Blog 6 : Small Service Provider Exemption :

Service tax provides for an exemption to small service providers who provide taxable services of a value not exceeding the specified limit. The specified limit is now Rs. 10 lakhs. In other words where the value of taxable services provided do not exceed Rs. 10 lakhs in the previous financial year, the concerned service provider would not be required to pay service tax up to receipts of Rs. 10 lakhs in the current financial year. The exemption is through notification 33/2012ST as amended from time to time. The service provider should however satisfy certain conditions which are as follows –

·         Taxable services provided by a person under a brand name or a trade name (whether registered or not) of another person would NOT be eligible for this exemption

·         A receiver of services who is liable to pay service tax on the services he has received. Eg. Import of Service & recipient of Goods Transport Agency service.

·         Once an option is exercised in regard to this exemption during a financial year, it cannot be changed in the same financial year. [This however does not mean that the claiming of the exemption makes it compulsory to claim for the whole year. In between even without reaching Rs.10 lakhs the option to pay can be made.]

·         No cenvat credit can be availed on inputs or input services used in providing such output service for which exemption is being claimed.

·         Cenvat credit cannot be availed on capital goods received in the premises of provider of such service during the exemption period.

·         On the date of availment of exemption option, the service provider who has taken cenvat credit, shall pay an amount equivalent to the cenvat credit taken by him in respect of inputs lying in stock or in process on the date of availment of exemption. After paying such an amount, if there is any balance of cenvat credit remaining unutilized, such balance would lapse.

·         The exemption shall apply in respect of the aggregate value of ALL taxable services provided by the service provider (even if from more than one premises) and not individually.

·         Exempted services shall be outside the purview of the exemption of this notification. In other words, the value for ascertaining the limit of Rs. 10 Lakhs would be that of taxable services alone on which service tax is payable.

·         The aggregate value of such services provided in the preceding financial year should not exceed the aforesaid exemption limit.

Blog 5 : Input Service Distributor :

Where the service provider is providing the output service from the multiple locations can receive input services invoices at one location and distribute the credit on input services to various locations of the service provider subject to the following conditions.

·         Credit distributed shall not exceed the amount of service tax paid on input service

·         Credit shall not be distributed on input service which is used exclusively in providing the exempted service

·         Where an input service which is used exclusively in one unit entire credit on such input service shall be distributed to that unit only.

·         Where an input service is used for more than one location credit on such input shall be distributed to all such units on the basis of turnover of each unit to the total turnover of all the units.

This facility could be used where the manufacturer or service provider has a system of receiving the bills for input services at the Head Office or at branch offices but the credits are to be distributed to the registered service units providing taxable services or the factories engaged in manufacturing. Where the assessee has independent registration for the various service units/factories, this scheme would be particularly useful. The scheme requires the Head Office/branch office seeking to distribute the cenvat credits to the individual units, to register under service tax as an ISD (Input Service Distributor).

Once registered, the Head Office/branch office would issue an invoice, bill or a challan to each of the recipient to whom the credit is sought to be distributed. The invoice, bill or challan is to be serially numbered and shall contain –

·         Details as to name, address and registration number of the provider of input services.

·         Details of the document/bill given by such input service provider.

·         Name and address of the input service distributor.

·         Name and address of the recipient of the distributed credit.

·         The amount of the credit that is sought to be distributed.

Blog 4 : Procedures of Registration & Service Tax Forms :

1)     Apply for registration in Form ST-1 to Superintendent of Central Excise.

2)     Submit all the proofs viz. PAN, residential proof, address proof, partnership deed in case of firm, Memorandum or Articles of Association in case of Company.

3)     The superintendent of Central Excise will grant certificate in ST-2.

The service provider can subsequently Add or delete the category of services from time to time as require.

Amendment or addition of service is require if assesse is require to remit the service tax as input service recipient. The same has also to be reported while filing the return in ST-3.

 Service Tax Forms :

Sr. no.	Liability	When and by whom	Time period	Form
1	Service Tax Registration	At the time of starting of business by the assessee	Within 30 days from the date of starting the business or reaching INR 9 lakhs taxable turnover or commencement of new levy	ST-1
	Amendment in the Service Tax registration certificate		Within 30 days of any change
2	Service Tax Registration Certificate	To be issued by Service Tax Department	Within 7 days from the date of receipt of application	ST-2
3	Service Tax return	Half Yearly / Assessee	Within 25 days after completion of half year	ST-3
			25th October 25th April
4	Appeal to Commissioner of Central Excise (Appeals)	Assessee	Within 2 months from the date of receipt of order	ST-4
5	Appeal to CESTAT	Assessee	Within 3 months from the date of receipt of order	ST-5
6	Cross objections	Assessee / Department	Within 45 days from the date of receipt of notice	ST-6
7	Appeal to CESTAT	Department	Within 4 months from the date of receipt of order	ST-7
8	Payment of Service Tax	Corporate Assessee	Within 5 days from the end of month	GAR-7 challan
			Within 6 days from end of month in case of e-payment
			For March, Tax payment shall be made on or before 31st March.
9	Payment of Service Tax	Non Corporate Assessee	Within 5 days from the end of quarter	GAR-7 challan
			Within 6 days from end of quarter in case of e-payment
			For quarter ending March, Tax payment shall be made on or before 31st March.

Blog 3 : Registration :

A person liable to Service Tax has to register with Superintendent of Central Excise within 30 of providing taxable service.

In following cases Registration is required –

• Taxable turnover of service provider exceeds Rs. 9 Lakhs. (The exemption limit is of Rs. 10 Lakhs).
• Service provider is acting as input service distributor irrespective of turnover.
• Service provider provides the service under the brand name of others.
• Service Receiver is liable to pay service tax being the recipient of service under Reverse Charge Mechanism.

Basic Exemption Limits are as below.

Period	Basic Exemption Limit (in INR)
01-07-1994 to 31-03-2005	No limit
01-04-2005 to 31-03-2007	4 Lakhs
01-04-2007 to 31-03-2008	8 Lakhs
01-04-2008 onwards	10 Lakhs

Multiple Services : One application of registration is enough even though the service provider providing multiple service. All the services can be mentioned in one ST-1, & ST-2, the registration certificate is issued for all the services.

Transfer of Service : Registration certificate is not transferable. The person acquiring business has to obtain fresh registration.

Amendment to Registration Certificate : For addition of service or change in business address the amendment is require to existing Registration Certificate.

Change in Business Constitution : From Sole proprietorship to Firm or Firm to Company etc. Fresh registration has to be obtained with new number.

Brand Name of another person : Service provider providing taxable service under the brand name (whether registered or not) of another person is not eligible for claiming exemption of Rs. 10 lakhs & hence liable to pay tax irrespective of Turnover.

Contains of Registration Certificate : The Service Tax Registration Number is a PAN based.

            First 10 digit is a PAN of Assessee

            Next 2 digits are ‘ST’

            Next 3 digits are serial number. Like 001, 002 etc.

Cancellation or Surrender of Registration Certificate : The certificate once issued is valid till it is surrender. Registration can be cancelled in the following cases

            Service provider ceases to provide the taxable service,

            Service provider deceased (in case of sole proprietor).

            Service provider transferred his business in favour of others.

Blog 2 : Service Tax, Meaning & Applicability :

Sources of Service Tax Laws.

• Finance Act, 1994
• Rules
• Notifications
• Circulars or Instructions
• Orders & Trade Notices

Rates from the beginning are as follows.

Period	Basic Rate	EC	SHEC	Total
01-07-1994 to 13-05-2003	5%	-	-	5%
14-05-2003 to 09-09-2004	8%	-	-	8%
10-09-2004 to 17-04-2006	10%	2%	-	10.20%
18-04-2006 to 10-05-2007	12%	2%	-	12.24%
11-05-2007 to 23-02-2009	12%	2%	1%	12.36%
24-02-2009 to 31-03-2012	10%	2%	1%	10.30%
01-04-2012 onwards (Present Rate)	12%	2%	1%	12.36%

EC : Education Cess

SHEC : Secondery & Higher Education Cess.

Service Tax Not applicable to following. 

1. To the state of Jammu & Kashimir 
2. On Export of Service

Export service to be provided by service provider from taxable territory & used in non taxable territory, & the payment is received in convertible foreign exchange.

Meaning of Service :

• Any activity
• For a consideration
• Carried out by one person to another
• AND includes declared service.

But Excludes :

(1) IMAGE

Immovable property

Money

Actionable Claims

Goods sold (including deemed sale)

Employee to the Employer

(2) Fees payable to a court or a tribunal

Meaning of terms :

Activity :

Could be active or passive & would also include forbearance of act. 
Consideration :

Everything received or receivable including Monitory & Non Monitory benefit for providing of said service.

For  example, No Service Tax on :

1.     Activity Without Consideration – An artist performing on street, Large Govt. activity for citizens.

2.     Payments without activity – Pocket money, reward, gift, etc..

3.     There is no Service Tax on penalty or on fine

Carried on by one person to another : 
Service provided by a person to self is not a service. e.g.

1.     Presenting own file to income tax officer.

2.     From branch to another branch or Head office or vice versa from taxable to taxable territory.

3.     Support service provided by Government.

Declared Service: It includes,

1.     Renting of immovable property

2.     Construction of complex, building, civil structure or a part thereof.

3.     Transfer of intellectual property rights

4.     Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software.

5.     Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.

6.     transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods

7.     activities in relation to delivery of goods on hire purchase or any system of payment by installments

8.     service portion in execution of a works contract

9.     service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity

 Immovable Property :

Transfer of title in Land, things attached to the earth.

      Money : following are Exclusions,

-       Principal amount of Deposit or withdrawal from bank.

-       Repayment of Principle sum of loan.

-       Conversion of currency in exchange e.g. Rs. 100 note in smaller denomination, i.e. coins.

     Actionable Claims :

-       Unsecured debts transferred to third person.

-       Righty to participate in the draw to be held in lottery.

     Goods :

-       Transfer of title in Goods or Securities.

-       Transfer of goods (deemed sales)

 Employee to Employer.