TIOL-DDT 131 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 131</font><br> 08 06 2005<br> Wednesday</strong></font></p> <p align="center"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax – More than budgeted?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> The new and expanded services are to be effective from 16th June. Why 16th June? Read on. The Government did not stop just with notifying the new and expanded services but introduced several changes – good, bad and ugly.<br> <br> <strong>Service Tax on Job Work.</strong> The Service Tax on Business Auxiliary Service includes a tax on production or processing of goods for or on behalf of the client. The job work by individuals - other than factories, corporates etc was exempted by Notification No. 14/2004. Now the Notification is amended to restrict the exemption to certain areas like agriculture, printing etc,. This would mean expansion of the existing service beyond the scope of budget.<br> <br> <strong>Computer training institutes – not vocational?</strong> – The controversy regarding exemption to computer training institutes is at last settled – in favour of state. As per Notification No. 9/2003 dated 20.6.2003, computer training institutes were exempted. But the later version, Notification No. 24/2004 did not include computer training institutes in the exemption but there was a school of thought that believed that vocational training included computer training. There was a controversy whether computer institutes would fall under the exempted category of vocational training. Now the Notification No. 24/2004 is amended to specifically exclude computer training institutes from the purview of the exemptions thereby making all computer institutes in the purview of service tax. >From 16th June, we will have swarms of officers descending on computer institutes.<br> <br> <strong>Photography studio</strong> – Service provided by a photographic studio other than a commercial concern was exempted under Notification No. 6/2001-ST, dated 9-7-2001. Now this notification is rescinded.<br> <br> <strong>Videotape production</strong> – Videotape production by individual professional videographer was exempted. Now they are brought under the tax net by rescinding Notification No. 7/2001-ST, dated 9-7-2001. Every videographer is under the tax net.<br> <br> You want to look young by dyeing your hair? Do pay service tax. Hair dyeing under the beauty parlour Service was exempted. Now if you want to look younger with the dyed hair, pay a little service tax. Notification No. 11/2002-ST, dated the 1-08-2002 is rescinded. Why was hair dyeing earlier exempted and why is it withdrawn now?<br> <br> <strong>Indian service tax extended abroad, but mercifully exempted in some areas</strong> - Service provided by certain Service providers like Customs House Agent , Steamer Agent, C & F Agent etc,. are exempted if the Service provider is a non-resident person and the service is consumed out side India in the course of sailing of a ship. Is the Indian government competent to levy service tax on Services rendered abroad? But that seems to be what the Government believes. They have levied a tax on services provided abroad and even granted certain exemptions on services availed abroad.<br> <br> <strong>Exemption to service provided abroad</strong> – While the government has expanded its jurisdiction to levy service tax on Services rendered abroad, they have been kind enough to expand Services provided to an individual who is abroad if there is no commerce or industry involved. If a barber in India provides a hair cut in Paris, the Service is perhaps exempted if the hair is not sold.</font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <font color="#006633"><strong>DDT’s questions answered</strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <strong>BSNL, MTNL no more offenders</strong> – In DDT on 20.4.2005, I had asked a question, <br> <br> <strong> What is common to MTNL, BSNL IDEA CELLULAR, AIRTEL, HUTCH, RIM, TATA INDICOM?</strong> <br> <br> And answered it as,</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> You will say they are all telephone companies but they provide different kind of services. The common factor is, <strong>they are all Service Tax offenders</strong>. From 1.4.2005, as per Rule 4A of the Service Tax Rules, “Every person providing taxable service shall, not later than fourteen days from the date of completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier issue an invoice”. Aren’t these phone companies issuing monthly invoices? </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Now the rule is amended so that they <b>can issue the invoice after fourteen days of the billing period. </b><br> <br> <strong><font color="#006633">GTA – How to take Credit?</font><br> <br> In the same DDT another issue was raised,</strong><br> <br> What is the document under which credit can be taken for Service Tax on goods transport paid by consignor or consignee?</font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> Sadly, there is no document prescribed under Rule 9 (1) of the Cenvat Credit Rules. So if you are taking credit on such tax, you are an offender - because the Government has not notified the document for this purpose under Rule 9(1). <br> <br> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This lapse is now rectified and the document issued by the service receiver factory is included in the list of documents. But the solution does not really solve the problem. Now a Challan evidencing payment of Service Tax by the consignor/consignee is declared as a document for taking credit. Does this mean that credit can be taken only on a Challan and what is this Challan? Is it the TR 6 Challan? Does it mean that Service Tax has to be paid into the bank by TR 6 Challan only? Can’t it be paid by debit entry in the credit account? <strong>Another immediate clarification is required to avoid meaningless litigation</strong>.</font></p> <p align="left"><font color="#006633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Why 16th?</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>A very concerned netizen wrote to me,</strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> It was proposed in the Finance Bill to extend the levy of Service Tax to certain new services. There were nine in all, each one of them proposed to be brought into the ambit of Service Tax, elementarily with a view that said services will contribute a fair amount to the Government exchequer. <br> <br> The service tax on these new services was to come into force only from a date to be notified after the enactment of the Finance Bill, 2005. <br> <br> Further, certain amendments were also proposed to extend the scope of certain existing services which was supposed to affect 12 services already under the net of Service Tax. The changes therein were to come into effect only from a date to be notified after the enactment of the Finance Bill, 2005. <br> <br> Subsequently, the enactment of the Finance Bill , 2005 took place on the 13th May 2005. But, the relevant notifications pertaining to the new services and the notifications extending the scope of certain existing services was not issued. The same has not been done till date. It is surprising, to say the least, that the concerned authorities could not keep the machinery geared up so as to issue the said Notifications immediately after the enactment. It is now nearly a month since the enactment and if prompt action was taken to issue the said notifications immediately, all the new service providers would have started paying service tax a month or so earlier. What follows thereof is that the Government has lost a chunk of revenue by not issuing the concerned Service Tax Notifications immediately after the enactment of the Financial Bill, 2005. . Many may say, where is the ‘loss’? May be, yes – But ‘Deemed Loss’ – Definitely!!! <br> <br> This gains importance in the backdrop given the Hon’ble F.M’s die hard revenue drive last year and continued follow up this year, such delay should come as a ‘paradox’. <br> <br> It is now informed that the date would most probably be notified as 16th June. Is it that the concerned authorities were waiting for the ‘sixteenth day’? As history has it, enactment of changes in Finance Bill, 2001 was done on 16.07.2001 and that of Finance Bill 2002 was put to effect from 16.08.2002. Anything special about ‘16’ ? If so, why was the date not notified to be 16th of May? <strong>And I just heard some one saying ‘Accountability’? </strong></font></p> <p align="left"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006633">Anti dumping duty</font></strong> </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Anti Dumping Duty is imposed on acrylonitrile butadiene rubber from European Union [excluding Germany], Brazil and Mexico. – <strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=23&filename=notification/custom/2005/ctariff05_053.htm">NOTIFICATION No. 53/2005-CUSTOMS dated 7.6.2005</a></strong><br> <br> <font color="#FF0000"><strong><font color="#FF6666">Until Tomorrow with more DDT<br> <br> Have a Nice Day. <br> <br> Mail your comments to</font> <a href="mailto:vijaywrite@taxindiaonline.com"><font color="#000000">vijaywrite@taxindiaonline.com</font></a></strong></font></font></p> </body> </html>