(Amendments between Nov 13 to April 14)
Earlier Amendment
Mega Exemption Notification 25/2012 (Following services are exempted)
Services by way of sponsorship of sporting events organized by national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, State or zone is exempted. Services by way of sponsorship of sporting events organized by national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, State, or Country is exempted.
Definition of governmental authority
Governmental Authority means any authority or a board or any other body :-
(a) Set up by an Act of Parliament or a State Legislature; or
(b) Established by Government
with 90% of more participation by way of equity or control, to carry out any function entrusted to municipality under article 243W of the Constitution.
New Entry Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation.
New Entry Services by way of loading, unloading, packing , storage or warehousing of rice.
Clarification on Resident Welfare Association (Entry in Mega Exemption Notification No 25/2012)
(i) In a residential complex, monthly contribution collected from members is used by the RWA for the purpose of making payments to the third parties, in respect of commonly used services or goods [Example: for providing security service for the residential complex, maintenance or upkeep of common area and common facilities like lift, water sump, health and fitness centre, swimming pool, payment of electricity Bill for the common area and lift, etc.]. Is service tax leviable?
(ii) If the contribution of a member/s of a RWA exceeds five thousand rupees per month, how should the service tax liability be calculated?
Exemption at Sl. No. 28 (c) in notification No. 25/2012-ST is provided specifically with reference to service provided by an unincorporated body or a non–profit entity registered under any law for the time being in force such as RWAs, to its own members.
However, a monetary ceiling has been prescribed for this exemption, calculated in the form of five thousand rupees per month per member contribution to the RWA, for sourcing of goods or services from third person for the common use of its members.
If per month per member contribution of any or some members of a RWA exceeds five thousand rupees, the entire contribution of such members whose per month contribution exceeds five thousand rupees would be ineligible for the exemption under the said notification. Service tax would then be leviable on the aggregate amount of monthly contribution of such members.
(i) Is threshold exemption under notification No. 33/2012-ST available to RWA?
(ii) Does ‘aggregate value’ for the purpose of threshold exemption, include the value of exempt service?
Threshold exemption available under notification No. 33/2012-ST is applicable to a RWA, subject to conditions prescribed in the notification. Under this notification, taxable services of aggregate value not exceeding ten lakh rupees in any financial year is exempted from service tax. As per the definition of ‘aggregate value’ provided in Explanation B of the notification, aggregate value does not include the value of services which are exempt from service tax.
If a RWA provides certain services such as payment of electricity or water bill issued by third person, in the name of its members, acting as a ‘pure agent’ of its members, is exclusion from value of taxable service available for the purposes of exemptions provided in Notification 33/2012-ST or 25/2012-ST ? In Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006, it is provided that expenditure or costs incurred by a service provider as a pure agent of the recipient of service shall be excluded from the value of taxable service, subject to the conditions specified in the Rule.
For illustration, where the payment for an electricity bill raised by an electricity transmission or distribution utility in the name of the owner of an apartment in respect of electricity consumed thereon, is collected and paid by the RWA to the utility, without charging any commission or a consideration by any other name, the RWA is acting as a pure agent and hence exclusion from the value of taxable service would be available. However, in the case of electricity bills issued in the name of RWA, in respect of electricity consumed for common use of lifts, motor pumps for water supply, lights in common area, etc., since there is no agent involved in these transactions, the exclusion from the value of taxable service would not be available.
Others
Is CENVAT credit available to RWA for payment of service tax? RWA may avail Cenvat credit and use the same for payment of service tax, in accordance with the Cenvat Credit Rules.
Exemptions to rice from service tax Transportation of rice by rail or vessel is exempted. [Foodstuff includes rice]
Transportation of rice by GTS is exempted. [Foodstuff includes rice]
Loading, unloading, packing, storage and warehousing of rice is exempted.
Milling of paddy into rice is also exempted.
Specific direction by Central Government Service tax payable on the services provided by an authorized person or sub-broker to the member of recognized association or registered association, in relation to a forward contract, shall not be required to be paid in respect of such taxable service on which service tax was not being levied during the period (10.09.2004 to 30.06.2012).
Online payment mandatory With effect from 1st January 2014 if service tax liability exceeds rupees one lacs (including cash payments and CENVAT Credit) then it is mandatory to pay Service tax online.
VCES Scheme
Whether declaration can be returned on the ground of its incompleteness. As has already been directed by the Board, vide the said letter dated 22.8.2013, the designated authority shall ensure that no declaration is returned. In all cases, declaration should be promptly received and duly acknowledged. Request for clarification should be dealt with promptly. Defects in the application, if any, should be explained to the declarant and possible assistance be provided in rectifying these defects. The effort must be to accept a declaration, as far as possible, and recover the arrears of tax.
For rejection of declaration refer Section 106(2).
Whether benefit of VCES would be available in cases where documents like balance sheet, profit and loss account etc. are called for by department in the inquiries of roving nature, while quoting authority of section 14 of the Central Excise Act in a routine manner. The designated authority/ Commissioner concerned may take a view on merit, taking into account the facts and circumstances of each case as to whether the inquiry is of roving nature or whether the provisions of section 106 (2) are attracted in such cases.
Whether the benefit of the Scheme shall be admissible in respect of any amount covered under the definition of ‘taxes dues’, as defined in the Scheme, if paid by an assesses after the date of the Scheme coming into effect, (i.e., 10.5.2013), but before a declaration is filed Yes, benefit of the Scheme would be available if such amount is declared under the Scheme subsequently, along with the remaining tax dues, if any, provided that Cenvat credit has not been utilized for payment of such amount.
Example:
A person has tax dues of Rs 10 lakh. He makes a payment of Rs 2 lakh on 15.5.2013, without making a declaration under VCES. He does not utilize Cenvat credit for paying this amount. Subsequently, he makes declaration under VCES on 1.7.2013. He may declare his tax dues as Rs 10 lakh. Rs 2 lakh paid before making the declaration will be considered as payment under VCES.
Whether declaration can be made in such case where service tax pertaining to the period covered by the Scheme along with interest has already been paid by the parties, before the Scheme came into effect, so as to get waiver from penalty and other proceedings? As no “tax dues” is pending in such case, declaration cannot be filed under VCES. However, there may be a case for taking a lenient view on the issue of penalties under the provision of the Finance Act, 1994. In this regard attention is invited to section 73 (3) and section 80 of the Finance Act, 1994.