -
(i) a stage carriage;
(ii) railways in a class other than -
(A)
first class; or
(B) an
air conditioned coach;
(iii) metro, monorail or tramway;
(iv) inland waterways;
(v) public transport, other than
predominantly for tourism purpose, in a vessel between places located in India;
and
(vi) metered cabs, radio taxis or auto rickshaws;
(p) Services by way of transportation of goods -
(i) by road except the services of -
(A) a
goods transportation agency; or
(B) a
courier agency;
(ii) by an aircraft or a vessel from a place
outside India up to the customs station of clearance in India; or
(iii) by inland waterways;
(q) Funeral, burial, crematorium or mortuary
services including transportation of the deceased.
4. 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 instalments;
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.
The above activities
when carried out by a person for another for consideration would amount to
provision of service.
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