Liability of service tax

[shyamal roychowdhury]

business support service :- One mr A ( Not Professionally qualified ) under trade name BSD & ASSOCIATES CARRIES ON BUSINESS OF KEEPING & PREPARING RECORDS , CHALLANS , REGISTERS ETC REQURED ASPER PROVISIONS OF PF & ESI ACT . HIS CLIENTS ARE SMALL PVT LTD COMPANIES, FIRMS & PROPRITORY BUSINESS . THESE BUSINESS CLIENTS OUTSORCE THE COMPLIANCE OF THE PF ACT, ESI ACT . NOW THE QUESTION IS ARE MR A LIABLE TO SERVICE TAX UNDER BUSINESS SUPPORT SERVICE & IF NOT IS THEIR ANY OTHER CLAUSE TO COVER MR A FOR SERVICE TAX. iF THE ANS IS YES , THEN WEATHER MR A IS LIABLE TO PAY SERVICE TAX ON RENT OF PROPERTY HE RECIVES WHICH IS USED BY COMMERCIAL CONCERN. TOTAL ANNUAL EDTIMATED FEES OF MR A FOR 2007- 2008 WILL BE 25 LACS . RENT RECEIPT IS RS 15000 /- P.M. LAST YEAR 2006-2007 FEES WERE RS 18LACS. MR A SHOWS FEES RECIVED 'AS RECEIPTS 'IN P& L ACCOUNT MR A CONTENTION IS THAT AMOUNT RECEIVED FROM CLIENTS ARE HIS BUSINESS RECEIPTS & NOT SERVICE FEES . SHALL BE OBILIZED FOR AN EALY DISCUSSION ROYCHOWDHURY

[Madhukar N Hiregange]

He is liable under BSS as the defintion includes accounting and transaction processing. Rent also would be inlcuded post 1.6.2007.

AI Summary

Business support service liability covers accounting and transaction processing; commercial rent becomes taxable after amendment. Liability turns on classification: outsourced bookkeeping, challan and register preparation for employer compliance constitute Business Support Service, encompassing accounting and transaction processing, so fees are subject to service tax despite being shown as business receipts. Separately, rent from premises used by commercial concerns becomes taxable under the amended provisions after the specified effective date.