SYNOPSIS OF NOTIFICATIONS, CIRCULARS & LETTERS

CBEC vide Circular No.154/5/2012-ST dated 28th March, 2012 has clarified that in respect of invoices issued on or before 31st March,2012, the Point of Taxation in respect of specified taxable services rendered by individuals/proprietary firms/partnership firms shall be the date of receipt of payment as provided by erstwhile Rule 7 of the Point of Taxation Rules, 2011. The specified taxable services are:

i) Architects (Section 65(105)(p))

ii) Interior Decorators (Section 65(105)(q))

iii) Practising Chartered Accountants (Section 65(105)(s))

iv) Practising Cost & Works Accountants (Section 65(105)(t))

v) Practising Company Secretaries (Section 65(105)(u))

vi) Scientific & Technical Consultancy (Section 65(105)(za))

vii) Legal Services (Section 65(105)(zzzzm))

viii) Consulting Engineer’s Services (Section 65(105)(g))

CBEC vide Circular No.155/6/2012-ST dated 9th April, 2012 has clarified in respect of levy of service tax on air tickets issued before 1st April, 2012 where the journey takes place after 1st April, 2012. It clarified that:

In case of online ticketing & counter sales, the payment for the ticket is received before issuance of ticket hence in view of Rule 4(b)(ii) of the Point of Taxation Rules, 2011, service tax shall be levied at the existing rate of @ 10.30%.

In case of sales through agents, where the payment is received by agent (before 1st April, 2012) & remitted to airlines after some time (after 1st April, 2012), the payment to agent is considered as payment to airline in terms of Indian Contract Act, 1872 and accordingly, in view of Rule 4(b)(ii) of the Point of Taxation Rules, 2011, service tax shall be levied at the existing rate of @ 10.30%.

However, in case the airlines have already collected extra amount as service tax which is not refunded to the customers, same is required to be paid to the credit of Central Government in view of Section 73A of the Finance Act, 1994.

CBEC vide Circular No.156/7/2012-ST dated 9th April, 2012 has announced that a committee has been constituted with DGST as Chairperson to review the scheme for electronic refund of Service Tax paid on various taxable services used for export of goods as notified by Notification No. 52/2011-ST dated 30th December, 2011.

As a part of the review, the committee has been instructed to (a) evolve a scientific approach for the fixation of rates in the schedule of rates for service tax refund; and (b) propose a revised schedule of rates for service tax refund, taking into account the revision of rate of service tax from 10% to 12% and also movement towards ‘Negative List’ approach to taxation of services.

CBEC vide Circular No.157/8/2012-ST dated 27th April, 2012 has clarified on taxability of market cess charged by Agricultural Produce Marketing Committees (APMCs) to various licensees like commission agents, traders, mill/factory/cold storage owners etc. It clarified that:

Market fees charged for providing various facilities like roads, drinking water, weighing machines, storage places, street lights etc. in the market area do not appropriately fall under the category of “Business Support Services” since provision of these facilities is not in the nature of outsourced services. Development and maintenance of agricultural market infrastructure undertaken by APMC in accordance with the statute, is for the benefit of all users, rather than an activity solely in the interest of licensees.

As statutory bodies, APMCs provide basic facilities in the market area out of the market fee collected from the licensees, mainly to facilitate the farmers, purchasers and others. APMCs provide a host of services to the licensees in relation to the procurement of agricultural produce, which are “inputs” in terms of the definition of Business Auxiliary Services (Section 65(19) of the Finance Act, 1994). To that extent the meaning of “input” is much wider in scope than the meaning assigned in Rule 2(k) of CENVAT Credit Rules, 2004. Therefore the services provided by the APMC are classifiable as BAS and hence covered by the exemption under Notification 14/2004-ST.

However, any other service provided by the APMCs for a separate charge (other than market fee) to either the licensees or farmers or any other person, e.g. renting of shops in the market area, etc. would be liable to tax under the respective taxable heads.