About 300 Service Tax circulars about to be consigned into the dustbin of history – Board calls for comments.
The CBEC had done it! In one stroke about three hundred circulars relating to Service Tax are to be replaced by two circulars – yes just two circulars, one on technical matters and the other on procedure and the technical circular is planned in a technical way. Clarifications are given service code wise with each code followed by a dot and a two digit number indicating the clarification. Very scientific indeed!
There is actually nothing new in the circulars; they are just a compilation of the existing instructions. Some of the important technical clarifications:-
++ No Service Tax on the amount collected as surcharge for delayed payment of telephone bills.
++ Merely canvassing advertisements for publishing, on commission basis, is not taxable service.
++ ‘Express cargo service’ is covered under courier agency
++ Angadias are covered within the definition of ‘courier agency’ ['Sensitive documents' do not include Indian currency which is a legal tender and transmissions or compensatory payment of Indian currency on behalf of client cannot be covered under 'Courier Service' - 2005-TIOL-492-CESTAT-MUM. Board has conveniently ignored this CESTAT order]
++ Consulting engineers include self-employed professionally qualified engineer, whether or not employing others for assistance.
++ Educational institutes such as IITs, IIMs, fall within the definition of ‘manpower recruitment or supply agency’
++ Halls, rooms etc. let out by hotels / restaurants for a consideration for organising social, official or business functions are covered within the scope of “mandap”
++ Dance, drama or music programme or competitions are social functions and allowing temporary occupation of a hall for a consideration for organizing such functions are leviable to service tax under Mandap Keeper Service
++ Services provided in relation to merger, acquisition and other form of restructuring of business organization are covered within the scope of management or business consultant service
++ with effect from 1.4.2003 PrasarBharati Corporation is liable to pay service tax for the broadcasting services provided like any other broadcasting agency or organization engaged in providing service in relation to broadcasting
++ Moneychangers are authorized by RBI to buy and sell foreign exchange at the prevalent market rates. Buying or selling of foreign exchange by such persons without separately charging any amount as commission or brokerage does not fall within the scope of foreign exchange broking and is not leviable to service tax
++ Entry load and exit load charged by a mutual fund are not for the purpose of management of assets. Thus, amount charged as “entry and exit load” are not to be treated as consideration received by Asset Management Company for asset management and hence not be leviable to service tax under banking and other financial service
++ the depository services provided by CDSL including Electronic Access to Securities Information (EASI) for a fee are leviable to service tax under Banking and other Financial Services
++ Repair of ships in an Indian port, whether or not during dry-docking, by the port or by the person duly authorized by the port authorities is leviable to service tax under port service.
++ As the Management Committee of Paradeep Port is authorized by the Port Trust to provide services within the port area at the prescribed rates, such services provided by the Committee are leviable to service tax under Port Service.
++ Free service by authorized dealers - Service tax is leviable on the amount received from the vehicle manufacturer for the purpose of servicing of vehicles.
++ Servicing of heavy vehicles like trucks, not being one of the specified categories of motor vehicles, is not covered within the scope of the taxable service.
++ Any goods used in the course of providing service are to be treated as inputs for providing the service and accordingly, cost of such inputs should form integral part of the value of the taxable service.
++ services provided in relation to storage and warehousing of empty containers is leviable to service tax under storage and warehousing service
++ Distributors receive commission from mutual fund for providing services relating to purchase and sale of Mutual fund units. Services provided by such distributors are in the nature of commission agent and are, thus, leviable to service tax under business auxiliary service
++ Whether a club or association enjoying exemption under the provisions of Income Tax Act as a public charitable institution gets automatically excluded from levy of service tax? NO
++ Whether ticket issued outside India for an international journey commencing from India (say Delhi–London) is leviable to service tax? YES
++ if a sovereign / public authority provides a service, which is not in the nature of statutory activity and the same is undertaken for a consideration (not a statutory fee), then in such cases, service tax would be leviable as long as the activity undertaken falls within the scope of a taxable service.
++ Following services provided by Department of Posts are not leviable to service tax.
Basic mail services known as postal services such as post card, inland letter, book post, registered post provided exclusively by the Department of Posts to meet the universal postal obligations.
Transfer of money through money orders, operation of savings accounts, issue of postal orders, pension payments and other similar services which are of the nature of banking and other financial services.
Board appears to be serious in officially issuing these circulars by 1.7.2007. So please send your comments urgently to tru.finmin@gmail.com latest by 29th June 2007