TaxTMI Updates e-Newsletter
May 08,2012

Summary: Section 66E lists nine categories as declared services-including renting of immovable property; construction of buildings (with an exception where full consideration is received after a completion certificate); temporary transfer of intellectual property rights; IT software services; agreeing to refrain or tolerate acts; hiring/leasing/licensing of goods without transfer of right to use; hire-purchase delivery activities; and the service portion of works contracts and of activities supplying food or drink. An explanatory clause defines competent authority and expands "construction." A practitioner response to a factual query concludes that an organisation supplying materials and deducting material costs from contractor bills is not itself providing the construction service and thus is not liable for service tax in those facts.

Summary: The revised reverse charge mechanism applies from enactment of the Finance Bill, 2012, shifting service tax liability to recipients as specified; Rent-a-Cab, Supply of Manpower and Works Contract attract the new reverse charge only when the provider is an Individual, HUF, proprietary/partnership/AOP and the receiver is a company, while a list of services (insurance agent to insurer, GTA in specified cases, sponsorship, arbitral tribunal, individual advocates, government support services, and import of services) requires the recipient to pay the tax in full and specified apportionments apply for other listed services.