SERVICE TAX: READY RECKONER FOR THE CALANDER YEAR
[Submitted by CA. Pradeep Modi,
B.Com. FCA, DISA,
Kolkata, West Bengal]
July 17, 2008
STEP-1. REGISTRATION
Registration within a period of 30 days in FORM ST-1 is Compulsory where the aggregate value of taxable service exceeds Rupees Nine Lakhs.
Registration in form S.T. –2 shall be granted within seven days.
New services introduced w.e.f. 16.05.2008 are:-
- Information Technology Software Service;
- Investment Management Service under ULIP;
- Stock Exchange Service;
- Commodity Exchange service;
- Clearing & processing House services;
- Supply of tangible goods for use service.
STEP-2. BOOKS & RECORDS
No specific records have been prescribed. The records, including computerized data if any, being maintained by an assessee as required under any other laws in force (e.g. Income tax, Sales tax) is acceptable
STEP-3. VALUATION
- The value of any taxable service shall be the gross amount charged by the service provider of such service provided or to be provided by him. The transactions between associated enterprises, any amount credited or debited to any account (including suspense account) in the book of account of person liable to pay Service tax will be taken for reckoning gross amount charged.
- TDS: The Service Tax is to be paid on the value of taxable services, which is charged by an assessee. Therefore, the Service Tax is to be paid on the amount of income tax deducted at source because it is also a part of Consideration.
- UTILIZING CENVAT CREDIT ON INPUT, SERVICE, INPUT & CAPITAL GOODS
- When input service are common for exempted service as well as output service, the credit to the extent 20% of tax liability on the output service.
- However, on certain specified input service the CENVAT Credit could be utilized without having any restriction of 20%.
- Service tax Rate in general is 12%, Education Cess 2% and Secondary & Higher education Cess 1% but for Works Contract, the rate is 4% under composition Scheme.
STEP-4. PAYMENT
- The payment of service tax on monthly / quarterly basis shall be deposited by way of GAR-7 Challan.
- In case where an assessee is an individual or a partnership firm:-
The value of taxable services received during any quarter shall be required to be paid by him 5th day of the month immediately following the said quarter.
- (b) In case of all other categories of service tax assessee:-
The value of taxable services received during any calendar month shall be required to be paid by them to the credit of the Central Government by the 5th day of the month immediately following the said calendar month.
- However, service tax for the month of March or the quarter ending in the month of March is to be paid by 31st March, of that calendar year.
- In case where an assessee is an individual or a partnership firm:-
- DELAY IN PAYMENT
Interest @ 13% per annum for the period by which the crediting of the levy or any part thereof is delayed.
STEP.5- ADJUSTMENT IN TAX
Where an assessee has paid to the credit of Central Government any amount in excess of the amount required to be paid towards service tax liability for a month or quarter, as the case may be, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month or quarter, as the case may be, subject to the following conditions:-
- excess amount paid is on account of reasons not involving interpretation of law, taxability, classification, valuation or applicability of any exemption notification,
- excess amount paid by an assessee, on account of delayed receipt of details of payments towards taxable services may be adjusted without monetary limit,
- in other cases the excess amount paid may be adjusted with a monetary limit of Rs. 100,000/- for a relevant month or quarter, as the case may be,
- the details and reasons for such adjustment shall be intimated to the jurisdictional Superintendent of Central Excise within a period of 15 days from the date of such adjustment.”.
STEP.6- FILING OF RETURN
All categories of service tax assessee shall be required to submit a half-yearly return by the 25th day of the month following the particular half-year (i.e.25th October & 25th April) in FORM ST-3 in triplicate along with:-
- Copy of each of the form GAR-7 challans submitted for the month/quarter covered in the half, and
- A memorandum in form ST-3A giving full details of the difference between the amounts of Service Tax collected and the actual amount deposit (month wise) if applicable.
- If no services have been provided or no recovery is made, such assessee may file a Nil Return.
STEP.7- REVISION OF RETURN
An assessee may submit a revised return, in Form ST-3, in triplicate, to correct a mistake or omission, within a period of ninety days from the date of submission of the return.
STEP.8- PENALTY
- The failure to pay service tax within the specified period attracts penalty. The amount of penalty shall be Rs.200/- per day or 2% of such tax per month whichever is higher [which shall not exceed the amount of service tax payable].
- For delay in furnishing the return:
- 15 days from the date prescribed, an amount of Rs. 500/-;
- beyond 15 days but not later than 30 days, an amount of Rs. 1,000/-; and
- beyond 30 days from the date prescribed for submission of such return an amount of Rs. 1,000/- plus Rs. 100/- for every day from the thirty first day till the date of furnishing the said return:
STEP.9- SHOW CAUSE NOTICE
- WHO: - The Assistant / Deputy Commissioner of Central Excise.
- WHY: - Service Tax on any service provided by the assessee has been paid shortly, not paid, refunded erroneously.
- WHEN: - Short levy or erroneously granted any refund due to suppression of facts, misstatement or evasion with intent to evade payment of service tax to be levied, the notice could be issued within five year from the relevant date.
STEP.10 - APPEALS
10.1 APPEAL TO THE COMMISSIONER (APPEALS):-
- WHO: - An Assessee
- WHY:-
(i) assessment order passed by the Assistant / Deputy Commissioner.or
(ii) denying his liability to be assessed under Service Tax, or
(iii) against order levying interest or penalty or
(iv) denying any refund of service tax.
- WHEN: - Within 3 months from the receipt of the order in question. Commissioner (Appeals)may extend that said period by a further period of three months, If he feels that Appellant was prevented by sufficient cause from filing the appeal within the aforesaid period of 3 months
- HOW:- Form ST– 4
- ADJOURNMENT: - That any adjournment during hearing may be give only after recording the reasons and the adjournment given shall not be more than three times.
- DECISION:- The Commissioner of Central Excise (Appeals) shall hear and decide the appeal within a period of 6 months of its being filed and pass such orders as he thinks fit and he may enhance the service tax, interest or penalty or denying any refund of service tax.
10.2. APPEAL TO THE APPELLATE TRIBUNAL:-
- WHO:-
(i) Any person aggrieved by an order passed by the Commissioner of Central Excise or
(ii) An appellate order passed by the Commissioner of Central Excise (Appeals)
- WHY:-
(i) the Committee of Chief Commissions or the Committee of Commissioners objects to any order passed by the Commissioner of Central Excise in relation to the service tax, it may direct the Commissioner of Central Excise to appeal to the Tribunal.
(ii) denying the Commissioner of Central Excise objects any appellate order passed by the Commissioner of Central Excise (Appeals), he may direct the Assistant / Deputy Commissioner to file an appeal to the Appellate Tribunal against such order.
- WHEN:- (i) Respondent has a right to file cross objection with 45 days from the date of receipt of Notice or such extended period as permitted by the Tribunal and the cross memorandum shall be disposed off along with the appeal.
(ii) An appeal to the Tribunal shall be filed within 3 months, time period may be extended if sufficient cause. The Appellate Tribunal can condone the delay in filing the appeal or cross objection on sufficient cause being shown.
- HOW: - (i) in Form ST-5 & ST-7 as the case may be & Form ST-6 ( for Cross objection and has to be accompanied with a fee as prescribed.
- ADJOURNMENT: - That any adjournment during hearing may be give only after recording the reasons and the adjournment given shall not be more than three times.
10.3. POWER OF SEARCH
If the Commissioner of Central Excise has reason to believe that any documents or books or things which in his opinion will be useful for or relevant to any proceeding under this Chapter are secreted in any place, he may authorize any officer [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be] to search for and seize or may himself search for and seize such documents or books or things.
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches, shall, so far as may be, apply to searches under this section as they apply to searches under that Code.
- Gazetted Officer of Central Excise (Superintendent and above) has the power to summon any person for giving evidence or producing documents necessary for any inquiry.
- The person must attend in response to summons and answer such questions as do not incriminate him and on his failure to do so, he attracts penalties.
10.4. SERVICE TAX AUDIT
- WHO:- Central Excise Officer authorized by the AC/DC or audit party deputed by the C&AG.
- WHEN:- Norms for Audit of service providers are as under:
S.No. Amount of tax in CASH and CENVAT paid annually Frequency of Audit 1. Taxpayers paying more than Rs. 50 lakhs Every Year 2. Taxpayers paying between Rs. 25 to Rs. 50 lakhs Once in two Years 3. Taxpayers paying between Rs. 10 to Rs. 25 lakhs Once in Five Years 4. Taxpayers paying below Rs. 10 lakhs 2% of the taxpayer every Year
-
HOW:- Every Assessee shall make available at the registered premises at all reasonable time of all records for inspection and examination.
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