SEC 67 OF SERVICE TAX READ WITH RULE-3 OF SERVICE TAX (DETERMINATION OF VALUE) RULES, 2006.
BY ARVIND AGGARWAL.
SEC 67(1)(iii) of service tax says that where the amount of the consideration is not ascertainable, then the value will be determined in the prescribed manner.
May I underline the word Prescribed Manner.
(RELEVANT EXTRACT FROM BARE PROVISIONS OF SEC.67 OF SERVICE TAX)
SEC. 67. Valuation of taxable services for charging Service tax
(1) Subject to the provisions of this Chapter, service tax chargeable on any taxable service with reference to its value shall,—
(i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;
(ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration;
(iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner.
Now, the PRESCRIBED MANNER IS GIVEN IN RULE 3 OF SERVICE TAX (DETERMINATION OF VALUE) RULES, 2006.
(RELEVANT EXTRACT FROM BARE RULES OF SERVICE TAX)
Service Tax (Determination of Value) Rules, 2006
RULE 3. Manner of determination of value.– Subject to the provisions of section 67, the value of taxable service, where the consideration received is not wholly or partly consisting of money, shall be determined by the service provider in the following manner:–
(a) the value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration;
(b) where the value cannot be determined in accordance with clause (a), the service provider shall determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service
Here the Rule 3 (a) says that the value will be Gross amount charged by THE SERVICE PROVIDER TO PROVIDE SIMILAR SERVICE
to any other person in ordinary course of business.
Now, May I underline the words “The service Provider to provide similar service”
Here the view of all the author and intellectual person is that in the clause (a) of Rule 3 the value can be determined ONLY if the SIMILAR service provider ( say the original service provider ) provides the SIMILAR service and if he do not provide the similar service then clause (b) will apply.
But by looking at the Bare Portion I don’t see the word
“SIMILAR SERVICE PROVIDER”
rather the words are “SERVICE PROVIDER” It means that if another service provider( i.e Other than the original service provider) is providing the similar service then the amount charged by him may be taken as value for the “SIMILAR SERVICE”
I don’t know whether it is a legal ambiguity or else.
HOWEVER THESE ARE MY PERSONAL INTERPRETATION.
CONTRARY VIEWS ARE WELCOMED.
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