TaxTMI 
TaxTMI 
Subject: Tax on 15 New Services to be effective from 16.7.2001- Instructions regarding.
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....e service tax provisions relates to the introduction of self-assessment procedure vide amendment of section 70 of the Finance Act 1994. Section 71 has also been amended to provide for verification by the Superintendent for correctness of the tax assessed by the assessee on self-assessment basis. Where service tax on any services provided has escaped assessment or has been under assessed, the Assistant Commissioner / Deputy Commissioner of Central Excise (AC/DC) is required to pass an order of assessment. In view of the amended provisions, the Superintendent of Central Excise is not required to pass any order of assessment. He should only refer the matter to AC/DC concerned along with his observation and report. 4.2 Section 67 of the Finance Act, 1994 has been amended to provide for a comprehensive definition of value of taxable service instead of separate definitions for each of the services. However, there is no change in the definitions relating to existing taxable services. Accordingly clarifications/circulars issued in this regard in the past will continue to hold good. 4.3 Section 69 has been amended to specify that application for registration sh....
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.... appended as per details below. (i) Scientific and technical consultancy service Annexure I (ii) Photography service Annexure II (iii) Convention service Annexure III (iv) On-line information and database access and/or retrieval Annexure IV (v) Broadcasting service Annexure V (vi) Insurance auxiliary services Annexure VI (vii) Banking and other financial services Annexure VII (viii) Port services Annexure VIII (ix) Authorised service station for service or repair of motorcar and two wheeled motor vehicle Annexure IX (x) Video tape production service Annexure X (xi) Sound recording service Annexure XI (xii) Telegraph services Annexure XII (xiii) Telex service Annexure XII (xiv) Facsimile service Annexure XII (xv) Leased circuits Annexure XII The section or clause nos. referred to hereinafter are the sections or clauses of the Finance Act, 1994 as amended by the Finance Act, 2001. 8 The Commissioners are requested to issue suitable trade notices for the benefit of the new assesses detailing the scope and coverage of the new services,....
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...., these categories of service providers are not known as scientists or technocrats or science or technology institutions or organisations. They will not be covered under service tax. Whether public funded research institutions like CSIR, ICAR, DRDO, IITs and IISc.,Regional Engineering Colleges etc, which are exempt from payment of income tax are covered under the service tax. Yes. Service tax is liable to be paid when any scientific or technical consultancy service is rendered whether by public funded institutions or by private agencies. Whether testing services will be covered under the proposed levy? Mere testing will not attract service tax. However, in case testing is an integral part of the consultancy, then such activity is part and parcel of the taxable service and no abatement of any kind admissible. Many public funded research institutions receive grants or aids from the Government for conducting research /project work. Whether such activities would be covered under the levy? In the facts of this case, no service is rendered to any one. Hence the question of payment of service tax does not arise. However, if they render service to anyone on payment basis,....
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....tc. 3. The photography services are rendered by still photography studios, still film processing laboratories, cinematographic studios/labs who undertake motion picture photography and processing of cine films, holography studios (laser photography) who make holograms, aerial photographers, industrial photographers, etc. 4. The value of taxable service is the gross amount charged from the customer for the service rendered. However, the cost of unexposed photography films sold to the customer is excluded. The service provider claiming benefit of the cost of film should be advised to show them clearly on the invoices along with description and particulars of the film. Otherwise, the claim will not be considered as admissible. No other cost (such as photographic paper, chemicals, etc.) is excluded from the taxable value. 5. In regard to still photography, notification No. 6/2001-ST dated the 9th July, 2001, has been issued. Accordingly, service providers who are registered under various States/Municipal laws relating to Shops and Establishments or any other law of state which is in force for the time being, for carrying out commercial activity only are liable to service tax. ....
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....s not liable to tax as mandap keeper service also. 3. A doubt has been raised whether holding of conventions by Chambers of Commerce and Industry for their members would be liable to service tax. In this regard, it is clarified that service tax, in the case of convention services, is applicable only when the service is provided by a commercial concern. If the Chamber of Commerce and Industry is not a commercial concern, then the tax does not apply. The memorandum and articles of association of a Chamber of Commerce & Industry would indicate whether it is a commercial concern or not. It is informed by the Chambers that generally they are not commercial concerns. Annexure IV On-line information and database access and/or retrieval 1. As per section 65(19), 1994, the term "On-line information and data base access or retrieval" means providing data or information, retrievable or otherwise, to a customer in electronic form through a computer network. The words "Data", "information", "electronic form" and "computer network" have the same meanings assigned to them in the Information Technology Act, 2000. As per section 65(72)(zh), taxable service means any se....
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.... Internet service providers (ISPs) provide access to the web-sites through the computer network and the web-sites. Web-sites, in turn, provide the database or information. Some of the well-known ISPs operating in India are VSNL, MTNL, Satyam online, Bharti, Tata, RPG, HCL, Wipro, BPL, Mantra online, Dishnet. They normally charge the customers on the basis of usage of time (hours). They also provide dedicated lease lines on lump-sump payment basis. Clearly ISPs provide service in relation to on-line information and database access or retrieval. They are an integral part of the internet operations and without their service, the data or information can neither be accessed nor retrieved. They are, therefore, liable to pay service tax on the amount charged from the customers whether on usage time basis or on lease line basis. 5. As regards paid web-sites, a few examples of Indian dot companies are, Indiainformer.com, CIIonline.com, who charge the customer for certain specific information contained in their website either in advance or credit basis. They shall be also liable to pay service tax on the paid services provided by them. It is obvious tha....
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....ication like sign, signals, writing, pictures, images and sound of all kind by transmission of electro-magnetic waves through space or through cables intended to be received by the general public either directly or indirectly through the medium of relay stations and all is grammatical variations and cognate expressions shall be construed accordingly. The taxable service is any service provided to a client, by a broadcasting agency or organisation in relation to broadcasting, in any manner. 2. The service covers both radio broadcasting and television broadcasting. While radio broadcasting is done by the All India Radio or any private radio channel, television broadcasting is done by Doordarshan, Indian TV Channels and Foreign TV channels. The broadcasting may be of advertisements, serials/programmes or live events. The client is the person who wants an advertisement to be broadcast or the sponsor of a serial or programme or event who wants the serial or programme or event to be broadcast. The service provider, that is, broadcasting agency or organisation is the AIR, Doordarshan, other Indian TV Channels and foreign TV channels who broadcast the programme in Indi....
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....nels, their head office may be located outside India. However, they have their branch offices or subsidiary companies located in India. In some cases, they have appointed agents. These branch offices/ subsidiary companies/agents act on behalf of these channels, selling time slots and recovering service charges and remitting the same to their head office/holding company/principals as the case may be. In such cases, these branch offices/subsidiary companies/ agents are rendering the service in relation to broadcasting and therefore, they are liable to pay the service tax and comply with all other procedural formalities relating to service tax. 6. In the case of AIR and Doordarshan, the billing for the service rendered is done by the Regional Stations of AIR or Regional Doordarshan Kendras. These Regional Offices will have to be, therefore, registered for payment of service tax and for complying with other procedural formalities. 7. A doubt has been raised whether Prasar Bharati (AIR and Doordarshan) is liable to pay service tax since under section 22 of the Prashar Bharati Act 1990, they are exempt from any income tax or any other tax in resp....
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....s and loss adjusters, actuaries and insurance consultants, the service is provided mainly to the insurance companies (insurer) while in the case of insurance agents, the service is provided to both the insurer and the policy holder. Service tax is liable to be paid by the insurance auxiliary service provider except in case of insurance agents. Insurance agents normally do not charge the policy holder. However, the insurance company pays the agent a commission (usually as a percentage of the insurance premium) on a periodic basis. In the case of an insurance agent, it has been provided in the Service Tax Rules that the person liable to pay service tax will be the concerned insurance company who has appointed the agent. Notification no. 5/2001-ST refers. 4. The service tax is applicable to services provided on or after16th July 2001 and any payment made for the services provided prior to this date will not liable to tax even though payment is made on or after the 16^th July 2001. 5. A point has been raised that the service provider, namely, an actuary, an intermediary or insurance intermediary or an insurance agent is reimbursed certain out o....
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....the Banking Regulation Act, 1949 and Reserve Bank of India Act, 1934 are given below:- " banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. "banking company" means any company which transacts the business of banking in India. "financial institution" means any non-banking institution which carries on as its business or part of its business any of the following activities, namely- (i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own: (ii) the acquisition of shares, stock, bonds, debentures or securities issued by a government or local authority or other marketable securities of like nature: (iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire Purchase Act. 1972 (26 of 1972): (iv) the carrying of any class of insurance business: (v) managing, conducting or supervising, as foreman, agent or in any other capacity, of chits or kuries as defined in any law which is for the time being....
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....d that the general business practice is as follows: The service provider enters into a leasing or hire-purchase agreement with the lessee or hire-purchaser. At the time of entering into the agreement, they collect a charge called lease management fee or processing fee or documentation charges or by any other name, which is usually a percentage of the transaction value. The lease rental or hire purchase amount is recovered in equated monthly instalments (EMI) over the period of lease or hire-purchase as indicated in the agreement through post dated cheques and no separate bills are raised for the monthly recovery. Every agreement bears a unique number. 2.1.3 The EMIs consist of recovery of principal amount (towards the original cost of the equipment) and finance /interest charges. The allocation between the principal and the finance/interest charges are known to and agreed upon by both the parties. The customer repayment schedule contains the details of the EMIs with the break up for the principal and the interest. In respect of leasing and hire-purchase, the amount recovered as principal is not the consideration for services rendered but is credited to the capital acc....
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....to credit card service provider in respect of transaction done prior to 16th July, 2001 is not liable to service tax even though such amount is paid on or after the 16th July, 2001. 2.3 Merchant banking services Banks and Financial institutions including NBFCs providing merchant banking services are governed by the SEBI (Merchant Bankers) Rules, 1992 and SEBI (Merchant Bankers) Regulations, 1992. As per these rules and regulations, merchant banking service is any service provided in relation to issue management either by making arrangements regarding selling, buying or subscribing securities as manager, consultant, advisor or rendering corporate advisory service in relation to such issue management. This, inter-alia, consists of preparation of prospectus and other information relating to the issue, determining financial structure, tie up of financiers and final allotment and refund of the subscription for debt/ equity issue management and acting as advisor, consultant, co-manager, underwriter and portfolio manager. In addition, merchant banking services also include advisory services on corporate restructuring, debt or equity r....
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....e examples of other auxiliary financial services are investment and portfolio research and advice, advice given on mergers and acquisition, advice on corporate restructuring and strategy, market analysis and intelligence. 2.6 In the case of banks and financial institutions including NBFCs, while some services may be done in a centralised way (that is centralised billing and accounting) either at the head office or regional office, in respect of other services such as financial leasing including equipment leasing, specified branches may be providing the service with separate billing and accounting. In respect of a taxable service, where the billing and accounting is centralised in an office of the bank, only such office needs to be registered and made liable to pay service tax in respect of such service. Where the billing and accounting is not centralised and is undertaken by different branches of a bank or a financial institution including NBFCs, each such branch office will have to be registered and made responsible for payment of service tax and compliance with other procedural formalities. Annexure VIII Port services 1. As per the ....
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....e liable to service tax as these are not services rendered in relation to goods or vessels. For any other charge not mentioned above, the Commissioner may decide the inclusion/exclusion in the value of taxable service on merits. Annexure IX Authorised service station for service or repair of motor cars and two wheeled motor vehicles 1. As per section 65(8), "authorised service station" means any service station, or center, authorized by automobile manufacturer to carry out any service or repair of any motor car or two wheeled motor vehicle manufactured by such manufacturer. The taxable service, as per section 65(72)(zo) is any service provided to a customer by an authorized service station, in relation to any service or repair of motor cars or two wheeled motor vehicles. 2. Any service or repair provided by an authorized service station in relation to motor cars and two wheeled motor vehicles, will be covered in the ambit of service tax. Examples of taxable services include services provided during warranty period, subsequent services such as routine check of performance of engine and vehicle, engine tuning, engine oil check, gear oil....
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.... video-tape will not come within the purview of service tax. 2.1 Services provided by individual videographers has, however, been exempted vide notication No. 7/2001-ST, dated the 9th July, 2001. As such, the tax is payable by studios, shops and other establishments carrying on business of rendering of services in the field of videography. Annexure XI Sound recording service 1. As per section 65(66), "sound recording" means recording of sound on a magnetic storage device and editing thereof, in any manner. As per section 65(72)(zj), taxable service is any service provided to a client by a sound recording studio or agency in relation to any kind of sound recording. 2. Any service provided by sound recording studio or agency in relation to recording of sound will be covered under the tax net. The activities which fall under the category of service are providing the facility of studio, technical persons, musical instruments and other devices or any other facility or all the facilities in a consolidated manner, required for recording of sound, editing thereof, providing different kinds of sounds from the sound library....