levy of service tax

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Levy of Service Tax

-By Ch.Kapil

Article Assistant at Gella & Co


Genesis of Service Tax Levy Authority of Levy Administration of Service Tax Service [Section 65 B (44) of Chapter

Finance Act,1994] Levy of Service Tax Role of Chartered Accountant

Contents


Base of Service Tax is Report of Chelliah Committee

Budget Speech for the year 1994-95 by Dr. Man Mohan Singh, Union Finance Minister

Initially chargeable services are 3; namely1. Telephones2. Non Life Insurance3. Stock Brokers

Genesis


Indian Constitution vide article 265 says “ No tax shall be levied or collected except by authority of law”

Schedule VII of Indian Constitution has 3 list for bifurcation of power.

List I – Union List List II – State List List III - Concurrent List

Who is Authorised to Levy Service Tax ? And How?


Entry 82 to Entry 92 C of List I enumerates the Central Government's power for collection of taxes

Entry 45 to Entry 63 of List II enumerates the State Government's power for collection of taxes

Entry 92 C – Taxes on Services (Not Effective as on date)

Collection of Service tax is in accordance with Entry 97- Residuary Entry only

……Continued


Administration of Service Tax

Ministry Of Finance

Department of Revenue

CBEC

Central Excise Zones-Chief Commissioner

Central Excise Commissionerate - Commissioner

Additional Commissioner

Joint Commissioner

Assistant / Deputy Commissioner

Super indent

Inspector


According to the Section 66 B of Chapter V of Finance Act,1994 says the rate of service tax is 12% on the value of service

But how much do we charge? @ 12.36% ? Because Chapter VI of Finance Act

(No.2),2004 specify the education Cess to be paid on the service tax paid under Chapter V i.e. @ .36% on 12% of Service Tax

At What Rate levy should be?


Two Parties are involved in Contract of service

1. Service Provider 2. Service Receiver To find the nature of taxability, Majorly 4

things are required1. What is service?2. Where is it provided? 3. Who has to pay the tax?4. When Should I Levy?

Contract of service


Section 65 B (44) of Chapter V of Finance Act,1994 defines service as “ Means any activity carried out for consideration and a Declared Service but does not include the following :

1. An activity which constitute merely;a. Transfer of title of goods by way of sale or gift or

any other mannerb. movement of goods which has the meaning of sale

according to clause(29a)of article 366 of constitution

c. a transaction in money or actionable claim2. A provision of service in course of employment3. Fees taken in any court or tribunal established under

any law for the time being in force

What is Service?


List of Nine Declared Services are:1. Renting of immovable property2. Construction of 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

Declared Service


4.Development,design,programming,customization,adaption,upgradation,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. service portion in execution of a works contract

….Continued


8. Activities in relation to delivery of goods on hire purchase or any system of payment by instalments

9. Service portion in an activity where in goods, being food or any other whole of human consumption or any drink(whether or not intoxicating) is supplied in any manner as art of the activity

….Continued


Section 68 of Chapter V of Finance Act,1994 says service tax to be paid on the service provided or to be provided in the taxable territory only.

What is taxable territory? Taxable territory has been defined as “to

the territory to which the chapter apply” It applies to India defined under Section

65B(25)

Place of Service?


The territory of the union as referred to in clauses (2) and (3) of article 1 of Indian Constitution

Its territorial waters, continental shelf, exclusive economic zone or any other maritime zone as defined in the territorial waters, continental shelf, exclusive economic zones and other maritime zones act,1976

The seabed 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

India


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, other than those 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 manner as may be prescribed [Section 66B]

In addition to the services specified in Negative list, services exempted under Mega Notification also not liable to service tax (Notification No 25/ 2012 / 20.06.2012)

Charge of Service Tax?


An Individual A HUF A Company A Society A Limited Liability Partnership An AOP,BOI whether incorporated or not Government A Local Authority Every Artificial Judicial Person not falling

within any of the preceding clauses

Person?


As discussed earlier the liability of payment of service tax is on both Service Provider and Receiver on nature of service

Service Provider is liable to levy tax under Section 68

Service Receiver is liable to pay tax under Section 68 (2) i.e. Reverse charge Mechanism which is Rule 2(d) of the Service Tax Rules,1994

Levy on basis of Person


1. Insurance2. Goods Transport Agency3. Sponsorship4. Arbitral Tribunal5. Advocate Services6. Support Service7. Rent or Cab Service8. Supply of Manpower9. Works Contract Services10. Import of Service [Section 68(2)- Chapter V

of FA,1994] - [Notification No 30/2012]

Service Recipient Basis


Is Printing of Books a service? And under what tax he has to register?

Beauty saloon, P.G.’S in Bangalore are covered under Declared services?

A Ltd bought technology from the X Company situated in United states which is branch of XYZ Ltd. Now who has to get register and under what? Who has the liability of service tax?

Few Questions to You?


Raja has rented a building to the government for organising technical seminar. Is his business a service? Under What?

Me and Mom Company Ltd. has invited tenders vide notice in The Times of India? Is the process covered under service tax liability?

A popular Rock star has gone for National Convention to perform the Entertainment schedule. Can he levy service tax on the Bills?

…….Continued


Advisory services Procedural compliancePersonal RepresentationCertification and Audit Onerous Task to Keep Pace

Chartered Accountant’s Role


Thank You

Contact Me:Mob : 8892879593Mail : [email protected]

levy of service tax

Documents

service portion

rate of service tax

base of service tax

provision of service

value of service

date collection of service

union list list

chapter finance act