I know & confident that ST should not be calculated on the consideration received in KINDS ie other than cash, it should be calculated on CASH amount.
In Nagpur one of the CA faculty, taking tuition Calss of CA Final, said that Service Tax should be calculated on BOTH ie on CONSIDERATION RECEIVED IN CASH & KINDS......
can you tell me what is correct? & also give me reference of any book
16 January 2010
As per section 67 of chapter V of the Finance Act 1994: 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.
(2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.
(3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.
(4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed.
Explanation.—For the purposes of this section,—
(a) “consideration†includes any amount that is payable for the taxable services provided or to be provided;
(b) “money†includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value;
(c) “gross amount charged†includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and ‘book adjustment, and any amount credited or debited, as the case may be, to any account, whether called “Suspense account†or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.
[ Inserted vide Finance Bill 2008, w.e.f. 16th May, 2008 ] Hence service tax is chargeable on both amounts received in cash or n kind
16 January 2010
Rule 3 of the Service tax (Determination of value) Rules,2006 is reproduced below.
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.
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