Understanding Service Tax Concepts
CA. Madhukar N Hiregange
CA. Sudhir V S
OVERVIEW OF SERVICE TAX
Constitutional validity and concepts
Levy and collection
Concept of Classification
Concept of consideration and valuation2
Payment of service tax
Cenvat Credit scheme
Export of Services
Filing of returns
Provisions as to recovery
Provisions pertaining to penalty
Provisions pertaining to Appeals
SERVICE TAX - LEVY
CLASSIFICATION OF SERVICES
Relevance of the concept of classification
Possible ramifications where the assessee gets the classification wrong
Relevant case laws .
CENVAT CREDITS AND PAYMENTS
Duties/taxes which can be considered for set off or availing credits
Utilisation of the credits
When inputs/capital goods are removed outside the premises
Restriction in case of capital goods
Can the inputs or capital goods on which cenvat credit is claimed, be sent out to a sub contractor for processing?
Cenvat Credits – Refund for exporter of service/ SEZ/ EOU
Where the service provider has both taxable as well as exempted services
Can Cenvat credits be transferred?
Can credits be taken on inputs and capital goods received under invoice, bill or challan issued by another office of service provider?
Confiscation and penalty in case of wrong availment of Cenvat Credits
Provision for recovery of credits wrongly availed .
Concept of input service distributor
VALUATION UNDER SERVICE TAX
What is the main basis for valuation?
Can the Central Excise Officer question the valuation?
Whether the gross amount charged for the service would include charges reimbursed by the service receiver?
Are there any other specific inclusions and exclusions with regard to amount charged for specific services?
Exclusions with regard to the amount charged:-
Where during the course of providing service, there is transfer of property in goods, what would be the value? .
EXEMPTIONS AVAILABLE UNDER SERVICE TAX
Is there an exemption available generally to all service providers exempting value of services up to a certain limit?
Is there any exemption from service tax where the service provider transfers property in goods during the course of provision of services?
Is there any other exemption available which can also be used in a scenario where the value of materials/goods sold cannot be quantified or ascertained separately?
Exemption on services provided to a developer of Special Economic Zone or a Unit of a Special Economic Zone
Certain other specific exemptions –
IMPORT AND EXPORT OF SERVICES
When is a service said to have been imported into the country for the purpose of taxing the same in the hands of the service receiver?
What would be the position where an entity has establishments in India as well as abroad and the entity abroad provides services to the Indian unit?
What do the Taxation of Services (Provided from outside India and Received in India) Rules 2006 say?
Provisions in case of export of services
REFUNDS AND REBATES
How does the refund work?
Refund under notification 17/2009 – Available to exporters of goods in respect of specified input services
Refund under notification 43/2007-ST-Available to manufacturers of specified goods in respect of business exhibition service
Procedure under sec 11B – Refund of cenvat credits/service tax paid in excess
How does the scheme of rebate work?
Rebate of the service tax on taxable services exported
Rebate of the service tax on input services or duty on inputs
DEMANDS AND APPEALS
What happens when there is a short levy or short payment of tax or erroneous refund?
What happens when the service provider has collected service tax in excess of the amounts to be collected from the service receiver?
What is the interest for delay in payment or in cases where amounts have been collected in excess from customers?
Is provisional attachment of property possible?
Can mistakes apparent from record be rectified?
Can an order be revised by the Commissioner of Central Excise?
Where the assessee is aggrieved by the order of an authority subordinate to Commissioner of Central Excise, where would the appeal be made?
When shall the appeal be with the Appellate Tribunal?
PROCEDURES WITH REGARD TO REGISTRATION
What is the procedure for registration?
How to make amendments with regard to changes in particulars?
PROCEDURE WITH REGARD TO INVOICING
How to raise a proper invoice? .
PAYMENT OF SERVICE TAX
How to pay service tax? 9
SERVICE TAX RETURNS
SERVICE TAX AUDITS BY PROFESSIONALS
FREQUENT ERRORS COMMITTED IN SERVICE TAX
OTHER MISCELLANEOUS ASPECTS IN SERVICE TAX
Interest and penalty calculations
Provisions as to penalty
Searching of premises by authorized officers
Other recovery provisions
Application of the provisions of the Central Excise Act 1944
The professional who advises on service tax should be aware of the implications of the above provisions which maybe judicially clear as they have gone through a number of years of modifications.
SOME OF THE IMPORTANT COMMON SERVICES
Renting of Immovable Property Services
Management, Maintenance or Repair Services
Information Technology Software Services
Goods Transport Agency Services
Construction Related Services
Business Auxiliary/Support Services of Business or Commerce
TABLE OF SERVICES TAXABLE U/S 65(105)
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