by-ca. ankit agarwal chartered accountant amendments in service tax 1

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BY-CA. ANKIT AGARWALChartered Accountant

AMENDMENTS IN SERVICE TAX

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• Amendments in Various Notifications:-

Mega Exemption Notification [N/No. 25/2012-ST, dated 20-06-

2012].

Abatements under [N/No. 26/2012-ST, dated 20-06-2012].

Reverse Charge under [N/No. 30/2012-ST, dated 20-06-2012].

• Amendments in Various Sections of Chapter V of Finance Act,

1994

• Other Amendments

3


Rules/ Provisions Original Notification as amended

Amendment Reference

Mega Exemption N/No. 25/2012-ST, dated 20-06-2012

06/2015-ST, dated 01-03-2015

Reverse Charge N/No. 30/2012-ST, dated 20-06-2012

07/2015-ST, dated 01-03-2015

Abatements N/No. 26/2012-ST, dated 20-06-2012

08/2015-ST, dated 01-03-2015

1. In Important Notifications

Amendments Substitution with New

Section 65B Section 76

Section 66B Section 78

Section 66D

Section 66F Insertion

Section 67 Section 78B

Section 73

Section 86 Omission

Section 94 Section 80

2. In Chapter V of Finance Act, 1994

3. Other Amendments

Other Amendments

• Revision in Composite Rate on Specified Services

• Swachh Bharat Cess @ 2% [On Taxable Value of All / Specified Taxable

Services]

• Time limit for taking CENVAT Credit on inputs and input services is being increased from 6 months to 1 year.

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Mega Exemption Notification

N / N o . 0 6 / 2 0 1 5 -S T

MEGA EXEMPTION NOTIFICATION

N/No.-25/2012-ST, DATED 20-06-2012, as

amended

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Serial No. 2

N / N o . 0 6 / 2 0 1 5 -S T

Old Provisions New /Amended Provisions

Health care services by a clinical establishment, an authorised medicalpractitioner or para-medics;

1. Health care services by a clinical establishment, an authorised medicalpractitioner or para-medics

2. Services provided by way of transportation of a patient in an ambulance other than above

NewW.E.F.

01.04.2015Effect:

Earlier only ambulance services provided by a clinical establishment etc. were tax free but now all ambulance services have been exempted from tax.


6

Serial No. 16

Old Provisions New /Amended ProvisionsServices by a performing artist

In folk or classical art forms of (i) Music/(ii) dance/(iii) theatre

Services by an artist by way of a performance In folk or classical art forms of (i) Music/(ii) dance/(iii) theatre,

If the consideration charged for such performance is not more than Rs. 1,00,000/- (One

lakh rupees).

Services provided by such artist as A Brand Ambassador shall not be exempt.

Services provided by such artist as A Brand Ambassador shall not be exempt.

NewW.E.F.

01.04.2015


N / N o . 0 6 / 2 0 1 5 -S T

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Serial No. 26A


Services of life insurance business provided under following schemes -

Services of life insurance business provided under following schemes -

a. Janashree Bima Yojana (JBY); orb. Aam Aadmi Bima Yojana (AABY

)

a. Janashree Bima Yojana (JBY); orb. Aam Aadmi Bima Yojana (AABY)

c. Varishtha Pension Bima YojanaNewW.E.F.

01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T


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New Serial No. 43, 44, 45, 46

New Sl.

No.

New Exemption

43 Services by operator of Common Effluent Treatment Plant by way of treatment of effluent;

44 Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables;

45 Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo;

46 Service provided by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members.

NewW.E.F.

01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T


9

New Serial No. 47

New ExemptionCondition for ExemptionServices by way of right to admission

to:

(i) Exhibition of :• Cinematographic film,• Circus, • Dance, or • Theatrical performance

including drama or ballet;

Exemption without any limit i.r.t. entry fee.

(ii) recognised sporting event; Exemption without any limit i.r.t. entry fee.

(iii) • Award function, • Concert, • Pageant, • Musical performance or• Any sporting event other than a

recognised sporting event,

New Exemptions

(Date to be notify)

CONDITION FOR EXEMPTION:

Where Consideration for admission (may be called as entry fees) is not more than Rs. 500 per person.

N / N o . 0 6 / 2 0 1 5 -S T


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Serial No. 12Services provided to By way of

• Government, • a Local Authority or • a Governmental Authority

• Construction, • Erection, • Commissioning

,

• Installation, • Completion, • Fitting out,

• Repair, Maintenance,• Renovation, or • Alteration of

followings-

a) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;

b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

c) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

d) canal, dam or other irrigation works;

e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or

f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of Act;

Clause (a), (c), (f) Omitted w.e.f. 01.04.2015

Effects: Now Taxable



N / N o . 0 6 / 2 0 1 5 -S T


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Serial No. 14

Services provided

By way of

of Original Work pertaining to followings-

• Construction, • Erection, • Commissioning,• Installation,

(a) an a i rpo r t , po r t or railways, including monorail or

metro;

(b) Remain same as earlier……….

(c) Remain same as earlier……….

(d) Remain same as earlier……….

(e) Remain same as earlier……….

Words Omitted w.e.f.

01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T


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Clause (i) of Serial No. 20

Services providedBy way of

of Following Goods:Transportation by RAIL or A VESSEL

from one place in India to another

W.E.F. 01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T


• FLOURS, PULES AND RICE.


Foodstuff including

•Flours,

•tea,

•coffee,

• jaggery,

•sugar,

•Milk Products,

•Salt and

•edible oil,

Excluding alcoholic beverages.

•tea,

•coffee,

• jaggery,

•sugar,

•edible oil,

•excluding alcoholic beverages.

Agricultural Produce is separately exempt which would continue [Clause (h) of Serial No. 20]

MILKSALT

FOOD GRAINS including-

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Clause (d) of Serial No. 21Services provided

By By way of

of Following Goods:• Good Transport Agency

Transport in a Goods carriage

• FLOURS, PULES AND RICE.

W.E.F. 01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T



Foodstuff including

•Flours,

•tea,

•coffee,

• jaggery,

•sugar,

•Milk Products,

•Salt and

•edible oil,

Excluding alcoholic beverages.

•tea,

•coffee,

• jaggery,

•sugar,

•edible oil,

•excluding alcoholic beverages.

FOOD GRAINS including-

Agricultural Produce is separately exempt which would continue [Clause (a) of Serial No. 21]

MILKSALT

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Serial No. 29

Services provided BY Following Persons in respective capacities:

a) Same as earlier………

b) Same as earlier………

c) mutual fund agent to a mutual fund or asset management company;

d) distributor to a mutual fund or asset management company;

e) selling or marketing agent of lottery tickets to a distributer or a selling

agent;

f) Same as earlier………

g) Same as earlier………

h) Same as earlier………

Clause (c), (d) and (e) are Omitted W.E.F. 01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T


Effect:Therefore, these 3 services are now taxable. Also brought under the ambit of full reverse charge mechanism i.e. 100% Reverse Charge Mechanism (RCM) has been introduced for these 3 services.

Also amendments in Expln. 2 to “Service”

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Serial No. 30

Carrying out an intermediate production process as job work in relation to-

a) Remain same as earlier………

b) Remain same as earlier………

c) Any Goods on which appropriate duty is payable by the principal manufacturer

d) Remain same as earlier………

EXCLUDING ALCOHOLIC LIQOURS FOR HUMAN CONSUMPTION

Date to be notify

Effect of inserting such exclusion: Service tax to be levied on service by way of carrying out any processes as job work for production or manufacture of alcoholic liquor for human consumption.

N / N o . 0 6 / 2 0 1 5 -S T


Note: Also corresponding amendment has been made in Negative List

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Serial No. 32 has been fully omitted

Service by way of making telephone calls from :

(a) Departmentally run public telephone;

(b) Guaranteed public telephone operating only for local calls; or

(c) Free telephone at airport and hospital where no bills are being issued;

Omitted W.E.F. 01.04.2015

N / N o . 0 6 / 2 0 1 5 -S T


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N/No. 07/2015-ST

Reverse Charge Mechanism

(RCM)N / N o . 0 6 / 2 0 1 5 -S T


N/No.-30/2012-ST, dated 20-06-2012, as

amended

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Change under existing Services


N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

Services

Old Provision New Provision

Service Provide

r

Service Receive

r

Service Provide

r

Service Receive

r

•Manpower Recruitment Agency

•Security Service 25% 75% Nil 100%

Effect:“JOINT CHARGE” system has been changed to the “100% REVERSE CHARGE” system. Therefore, the service receiver will be liable for the 100% liability in this regard.

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N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

Taxable Services provided or agreed to be Provided

by:

To Service Receiver Liable to Pay ST under

RCM

With Effect From

•a person involving an aggregator in any

manner

•Any Person100%

01.03.2015Effect:

Booking a cab via web-based aggregators such as Meru, Uber and TaxiforSure is likely to cost you more. Any company providing service under the aggregator model will be liable to pay service tax. Also, the service tax will be levied on the total fare and not just the commission being earned by the aggregators for every ride.

New Services under RCM

Corresponding amendments in STR, 1994: [vide N/No. 5/2015-ST, dated 01-03-2015] New Definition under Rule 2(1) has been inserted as follows:

(aa) “aggregator” means a person, who owns and manages a web based software application, and by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular kind under the brand name or trade name of the aggregator.

(bca) “brand name or trade name” means, a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as an invented word or writing, or a symbol, monogram, logo, label, signature, which is used for the purpose of indicating, or so as to indicate a connection, in the course of trade, between a service and some person using the name or mark with or without any indication of the identity of that person

New Clause under sub-clause (i) of Rule 2(1)(d) “Person liable for paying service tax”:(AAA)………………………………………………(refer notification)

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N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

Taxable Services provided or agreed to be Provided

by:

To Service Receiver Liable to Pay ST under

RCM

With Effect From

• Mutual Fund Agent, or

• Distributor

•Mutual Fund or

•AMC100%

01.04.2015

• Selling or Marketing Agent of

lottery tickets

•Lottery distributor or

•Selling Agents

100%01.04.20

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Effect:Earlier these services are exempted under Mega Exemption List, Now These are made taxable under 100% Reverse Charge Mechanism (RCM).

New Services under RCM

Entry 29 of Mega Exemption List Also amendments in Expln. 2 to “Service”

Corresponding amendments in STR,1994: [vide N/No. 5/2015-ST, dated 01-03-2015]

New Clause under sub-clause (i) of Rule 2(1)(d) “Person liable for paying service tax”:(EEA)………………………………………………(refer notification)(EEB) ………………………………………………(refer notification)

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N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

N/No. 08/2015-ST

ABATEMENTS

Abatement Provisions

N/No.-26/2012-ST, dated 20-06-2012, as

amended

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N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

Description of Taxable Services

Taxable Value

New Condition

Old New

2. Transport of Goods by RAIL.

30% (No Change)

No CENVAT of Inputs, Capital Goods or Input Service can be taken.(Earlier abatement without any condition, Now This condition has been newly inserted, rest all remained same)

3. Transport of Passengers, by RAIL

with or without accompanied belongings

7. GTA Service 25% 30% No CENVAT of Inputs, Capital Goods or Input Service can be taken.

10. Transport of Goods in a Vessel

40% 30%

No CENVAT of Inputs and Capital Goods Can be taken.CENVAT on Input Services of renting of Motorcab is allowed to taken in taken in specified manner. (No Changes in this condition)

5. Transport of passengers by AIR, with or without accompanied

belongings in

(i) Economy Class

(ii) Other than Economy Class

60%

60%

40%

60%

No CENVAT of Inputs and Capital Goods Can be taken.(No Changes in this condition)[Now, New Categories viz. Economy and Other Class has been inserted]

8. Services provided in relation to Chit

Fund70 N.A.

Entry Deleted, meaning thereby No Abatement., Also an Explanation has been added to “Service”

N/No. 08/2015-ST

ABATEMENTS

Amendment in Value & Conditions.

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N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

N/No. 08/2015-ST

ABATEMENTS

Clause (j) of section 66D

Section 66D

Negative List

Earlier Position:Following service was defined in the negative list under clause (j):“admission to entertainment events or access to amusement facilities”

“Entertainment Event" means

Which is intended to provide

By way of Exhibition of

•An event or •A performance,

•Recreation,•Pastime, •Fun or •Enjoyment

•Cinematographic Film, •Circus, •Concerts, •Sporting Event, •Pageants, •Award Functions,

•Dance, •Musical or •Theatrical performances Including drama, ballets or any such event or programme

“Amusement Facility" means By means of In

A facility where fun or recreation is provided

•Rides,

•Gaming Devices

or

•Bowling Alleys

•Amusement Parks,•Amusement Arcades, •Water Parks, •Theme Parks or •Such Other Places

But does not include:A place within such facility where other services are provided.

Clause (9) of Sec. 65B


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N/No. 07/2015-ST


(RCM)N / N o . 0 6 / 2 0 1 5 -S T

N/No. 08/2015-ST

ABATEMENTS

Clause (j) of section 66D

Section 66D

Negative List

Position after amendment:Clause (j) has been omitted from Negative List“admission to entertainment events or access to amusement facilities”

“Entertainment Event" means

Which is intended to provide

By way of Exhibition of

•An event or •A performance,

•Recreation,•Pastime, •Fun or •Enjoyment

•Cinematographic Film, •Circus, •Concerts, •Sporting Event, •Pageants, •Award Functions,

•Dance, •Musical or •Theatrical performances Including drama, ballets or any such event or programme



•Rides,

•Gaming Devices

or

•Bowling Alleys





Now this service has been removed from Negative List Wait………

Scope of services has been reduced and made tax free but from Exemption Route

(Now defined under Mega Exemption Notification)

25

N/No. 07/2015-ST


(RCM)

Clause (j) of section 66D, Now Entry No. 45 of Mega Exemption List

N/No. 08/2015-ST

ABATEMENTS

Section 66D

Negative List

N / N o . 0 6 / 2 0 1 5 -S T




•Rides,

•Gaming

Devices,

•Bowling Alleys .



Earlier defined in Negative List

Services by way of admission to

•A Museum, •National Park, •Wildlife Sanctuary, •Tiger Reserve Or •Zoo;

New Entry No. 45 in Mega Exemption List (W.E.F. 01.04.2015)

Therefore, entry to amusement facilities such as rides, gaming, bowling alleys, amusement parks, water parks etc made taxable. Only Admission to a Museum, National Park, Wildlife Sanctuary, Tiger Reserve or Zoo are made exempted.

26

N/No. 07/2015-ST


(RCM)

Clause (j) of section 66D, Now Entry No. 47 of Mega Exemption List

N/No. 08/2015-ST

ABATEMENTS

Section 66D

Negative List

N / N o . 0 6 / 2 0 1 5 -S T


Earlier defined in Negative List Now defined under Mega Exemption ListNew Exemption under Entry No. 47

Condition for ExemptionServices by way of right to admission to:

(i) Exhibition of :• Cinematographic film,• Circus, • Dance, or • Theatrical performance including drama or ballet;

Exemption without any limit i.r.t. entry fee.(ii) recognised sporting event;

(iii) • Award function, • Concert, • Pageant, • Musical performance or• Any sporting event other than a recognised sporting

event,

CONDITION FOR EXEMPTION:

Where Consideration for admission (may be called as entry fees) is not more than Rs. 500 per person.Now, For services referred into point (iii), a Condition of entry fee (Max.

Rs. 500/-) per person has been imposed.

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In Chapter V of Finance Act, 1994

Amendments Substitution with New

Section 65B [Date of Enactment]/ [Date to be Notify]

Section 76[Date of Enactment]

Section 66B[Date of Enactment]/ [Date to be Notify]

Section 78 [Date of Enactment]

Section 66D[Date of Enactment]/ [Date to be Notify]

Section 66F [Date of Enactment] Insertion


Section 78B (Transitory Provisions)

[Date of Enactment]


Section 86 [Date of Enactment] Omission

Section 94 [Date of Enactment] Section 80 [Date of

Enactment]

Sec.

65B

Sec.

66B

Sec.

66D

Sec.

66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec.

78B

Sec. 80

28

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80

Clause Definition Inserted Clause Definition Deleted

(23A) Foreman of Chit fund (9) Amusement Facility-(already discussed)

(26A) Government (24) Entertainment Event-(already discussed)

(31A) Lottery Distributer or Selling Agent (49) Support Service [Read with Sec. 66D(a)]

Clause Explanation Substituted Clause Omission of Word

(44) Explanation 2 to “Service” (40) The word Alcoholic liquors for human consumption” has been omitted in the Definition of “Process amounting to Manufacture or Production of Goods”


Date of Enactment

Date to be Notify

Note:Corresponding amendments in section 65B as referred above are made as result of amendment made in Mega Exemption Notification and Negative List.

Section 65B : Interpretations

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“Government” Means

• Departments of the Central Government, • A State Government and its Departments and • A Union territory and its Departments,

But shall not include -Any entity, whether created by a statute or otherwise, the accounts of which are not required to be kept in accordance with article 150 of the Constitution or the rules made there-under.

“Foreman of Chit Fund”

“Foreman of chit fund” shall have the same meaning as is assigned to the term foreman” in clause (j) of section 2 of the Chit Funds Act, 1982.

“Foreman" means the person who under the chit agreement is responsible for the conduct of the chit and includes any person discharging the functions of the chit and includes any person discharging the functions of the foreman under section 39.

Clause (23A)

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


“Lottery Distributor or Selling Agent” Means

A person appointed or authorised by a State for the purposes of promoting, marketing, selling or facilitating in organising lottery of any kind, in any manner, organized by such State in accordance with the provisions of the Lotteries (Regulation) Act, 1998’

Corresponding Changes: This has been omitted from explanation(i) to rule 6(7C) of STR, 1994

Clause (26A)

Clause (31A)

Date of Enactment

Date of Enactment

Date of Enactment

30

“Service” meansAny activity carried out by a person for another for consideration, and includes a declared service, but shall not include-(a) an activity which constitutes merely,––

(i)………………(ii)……………..(iii) a transaction in money or actionable claim.

(b) …………………………….(c) …………………………….Explanation 1, 3 and 4 are same as earlier…….Explanation 2 –“Transaction in money or actionable claim” shall not include–

(i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

(ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out–

a) by a lottery distributor or selling agent in relation to promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind, in any other manner;

b) by a foreman of chit fund for conducting or organizing a chit in any manner.

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Explanation 2 to clause (44) has been substituted

Removed from Mega Exemption List

Covered under RCM

Abatement Withdrawn

Double Exclusion clause .i.e. Activity

referred in Explanation 2 below have been

brought within the meaning of “Service”.

Date of Enactment

nwljk

31

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


“Process Amounting to Manufacture or Production of Goods” means

• A process on which duties of excise are leviable under section 3 of the Central Excise Act, 1944, or

• The Medicinal and Toilet preparation (Excise Duties) Act , 1955 (16 of 1955), or • Any process amounting to manufacture of -

Alcoholic Liquors For Human Consumption, Opium, Indian Hemp and Other Narcotic Drugs and Narcotics on which duties of excise are leviable under any State Act.

The “Process Amounting to Manufacture or Production of Goods” was covered under the Negative List [Clause (f) of section 66D], Now This Clause of Negative List has been substituted, namely- “Services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption”.

Omitted

Effect: Now “Any Process amounting to Manufacture of Alcoholic Liquors For Human Consumption” has been made out of the purview of Negative List, So now liable to ST.Note: Also corresponding amendment has been made in clause (40) of Mega Exemption List to tax the any intermediate Process related to Alcoholic Liquors For Human Consumption.

Date to be notify

nwljk

Date to be

notify

Clause (40)

32

Rate of Service Tax

There shall be levied a tax (hereinafter referred to as the service tax)

at the rate of twelve per cent.

On the value of all services, provided or agreed to be provided in the taxable territory

By one person to another

Other than those services specified in the Negative List.

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Charge of Service Tax

EC and SHEC shall be subsumed in the new service tax rate. The revised rate shall come into effect from a date to be

notified.

Date to be notify

fourteen per-cent (14%)

EC and SHEC

33

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Clause Amendments

(a) In sub-clause (iv), for the words “support services”, the words “any service” shall be substituted.

(f) Substituted with namely:-

“Services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption”.

(i) In Clause (i), “Betting, Gambling or Lottery”

Following Explanation shall be inserted, namely:—

‘Explanation.– For the purposes of this clause, the expression “betting, gambling or lottery” shall not include the activity specified in Explanation 2 to clause (44) of section 65B’

( j) Admission to entertainment event or access to amusement facilities has been omitted.

Section 66D [Negative List of Services]

Date to be notify

nwljk

34

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Clause (a)

Services by Govt./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,

Taxable[No Change with regard to

sub-clauses (i) to (iii)](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,

(iv) Support services,

(Other than services covered under clauses (i) to (iii) above, Provided to Business Entities)

Earlier the residuary charge under 66D(a)(iv) was only on support service. Now the same has been extended to all services.

Section 66D [Negative List of Services]

Any Services

Date to be notify

Effect: All services provided by the Government or local authority to a business entity, except the services that are specifically exempted and defined under Negative List.

35

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


(1) Unless otherwise specified, reference to a service (herein referred to as “main service”) shall not include reference to a service which is used for providing main service.

Now, following example has been added to this sub-section(1), namely:-

‘IllustrationThe services by the RBI, being the main service within the meaning of clause (b) of section 66D, does not include any agency service provided or agreed to be provided by any bank to the RBI. Such agency service, being input service, used by the RBI for providing the main service, for which the consideration by way of fee or commission or any other amount is received by the agent bank, does not get excluded from the levy of service tax by virtue of inclusion of the main service in clause (b) of the negative list in section 66D and hence, such service is leviable to service tax.’.

(2)………….. Same as earlier …………

(3)………….. Same as earlier …………

Sec. 66F : Principals of interpretation of specified descriptions of services or bundled services

Effect: To give clarity to this section that:“Reference to a service shall not include reference to its input services”

36

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sub section (1) to (4) ……….. same as earlier………….

Explanation :For the purpose of this section,-

(a) “consideration” includes - any amount that is payable for the taxable services provided or to be

provided.

This clause (a) has been substituted with following, namely:-

‘(a) “Consideration” includes–

(i) any amount that is payable for the taxable services provided or to be provided;

(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and SUBJECT TO SUCH CONDITIONS, AS MAY BE PRESCRIBED.

(iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket.’.

Sec. 67 : Valuation of Taxable Services

(i) is same as earlier

Date of Enactment

Also Corresponding Amendment under section 94 (Power to make rules): (aa) Determination of amount and value of taxable service under sec.67.(aa) Determination of the amount and value of taxable service, the manner thereof,

and the circumstances and conditions under which an amount shall not be a consideration, under sec.67.

Date of Enactment

Contd/-……..

37

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Analysis of Explanation (a) (ii)

Any reimbursable expenditure or cost incurred by the service provider AND CHARGED, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed.

BACKGROUND:

Section 67:Value = Gross Amount Charged by the service provider.

Rule 5(1) ST Valuation Rules, 2006:Where any expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service.

Intercontinental Consultants and Technocrats Pvt. Ltd. vs. UOI & Anr. [(2012):Hon’ble Delhi HC held that Rule 5 (1) of the Valuation Rules is ultra vires Sec. 66 (Now Sec. 66B) and Sec. 67 of the Finance Act, 1994, since it travels beyond the scope of the aforesaid section.

The expenditure or costs incurred by the service provider in the course of providing the taxable service can never be considered as part of the gross amount charged by the service provider for the services provided.

Without further touching the issue whether rule 5(1) is ultra-vires the section 67 or not, Govt.

has incorporate such clause within the sec.67 itself & amend the explanation of

‘consideration’ accordingly,

So now, The reimbursement of expenses for air travel tickets, train, hotel, etc INCURRED

AND CHARGED by the service providers shall be liable to Service Tax, EXCEPT IN PRESCRIBED

CIRCUMSTANCES.

Sec. 67 : Valuation of Taxable Services

nwljk

Contd/-……..

Date of Enactment

38

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


[Section 73(1B)] < Fast Recovery Mechanism> : Inserted

Sub-Section 78(1B) has been inserted, which are as follows:

Recovery u/s 87 (Sec. 87: Recovery of amount due to CG), without issuing SCN u/s 73(1) [18m/60m]

Condition:

• Where amount of ST payable has been self-assessed in the STR furnished u/s 70(1), But not paid either in full or in part,

Then,

• The same shall be recovered along with interest thereon in any of the modes specified in Sec. 87 (as an arrear of Land Revenue)

[Section 73(4A)] < Subsidized Penal Provision> : Omitted

In certain cases liability = ST + Intt. u/s 75 + Penalty (Max. 25% of ST),BUT, Now this section has been omitted.

Corresponding transitory provision has been incorporated u/s 78B.

Sec. 73: Recovery of ST Not Levied/Paid, Short Levied/Paid or Erroneously refunded Date of

Enactment

Corresponding amendments in STR,1994: [vide N/No. 5/2015-ST, dated 01-03-2015] Rule 6 : Payment of service tax: Clause 6(A) shall be omitted from the date of enactment.Effect: Now same power comes within the Act from STR, 1994

Date of Enactment

39

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 86 : Appeals to Appellate Tribunal

2 Cases has been inserted as a provisos to section 86(1) where appeal against the order passed u/s 85, shall not be lie with Appellate Tribunal. These cases shall be dealt with in accordance with the provisions of 35EE of CEA, 1944.

Cases for dealt in accordance with Sec. 35EE of CEA, 19441. Where an order, relating to a service which is exported, has been passed u/s 85

and The matter relates to grant of – Rebate of Service Tax on Input Services, or Rebate of Duty paid on Inputs, used in providing such service.

2. All appeals filed before the Appellate Tribunal in respect of aforementioned

matters,

after the coming into force of the FA, 2012, and pending before it up to the date on which the FB, 2015 receives the

assent of the President shall be transferred.

Section 35EE of CEA, 1944: Revision by Central Government

Date of Enactment

40

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 94 : Power to make rules.

Already discussed with section 67

Date of Enactment

Following Clause has been redrafted :

(aa) Determination of amount and value of taxable service under sec.67.

(aa) Determination of the amount and value of taxable service, the manner thereof, and the circumstances and conditions under which an amount shall not be a consideration, under sec.67.

More Power

41

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 76: Penalty for failure to Service Tax Date of Enactment

Earlier, Penalty was :

Rs. 100 Per Day or

1% p.m. of ST

Which ever is Higher

Max. Penalty under this section

= 50% of Such Tax

Now, this section has been substituted, namely (On Next Slide)

42

If such ST and Intt. thereon

paid within 30 days

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 76: Penalty for failure to pay Service Tax

Corresponding Section: Transitory provision u/s section 78B

Date of Enactment

Where ST has - For the reason OTHER THAN

• not been levied/paid• been short levied/paid• erroneously refunded

• fraud OR collusion OR wilful misstatement OR• suppression of facts OR • contravention of any of the provisions of Ch.V, FA, 1994 or rules

made thereunder with the intent to evade payment of service tax

Then penalty shall be liable to pay as follows:

Contd/-……..

Date of Service of notice u/s 73(1)

Specifying the amount of ST & Intt.

30 Days

Date of receipt of order u/s 73(2)Specifying the amount of ST, Intt. And Penalty (Max: 10% of

ST)

No Penalty10%

Penalty

1 2

If such ST and Intt. & PENALTY has been paid

30 Days


Penalty = 25% of penalty

specified in such order

3

4 Penalty specified

in such order

43

If such ST and Intt. thereon

paid within 30 days

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 76: Penalty for failure to pay Service Tax


Date of Enactment

Where ST has - BY REASON OF

• not been levied/paid• been short levied/paid• erroneously refunded

• fraud OR collusion OR wilful misstatement OR• suppression of facts OR • contravention of any of the provisions of Ch.V, FA, 1994 or rules

made thereunder with the intent to evade payment of service tax

Then penalty shall be liable to pay as follows:

Contd/-……..

Date of Service of notice u/p to Sec.73(1)

Specifying the amount of ST & Intt.

30 Days

Date of receipt of order u/s 73(2)

Specifying the amount of ST, Intt. And Penalty (100% of

ST)

15% Penalty

100% Penalty

1 2


30 Days


Penalty specified in such order

Penalty = 25% of SERVICE

TAX so determined

3

4

44

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 76 & 78 : Penalty for failure to pay Service Tax


Date of Enactment

Contd/-……..

Where Modifies Then

• The Commissioner (Appeals),

• The Appellate Tribunal or,• The court, (as the case may be)

Service Tax (determined u/s

73(2))

the amount of penalty payable thereon, shall also stand modified accordingly

The benefit of reduced penalty shall be available:-if such service tax, interest and reduced penalty is paid, within a period of 30 days from the date of receipt of the order of modification.

45

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 78B : Transitory Provisions [With regard to Section 73(4A), 76 & 78]

1. Section 73(4A) has been deleted.

So transitory provisions are given, in case -

• Where the notice under proviso to 73(1) has not been served, or

• Where such notice so served but order u/s 73(2) has not been passed

Before the date on which Finance Act, 2015 received the President’s assent.

2. Also Section 76 and Section 78 have been substituted with new one.

So transitory provisions are given, in case –

•Where the notice u/s 73(1) or under proviso to 73(1) has not been served, or

• Where such notice so served but order u/s 73(2) has not been passed.

Before the date on which Finance Act, 2015 received the President’s assent.

Pictorial Presentation is on next slide…………………………

Contd/-……..

46

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 78B : Transitory Provisions [With regard to Section 73(4A), 76 & 78]

Date on which FA, 2015 receives President’s assent

WhetherOrder u/s 73(2)

has been passed ?

Yes

No

No

Whether SCN u/s 73(1) [18m] or SCN under proviso to 73(1)

[60m]Has been served ?

Sec. 76 or Sec.78, (as the case may be)

As amended by the FA, 15

Shall be applicable.

For Cases Falling Section 76 or Section 78

NoNo

Whether SCN under proviso to 73(1) [60m]

Has been served ?

For Cases Falling u/s 73(4A)

Whether Order u/s 73(2) has been passed ?

Yes

Max. Penalty =

50% of ST (Earlier it was 25% in the deleted section

73(4A)

Contd/-……..

Simply means that it has retrospective effect for all pending cases where no order u/s 73(2) has been passed by CEO.

47

Sec. 65B

Sec. 66B

Sec. 66D

Sec. 66F

Sec. 67

Sec. 73

Sec. 86

Sec. 94

Sec. 76

Sec. 78

Sec. 78B

Sec. 80


Sec. 80 : Penalty not to be imposed in certain cases

Earlier, No Penalty u/s 76,77 shall be imposed if –

Assesses proves that there was reasonable cause for the failure u/s 76,77

Now, this relaxation has been omitted.

48

Other Amendments

Amendments in STR, 1994 RemarksNew Definition Inserted [under Rule 2(1) of STR, 1994] (aa) Aggregator (bca) brand name or trade name

New Persons liable for paying Service Tax under RCM has been defined, [under Rule 2(1)(d)(i) of STR, 1994] (AAA) the aggregator of the service (EEA) Mutual Fund or Assets Management Company(EEB) Lottery Distributer/Selling Agent.

Already Discussed with RCM

New Rule 4C : Authentication by digital signatureNew Rule 5(3) & 5(4) has been added in corresponding to New Rule 4C

To be

Discussed

Rule 6: Payment of Service Tax Subrule (6A)- omitted, Now same provision incorporated u/s 73(1B)

Already Discussed

Rule 6: Payment of Service TaxDue to Revision in ST Rate (From 12% to 14% ), Special optional Rate of ST under sub-rule (7), (7A), (7B) and (7C) has also been changed.

To be discussed

Rule 6: Payment of Service TaxExplanation (i) to subrule (7C) of Rule 6: Definition of “Lottery Distributor or Selling Agent” has been omitted and same has been added within the section 65B (31A).

Already Discussed

w.e.f. 01.03.2015

w.e.f. 01.03.2015

w.e.f. 01.04.2015

w.e.f. 01.03.20

15

Date FB, 15 Receive the President Assent

Date to be notify

Date FB, 15 Receive the President Assent

N/No. 05/2015-ST, dated 01-03-2015

N/No. 09/2015-ST, dated 01-03-2015

N/No. 04/2015-ST, dated 01-03-2015

49

Other Amendments

Rule 4C : Authentication by Digital Signature

(1) Any invoice, Bill or Challan issued under rule 4A or Consignment note issued under rule 4B

May be authenticated by means of a DIGITAL SIGNATURE.

(2)The Board may, by notification, specify the conditions, safeguards and procedure to be followed by any person issuing digitally signed invoices.

Rule 5: Records

Sub-rule (4)Records under this rule may be preserved in Electronic Form and Every page of the record so preserved shall be authenticated by means of a Digital Signature.

Sub-rule (5) :The Board may, by notification, specify the conditions, safeguards and procedure to be followed by an assessee preserving digitally signed records.

Explanation – For the purposes of rule 4C and sub-rule (4) and (5) of this rule,-

(i) The expression “authenticate” shall have the same meaning as assigned in the IT Act, 2000.(ii)The expression “digital signature” shall have the meaning as defined in the IT Act,

2000 and the expression “digitally signed” shall be construed accordingly.”

N/No. 05/2015-ST, dated 01-03-2015

N/No. 09/2015-ST, dated 01-03-2015

N/No. 04/2015-ST, dated 01-03-2015

50

Other Amendments

Rule Service Specified Rate

Old (EC & SHEC Extra)

New

Rule 6(7)

Service by Air Travel Agent: Domestic Bookings International Bookings

0.60%1.20%

0.70%1.40%

Rule 6(7A)

Insurer –Carrying Life Insurance Business

3.00% First Year1.50% Later Year

3.50% 1.75%

Rule 6(7B)

Currency Sale or Purchase (Transaction Amount)

Old Rate(EC & SHEC Extra)

New Rate

(a) Up to Rs. 1,00,000/- 0.12 % (Min Rs. 30)

0.14% (Min Rs. 35)

(b) Exceeding Rs. 1 Lac Up to Rs. 10 Lacs

Rs. 120 + 0.06 %

Rs. 140 + 0.07 %

(c) Exceeding Rs. 10 Lacs Rs. 660 + 0.012 %

(Max. Rs. 6,000)

Rs.770 + 0.014 % (Max. Rs. 7,000)

Rule 6(7C)

Lottery Tickets: Where Guarantee Prize more than 80%Where Guarantee Prize less than 80%

Rs. 7,000/-Rs. 11,000/-

Rs. 8,200/-Rs. 12,800/-

Simply,

Date to be notify

Date to be notify

N/No. 05/2015-ST, dated 01-03-2015

N/No. 09/2015-ST, dated 01-03-2015

N/No. 04/2015-ST, dated 01-03-2015

New Rate = Old Rate *76 Or New Rate = Old Rate *

1412

51

Other Amendments

SECTION 96A OF CHAPTER VA <ADVANCE RULINGS>

Clause (b) “applicant” means-

(i)……….

(ii)………

(iii) CG may specify the class or category of a RESIDENTAnd CG has time to time notify the class of resident as “applicant” for Advance Ruling in this regard as follows:

“Resident Public Limited Company” N/No. 4/2013-ST, dated 01-03-2013

“Resident Private Limited Company” N/No.15/2014-ST, dated 11-07-2014

“Resident Firm” N/No.9/2014-ST, dated 01-03-2015

Meaning of Firm means Partnership Firm and includes:LLPSole ProprietorshipOPC

“Resident” Meaning as defined under sec 2(42) of Income Tax Act, 1961

N/No. 05/2015-ST, dated 01-03-2015

N/No. 09/2015-ST, dated 01-03-2015

N/No. 04/2015-ST, dated 01-03-2015

52

Other AmendmentsN/No. 05/2015-ST,

dated 01-03-2015N/No. 09/2015-ST, dated 01-03-2015

N/No. 04/2015-ST, dated 01-03-2015

N/No. 31/2012-ST, dated 20-06-2012 as amended by N/No. 04/2015-ST, dated 01-03-2015

Service of Transport of Goods by GTA to an Exporter

Transport of goods for export by road from the factory/CFS/ICD to a LAND CUSTOMS STATION (LCS) is being exempted.

PortAirportLand Custom Station

NEW

Place of

Removal

CFS (Container Freight Station)

ICD (Inland Container Depot)

(From here the goods are exported)

(From here the goods are exported)

W.E.F01-04-2015

53

CA. Ankit AgarwalB.Com., LL.B., ACA

+ 91 92191 [email protected]

[Disclaimer: This publication does not constitute professional advice The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Though utmost efforts have made to provide authentic information, it is suggested that to have better understanding and to avoid any doubt, the reader should cross-check all the relevant facts, law and contents of the document/publication with Government’s original publication or notifications. Every efforts has been made to avoid error or omission while preparing this document. In spite of this, error may creep in. Author/ Firm will not to be responsible for any damage or loss of action to any one, of any kind, in any manner, there-from.]

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