Service tax issue

40% abatement is available  in the case of Mandap Keeper Service and Convention Centre Service.  In both cases the abatement is given subject to the condition that the assessee should not avail the input tax  credit.

So in your case if you takes abatement you are not eligible to set off Rs.1000/- as Cenvat Credit

Kirti,

In my opinion, most of the notifications providing for abatement do not allow CENVAT credit on inputs & input services to the service provider if he claims abatement. Such notifications do not restrict Credit of service tax paid in such manner to the Recepient of service.

Hence, where A would be restricted to utilise Credit of Service Tax on input service, B could utilise such credit.

Please give details of service provided and Notification under which abatement is claimed, for more specific answer.

Kirti,

In my opinion, most of the notifications providing for abatement do not allow CENVAT credit on inputs & input services to the service provider if he claims abatement. Such notifications do not restrict Credit of service tax paid in such manner to the Recepient of service.

Hence, where A would be restricted to utilise Credit of Service Tax on input service, B could utilise such credit.

Please give details of service provided and Notification under which abatement is claimed, for more specific answer.

Thanks Prabhat.

The services include 1. Tour operator & 2. renting of cabs. (Notification No.01/2006-ST, dated  01-03-2006)

Can you pls. mention the amount of ST liabilty for A & B?

Dear kirthi in case of Tour operator service  services other than package tour and booking of accomodation abatement available is 60%  and in case of Renting Cab also it is 60% abatement.  So after abatement you required to pay service tax on 40% of the vallue. In this case it is 40000x10.3% which comes to 4120 only.

In both the cases it is provieded that abatement will not be available if the assesse has opted to avail cenvat credit

So cenvat credit is not available in your case

thanks to you all for your replies.

You Should also look into Notification No. 38/2007 - ST dated 23.08.2007 for some additional benefits as tour operator. If you are providing services as specified in the Notification, you can claim additional abatement by classifying services accordingly. For reference the said notification is produced below.

"

TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY DATED THE  23^rd AUGUST, 2007

 1^st Bhadrapada, 1929(Saka)

GOVERNMENT OF INDIA
MINISTRY OF FINANCE

(Department of Revenue)

Notification No. 38/2007-Service Tax

New Delhi, the 23^rd August, 2007

G.S.R.  (E).       In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 1/2006-Service Tax, dated the 1^st March, 2006, vide number G.S.R. 115 (E), dated the 1^st March, 2006, namely: -

In the said notification, in the Table, for S.No. 2 and the entries relating thereto, the following shall be substituted, namely: -

 (G.G. Pai)

Under Secretary to the Government of India

[F.No. 356/82/2006-TRU]

Note:- The principal notification No. 1/2006-Service Tax, dated the 1^st March,2006, was published in the Gazette of India , Part II, Section 3, sub-section (i)vide  number G.S.R. 115(E), dated the 1^st March,2006 and was last amended by notification No. 20/2006-Service Tax, dated the 25^th April,2006, G.S.R. 250(E), dated the 25^th April,2006."

Prabhat ji, unable to interpret this notification. Can you pls. explain with a example?

Hence if you are providing a Packaged Tour abatement is 75% instead of 60%.

Further, where a Tour Operator is providing services solely of arranging or booking accommodation for any person in relation to a tour, abatement is 90%.

In relation to rent a cab services by renting of maxicab or motor vehicle rented for use by an educational body (other than a commercial training or coaching centre), it is not  taxable [However, motor cab, even if rented to an educational body, is leviable to service tax].

Refer the link: https://www.servicetax.gov.in/st-profiles/rentcab.pdf

If the tour operator provides both package tour & cabs on rent, then which rate is applicable 75% or 90%?

Can the abatement be claimed separately for each service - package tour @ 75% and cab renting @ 90%?

(cab is rented to parties other than educational insitute)

thanks.

If for an example A has provided a package tour (as defined in the notification above) of Rs.100000/- to B. Abatement will be 75%, i.e., Service tax would be Rs.100000*(100-75)%*10.3% = Rs. 2575/- only.

It is also seen that Tour operator also arrange for accomodation for a passanger. Suppose where A does not provide any tour facility but arranges for accomodation of C and issues a bill showing Cost of accomodation plus charges for such arrangement say Rs.1000/- + Rs.200/- (total Rs.1200/-). Service Tax would be payable as follows:Rs1200/-*(100-90)%*10.3% = 12.36 or Rs.12/- only.

Given below are type of service provided, abatement & taxable value

Yes abatement can be claimed for separate service provided proper classification ha been made.

Hope this is more clear.