Practical issues in Service tax

Queries 1646 views 2 replies

Pallavi

PCA

95 Points Joined June 2009

I have some queries regarding recent amendment in Finance Act & notifications issued. Kindly resolve the same:

1) Services by way of renting of Hostel, Inn, Guest House etc: No Service tax will be charged if declared tariff of a unit of accomodation is below rupess one thousand per day or equivalent. This case will apply if we are running the hostel. If we have given the hostel to some other person in lieu of some fixed amount and he is charging the rent for individual units, whether the same will be treated under this head our it will be treated as a commercial unit & will be liable for service tax.

Whether service tax will be charged on the food suppiled in mess of the hostel if (a) mess charges are included in tariff & are below Rs. 1000/-, or (b) if the the tariff for food & room are charged separately.

2) Selling of Space or Time for advertisement: My Client is running a Mall, kindly tell me taxability of following:
(a) Space given for a Plazma Television. TV owner takes the advertisement from various parties. However gives us a fixed amount every month.

(b) Space given to an advertising agency who further provides it to local businesses.
(c) If Space is given to a canopy and it is from more than 6 months from now. Whether it will be treated as Rent or Advertisement.

3) Transmission or distribution of electricity:

(a) Electricity Bills are raised to Shops in mall as per the actual reading shown by electric meter installed. Whether Service tax liability arises on such reciepts.

(b) Whether Electricity generated by generator set will be liable for service tax. Since single bill is raised for the recovery of both the charges.

4) Man Power supply:

(a) We recover the charges for air conditioning also. Two types of charges are covered in this, one for actual consumption of airconditioners installed & second for labour which is required in operation. Whether service tax liability will arise in this case. and if yes, under which service it will be taxable.

Kindly resolve the above.

Replies (2)

Ajit kumar Dubey

Taxation Manager

637 Points Joined September 2008

1) Services by way of renting of Hostel, Inn, Guest House etc: If you have given hostel to a sub contractor for operating purpose and in turn you are receiving a fixed amount, then you will be liable to be taxed under the head Renting of Immovable property, provided that the subcontractor is not issuing invoice for the hostel accomodation in your name. The tariff here includes all the amenities provided to the person staying in the hostel, so it will definitely include the food charges as well. 2) If you have provided any space for the purpose of advertisement then only service tax is exempt, but if you provide the space on rent basis wherein the purpose is not defined then service tax will be applicable under Renting of Immovable Property. 3) As far as malls are concerned they are charging for sub letting the electric meter which is actually on the name of the owner of the mall. Here by satisfying the conditions of a pure agent, service tax can be exempt, else it would be considered as bundled service and will be taxable under the head of main service. 4) Almost all the jobs in this world involves manpower. So it does not mean that service tax will be applicable on all those jobs under supply of service. There is a difference between entering into an agreement for supply of manpower and billing as per the manpower deployed on a specific job. For the purpose of taxable service in relation to supply of manpower the key feature which needs to be looked upon is that who has the supervision on the said manpower. If company has the supervision on the manpower then it would be taxed under manpower supply, if not then it is to be taxed under the service applicable for rendering the respective job. Hope it will clear your doubts now.