TaxTMI 
TaxTMI 
TaxTMI 
Subject: Tax on 15 New Services to be effective from 16.7.2001- Instructions regarding.
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....ure 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 shall be made to the "Superintendent of Central Excise". 4.4 Section 73 has been amended to provide for rec....
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....rvice 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, gist of the service tax procedures and formalities to be complied with by the assessees, formats of the application for registration, service tax returns, etc., the manner of payment of service tax, the banks through which service tax payments can be made and o....
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.... 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, service tax will be payable on such services. Whether the service tax will be leviable on consultancy provided to government departments, public sector undertakings? If scientific or technical consultancy is provided to a government department for which consultation fees are received, then service tax would be applicable. Annexure II Photography....
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....nt 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. Individual professional photographers and others providing still photography service, but who do not have fixed place of business as a shop or office and who are not registered under these enactments, will not be liable to pay service tax. In essence, service tax is payable by shops and studios, processing and developing labs, etc. and not by the individual photographers. 6. P....
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.... 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 service provided to a customer, by a commercial concern, in relation to on-line information and database access or retrieval or both in electronic form. 2. The definitions given in the Information Technology Act, 2000 are as follows:- "Data" means a representation of information, knowledge, facts, concepts or instructions which are being prepared or have been prepared in a formalised manner, and is intended to be processed,....
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.... 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 that where the information is supplied free of charge, no service tax is payable. 6. Point for clarification: A question has been raised as to whether e-commerce transactions (other than providing online information and data) are covered in the ambit of service tax. It is clarified that in e-commerce transactions, no service of online information and database access/retrieval is involved. Therefore, e-commerce transactions will not ordinarily be covered under the service tax net. Normally, the web sites do not charge the surfers for information on sale of goods or services offered by them. If at all they do, service tax will be payable on the amount charged for providing the information. Another point raised relates to applicability of service tax on inter-connectivity serv....
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....he 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 India. 3. Broadcasting is done either terrestrially or through satellite links. Most of the private TV channels are using satellite links for broadcasting their programmes. The uplinking of the programme to the satellite is done through VSNL or other earth stations located in India or through other agencies located abroad. The up-linking agencies are not broadcasting agencies and are not liable to service tax in respect of such service. The signals beamed by satellite are received either by Multi System Operators (MSO) or directly by cable operators. In the latter case the cable operator further retransmits the signals to the public (viewers). However, in the case of MSO, they first retransmit signals to the cable operator who in turn retransmits the same to the viewers. The cable TV operator who merely retransmits the programme is not a b....
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....ith 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 respect of any income, profit or gains, accruing or arising out of the Fund of the corporation or any amount received by them. In this regard, it is clarified that the said section 22 applies only in respect of taxes on income or profit or gains. The exemption is only in respect of direct tax and not in respect of indirect tax. As such the argument that AIR or Doordarshan are not liable to pay service tax is not correct Annexure VI Insurance auxiliary service 1. As per section 65(31), "insurance auxiliary service" means any service provided by an actuary, an intermediary or insurance intermediary or an insurance agent in relation to general insurance business and includes risk assessment, claim settlement, survey and loss assessment. As per section 65(72)(zl), the taxable service is any service provided to a policy holder or insurer by an actuary or intermediary or insurance intermediary or insurance agent, in relation to insurance aux....
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....n raised that the service provider, namely, an actuary, an intermediary or insurance intermediary or an insurance agent is reimbursed certain out of pocket expenses such as travelling expenses, boarding and lodging charges on actual basis. These expenses are reimbursed in addition to the prescribed fee. Whether such reimbursements will be included in the taxable value? In this regard it is clarified that the amount billed to the client on account of out of pocket expenses which are reimbursable on actual basis, such as travelling, boarding and lodging expenses, the same are not subject to service tax. In this respect, the assessee may be required to provide documentary evidence substantiating his claim. 6. Another point raised is to whether in cases where the bills raised by the service provider are revised, the service tax is payable on the billed amount or on the actual amount received. In this regard it is clarified that Rule 6 of the Service Tax Rules, 1994, provides for payment of service tax only on the amount received and not on the amount raised for the services provided. As such service tax is payable on the amount actually received. Annexure VII Banking and other finan....
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....s as defined in any law which is for the time being in force in any State, or any business, which is similar thereto; (vi) collecting, for any purpose or under any scheme or arrangement by whatever name called, monies in lumpsump or otherwise, by way of subscription or by sale of units, or other instruments or in any other manner and awarding prizes or gifts whether in cash or kind, or disbursing monies in any other way, to persons from whom monies are collected or to any other person, but does not include any institution, which carries on as its principal business- a. agricultural operations; or (aa) industrial activity; or b. purchase or sale of any goods (other than securities) or providing of any service, or c. the purchase, construction or sale of immovable property, so, however, that no portion of the income of the institution is derived from the financing of purchases, construction or sales of immovable property by other persons. "non-banking financial company " means- i. a financial institution which is a company; ii. a non banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in ....
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.... The interest/finance charges is the revenue or income and is credited to the revenue account. Such interest or finance charges together with the lease management fee/ processing fee/documentation charges is the consideration for the services rendered and, therefore, they constitute the value of taxable service and service tax is payable on this value. Accordingly it is clarified that service tax in the case of financial leasing including equipment leasing and hire purchase will be leviable only on the lease management fee/processing fee/documentation charges (recovered at the time of entering into the agreement) and on the finance/interest charges (recovered in equated monthly installments) and not on the principal amount. 2.1.4 A question has been raised whether lease or hire-purchase agreements entered into prior to the imposition of levy (prior to 16-7-2001) would be leviable to service tax. In this regard, it is clarified that such agreements entered into prior to 16-7-2001 will not be liable to service tax, provided the property/goods has also been received by the lessee prior to 16.7.2001. 2.2 Credit card services 2.2.1 This is a service where the customer is provided wit....
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....set management including portfolio management and all forms of fund management, pension fund mangement, custodial depository and trust services. 2.4.1 Asset management and portfolio managers are also governed by the SEBI (Portfolio Managers) Rules, 1993 and SEBI (Portfolio Managers) Regulations, 1993. As per these rules and regulations, the "portfolio manager" means any person who pursuant to a contract or arrangement with a client, advises or directs or undertakes on behalf of the client (whether as discretionary manager or otherwise) the management or the administration of portfolio of securities or the funds of the client, as the case may be. They enter in agreement with the client and charge an agreed fee for providing the service. The tax will be leviable on the fee charged for providing these services. Similiarly in the case of other types of fund management such as pension fund management, service tax will be leviable on the fee charged for providing the service. 2.4.2 With respect to mutual funds, a question has been raised whether the asset management company is liable to pay service tax as it may not fall in the category of NBFC. It is clarified that such asset manageme....
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....y consist of port and dock services (these are for services rendered in relation to vessels), cargo handling and storage services, railway haulage services, and container handling services(these are for services rendered in relation to goods). The Dock Labour Board of the Port provides service of labour for handling of goods. The port or the person authorised by the port rendering these services is the service provider. 2.1 Some of the specific charges for the services rendered in respect of port services are as follows. (i) Port and dock charges consisting of berthing and mooring charges, port dues, pilotage and towage, water supply charges, salvage and diver charges, anchorage fee; (ii) Cargo handling and storage charges consisting of wharfage for general cargo, warehousing charges, cranage charges, ore handling charges, wharfage on petroleum products, weighment charges for lorries, traffic appliance charges, weighment charges for goods; (iii) Railway haulage charges for rail-borne goods, local haulage and storage; (iv) Container handling charges consisting of import, export and transhipment wharfage on containers, equipment charges for handling of containers, container stor....
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....has been raised as to whether service tax is leviable on the amount reimbursed to them for carrying out free services. It is clarified that though the authorized service stations are providing free service to the customer during the warranty period, they are being reimbursed service charges for the same by the manufacturer of motor vehicles. The definition for value of taxable service specifically provides that the reimbursement received from the manufacturer of motor vehicles for free service rendered to the customer is includible in the taxable value. Annexure X Videotape production service 1 As per section 65(83), "video tape production" means the process of any recording of any programme, event or function on a magnetic tape and includes editing thereof, in any manner. As per section 65(72)(zi), taxable service is any service provided to a client by any video-tape production agency in relation to video tape production in any manner. 2. It may be seen that the taxable service covers the service of recording of any programme, event or function and includes recording of serials, telefilms or any other programme meant for broadcasting. Also, the scope of taxable service covers ....