SERVICE TAX [email protected] .

SERVICE TAX

[email protected] www.swamyassociates.com

Basic FeaturesBasic Features

Statutory provisions.

Levy on service provider - Exceptions.

Levy on realisation.


Classification of ServiceClassification of Service

Specific description than general description.

Essential character.

Which occurs first in the definition.


Valuation…Valuation…

Gross amount.

Cum - tax.

Abatements.

Notification 12/2003.


Valuation…Valuation…

Services rendered free.

Consideration in kind.

Reimbursement of expenses. Upto 18.04.2006 – No liability. Judgements and circulars. From 19.04.2006 – Concept of pure agent. Malabar Management Services VS CCE 2008(9) STR 483


Proceedings in Service TaxProceedings in Service Tax Issue of show cause notice.

Adjudication.

Appellate remedies.

Commissioner (Appeals) CESTAT High Court / Supreme Court


Procedures in Service Tax…Procedures in Service Tax…

Registration – Centralised Registration.

Issue of invoice.

Maintenance of records.


Payment of service tax. - Due date. - Advance payment. - e payment. - Self adjustment – if service not rendered. - Provisional payment. - Self adjustment of excess payments.

Procedures in Service Tax.Procedures in Service Tax.

Filing of return – ST 3. - Due date / Half yearly. - Revised return. - Fine for delayed return.


Penalties in Service Tax.Penalties in Service Tax.

Sec. 76 – Delayed payment of S.Tax.

Sec. 77 – General Penalty.

Sec. 78 – Suppression, etc.

Rule 7 C – Fine for delayed return.

Sec. 80 – Power of waiver.


Certain important services.Certain important services.


Business Auxiliary Service.Business Auxiliary Service.

Promotional activities. Customer care services.

Procurement of goods or services.

Production or processing.

Provision of service on behalf of client.

Manufacture – excluded.

Notification 8/2005.


Commercial / Industrial Commercial / Industrial construction Service.construction Service.

Exclusion for roads, airports, railways transport terminals, bridges, tunnels, dams and ports.

67 % Abatement.


Construction of Residential Construction of Residential Complex Service.Complex Service.

More than 12 units..

Personal use - exempted.


Consulting Engineering Consulting Engineering Service.Service.

Foreign Technological transfers. Novinon Ltd. VS CCE 2006 (3) STR 397

To cover software too.

Customs House Agents Customs House Agents Service.Service.


Erection, Commissioning and Erection, Commissioning and Installation Service.Installation Service.

Franchise Service. Franchise Service.


Intellectual Property Service. Intellectual Property Service.

Management Consultant Management Consultant Service. Service.

Manpower recruitment / Supply Manpower recruitment / Supply agencies. agencies.


Goods Transport Agency Goods Transport Agency Service. Service.

Reverse Charge.

Abatement.

Exemption.

Payment mode.

No SSI exemption.


Renting of immovable Renting of immovable property. property.

Support Services for business. Support Services for business.


Works Contract Service. Works Contract Service.

Re-classification.

Composition Scheme.

Vice of Notification 1/2006.

Diebold Systems (P) Ltd Vs CCE 2008 (9) STR 546. Air Liquide Engg. India (P) Ltd. Vs CCE 2008 (9) STR 486.


Sale Vs Service.

S.No Citation Decision

1 BSNL Vs UOI – 2006 (2) STR 161 SC

It has been held that the sale value of goods shall not be subjected to the levy of service tax.

2 Idea Mobile Communications Limited VS CCE – 206 (4) STR 132 Tri – Bang

Levy of sales tax and service tax are constitutionally mutually exclusive.

3 BPL Mobile Communications Limited VS CCE – 2007 (7) STR 440

Sale of SIM cards is sale and sales tax is paid. Hence service tax is not payable.

4 Imagic Creative (P) Limited Vs CCE – 2008 (9) STR 337 SC

Service tax and VAT are mutually exclusive.

5 Thermax Limited Vs CCE – 2007 (8) STR 487

Service tax not leviable when sales tax is paid.


Small Scale exemption. Small Scale exemption.

Threshold limit.

Conditions.


Commercial Concern Commercial Concern VsVs

Any person. Any person.


Export of Service and Import of Export of Service and Import of Service.Service.


CENTRAL EXCISE CENTRAL EXCISE

byby

g. natarajang. natarajanadvocate & cost accountantadvocate & cost accountant

CENTRAL EXCISEAND CENVAT


MANUFACTUREMANUFACTURE

Section 2 (f) Deemed manufacture. Third schedule.


VALUATIONVALUATION

Section 4 – Transaction Value


SECTION 4 & Valuation RulesSECTION 4 & Valuation Rules

Rule 4 - Comparable goods.Rule 4 - Comparable goods. Rule 5 - Freight and Insurance.Rule 5 - Freight and Insurance. Rule 6 - Additional consideration.Rule 6 - Additional consideration. Rule 7 - Depot clearance.Rule 7 - Depot clearance. Rule 8 - Captive consumption.Rule 8 - Captive consumption. Rule 9 - Related person.Rule 9 - Related person. Rule 10 - Interconnected undertaking.Rule 10 - Interconnected undertaking. Rule 10A – Jobwork.Rule 10A – Jobwork. Rule 11 - Best judgementRule 11 - Best judgement


SECTION 4 ASECTION 4 A

Weights and Measures. OE Exemption. Different MRP.


EXPORTSEXPORTS

Exports without payment of duty. Exports under claim for rebate. Protection of Cenvat Credit.


APPELLATE / OTHER REMEDIESAPPELLATE / OTHER REMEDIES

Commissioner (Appeals).

CESTAT.

Settlement Commission.

Pre deposit.


PENAL MEASURESPENAL MEASURES

Various penalties.

Provisional attachment of property.

Prosecution.



Concept of Cenvat credit.

Landmarks – 1986, 1994 & 2004.

Cenvat Credit Rules, 2004.


ApplicabilityApplicability

Manufacturers.

Service providers.


Certain terms.Certain terms.

Input.

Capital goods.

Input Services.

Input Service Distributor.

First / Second stage dealer.


Cenvatable duties / taxesCenvatable duties / taxes

Basic Excise Duty.

CVD.

NCCD.

Education CESS.

Addl. Duty of Customs – Sec. 3(5).

Service Tax and CESS thereon.


Utilisation and Restrictions on Utilisation and Restrictions on utilisationutilisation

Payment of Excise duty.

Payment of Service tax.

Other payments.

Cross utilisation.


Other conditions.Other conditions.

Removal of inputs / capital goods - the story “as such”.

Capital goods – 50 % restriction.

No to “having the cake and eating it too” - Depreciation / Cenvat Credit.


Other conditions.Other conditions.

Removal for job work.

Write off.

Service Tax Credit - Pay and use.

Documents for availing credit.


Rule 6 Algebra.Rule 6 Algebra.

Position upto 31.03.2008.

Position from 01.04.2008.


Rule 6.Rule 6.

Protection to certain clearances.

Protected Services.

Chandrapur Magnet Wires (P) Ltd Vs CCE. 1996 (81) ELT 3 SC - Recent developments.


Certain common disputes…Certain common disputes…

Credit for mobile phone. India Rayon Industries Ltd. Vs CCE 2006 (4) STR 79.

Credit for outdoor catering. Victor Gaskets India Ltd Vs CCE 2008 – TIOL – 409.


Certain common disputes…Certain common disputes…

Credit for outward transportation.

- Gujarat Ambuja Cements Ltd. Vs CCE. 2007 (6) STR 249. - India Cements Limited Vs CCE 2007 (8) STR 43. - Master Circular and recent amendments.



CUSTOMS


Role of customs

• Collection of import & export duties

• enforcement of customs act

• enforcing prohibitions/restrictions

• prevention of smuggling


• Imports

• IGM (by shipping lines)

• cargo declaration

• Bill of Entry

• assessment

• duty Payment


• Exports

• Shipping bill, Invoice, ARE#

• assessment

• duty Payment (if any)

• EGM (by shipping lines)


Customs Valuation Rules, 2007

•The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Notfn. No. 94/2007-Cus(NT) dated 13-9-07

• The Customs Valuation (Determination of Value of Exported Goods) Rules, 2007 - Notfn. No. 95/2007-Cus(NT) dated 13-9-07


Value of imported goods

• transaction value – Section 14 (1) of CA, 1962• deductive value – Rule 7 • computed value – Rule 8• residual method – Rule 9• similar goods / identical goods• related person• provisionally assessed value is not transaction value.


Value of exported goods

•transaction value – Section 14 (1) of CA, 1962• computed value – Rule 5• residual method – Rule 6


refunds

• claim to be filed within six months. • one year for some persons.• no time limit for duty / interest paid under protest• unjust enrichment


RE-EXPORT OF IMPORTED GOODS

• 98% of Customs duties drawback

• within 2 years from the date of import


Export promotion schemes


duty drawback

• all india industry rate

• brand rate

• simplified scheme


Advance licence

• actual user condition

• physical exports

• intermediate supplies

• deemed exports

• invalidation

• export obligation


Other export promotion schemes

• DFRC

• DEPB

• EPCG


export oriented units• customs bonded ware house

• duty free imports

• B-17 bond

• procurement of indigenous goods

– CT-3 procedure

• DTA sale - valuation – section 3 of

CA, 1962.


export oriented units• sale of surplus / un-utilised goods

• clearance under ARO/inland letter/DFRC

• sub-contracting

• inter-unit transfer

• de-bonding

SPECIAL ECONOMIC

ZONES



duty free imports

indigenous procurement

sub-contracting

DTA clearances


duty free imports of goods and services

exempt from customs duties – customs act.

exempt from service tax – finance act, 04

securities transaction tax – finance act, 04

exempt from most cesses.


Indigenous procurement

exempt from excise duty (from 11-5-2004),

service tax and most Cesses.

DTA supplier’s benefit – export entitlements

Cenvat credit on materials used in goods

supplied to SEZ units. (Rule 6(6) of CCR)[email protected] www.swamyassociates.com


Sub-contracting – Rules 41 to 44 of SEZ rules

can under take job-work of DTA units (for exports only) trading units not allowed SEZ developer/Co-developer/contractor– may subcontract a process into DTA permission of DC/AC Customs required.


DTA Clearance– Section 30 of SEZ Act.

to be cleared on payment of customs duties as if imported. valuation as per CV(DoPoI)R,88 quantity or value - no limit on sale


exports

direct exports

through third parties


39/2001-CE dated 31-7-2001

Exemption to excisable goods manufactured in Kutchh (Gujarat)


applicable to new industrial units

commercial production before 31-

12-2005

not applicable to SSI units

exceptions


pay excise duty through cenvat

credit account

after exhausting cenvat account,

pay through PLA (cash)

take re-credit of PLA amount on

15th of next month.


1st amendment – 42/2001-CE dated 21-9-2001

Original value of plant & machinery to be as certified by CA (under head fixed assets)


2nd amendment - 5/2003-CE dated 13-2-2003

‘refund shall not exceed the amount of duty paid LESS the amount of cenvat credit availed of, used in relation to the manufacture of goods’.



3rd amendment - 16/2003-CE dated 1-3-2003

‘refund shall not exceed the amount of duty paid LESS the amount of cenvat credit availed of, used in relation to the manufacture of goods’.




4th amendment - 65/2003-CE dated 6-8-2003

‘para 1A (i) to (iii),

para 2A (a) to g, inserted’




5th amendment - 16/2008-CE dated 27-3-2008

new words replaces old words –

“to the duty payable on the value addition undertaken in the manufacture of the said goods by the said unit.”




rebate of excise duty on exports

682/73/2002-CX dated 19-12-2002 – refund of duty paid in cash.

842/19/2006-CX dated 8-12-2006 – contents of circular dated 19-12-2002 applies to kutchh also. 209/11/2005-CX-6 dated 8-12-2006 – rebate on goods manufactured in kutchh.


209/11/2005-CX-6 dated 3-4-2007 – clarification to board’s instruction dated 8-12-2006

37/2007-CE(NT) dated 17-9-2007 – bans rebate on export for units availing benefits of 39/2001. 209/11/2005-CX-6 dated 13-10-2007 – board’clarifies – export after 17-9-2007 may be done only under bond.

rebate of excise duty on export


Rule 18 of CER, 2001 amended - Rebate allowed from 1-7-2001 to 28-2-2002 – Fifth schedule of Finance Bill enacted on 10-5-2008

Rule 18 of CER, 2002 amended - Rebate allowed from 1-3-2002 upto 7-12-2006 –Sixth schedule of Finance Bill enacted on 10-5-2008

rebate of excise duty on export


thanks …

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Kodambakkam, chennai – 600024 : tel: 044-24811147

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kalawad road, rajkot – 360007 : tel/fax: 0281-2451547

SERVICE TAX [email protected] .

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