When the tax was levied

1-11-1996

What is liable to tax

Any service provided or to be provided to any person, by an advertising agency (see 1.2) in relation to advertisement (see 1.3) in any manner [section 65(105)(e)]

1.2  “Advertising agency” means any person (earlier, the words were ‘commercial concern’ upto 1-5-2006) engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant [section 65(3)].

1.3  “Advertisement” includes any notice, circular, label, wrapper, document, hoarding or any other audio or visual representation made by means of light, sound, smoke or gas [section 65(2)]

What is covered

u       Preparation of advertisement material, hoardings, neon signs etc., Preparation of advertisement films

u       Getting advertisements published in newspapers or TV or cinema theatres or by way of hoarding, neon signs etc.

u       DAVP may be liable to service tax, as ‘any person’ can be ‘Advertising Agency’.

What is not covered?

u       Preparation of advertisement material, sign boards, hoardings (as it is sale of goods).

u       Sale of TV rights, sponsorship money and logo money is not ‘advertising agency’ service.

What is covered under different head?

u       Display of advertisement  on web, cinema theatre, commercial time on TV are taxable under ‘Sale of space or time for advertisement’

u       Advertisement in yellow pages and business directories is taxable under ‘Sale of space or time for advertisement’

u       Canvassing i.e. space selling is taxable under Business Auxiliary Service.

u       Rental charges for space are covered under ‘Sale of space or time for advertisement’

Valuation

u       Tax only on commission, not on advertisement charges paid to media or TV.

u       Service tax is not payable on  discount or incentives received from media

Other issues

Accounting Code - Service Tax : 00440013. Payment of interest, penalty, etc. : 00440016.

Rule for determining export or import of service : 3(iii)

When the tax was levied

1-7-1997

What is liable to tax

2.1 Any service provided or to be provided to any person, by an air travel agent (see 2.1) in relation to the booking of passage for travel by air [section 65(105)(1)]

2.2 ‘Air travel agent’ means any person engaged in providing any service connected with the booking of passage for travel by air [Section 65(4)].

What is covered

Booking of passage by air

Sub-agents also liable.

What is covered under different head?

GSA (General Sales Agent) appointed by foreign airlines are taxable under ‘Business Auxiliary Service’

Hotel booking under Tour Operator Service

Valuation

Tax on commission not on airfare

Option to pay service tax @ 0.60% of basic fare in case of domestic booking and @ 1.20% of the basic fare in case of international bookings, of passage for travel by air, during any calendar month, plus education cess @ 2% and SAH education cess @ 1%. Option cannot be changed during a financial year [Rule 6(7)]

Other issues

Accounting Code - Service Tax : 00440032. Payment of interest, penalty, etc. : 00440033.

Rule for determining export or import of service : 3(ii)

When the tax was levied

16-10-1998

What is liable to tax

3.1 Any service provided or to be provided to any person, by an architect [see 3.2] in his professional capacity in any manner [Section 65(105)(p)]

3.2 “Architect” means any person whose name is, for the time being, entered in the register of architects maintained under section 23 of the Architects Act, 1972 and also includes any commercial concern engaged in any manner, whether directly or indirectly, in rendering services in the field of architecture [Section 65(6)]

What is covered

Designing or planning of construction of buildings, bridges, dams etc.

Services concerning planning, design or beautification of spaces.

What is not covered?

Actual execution of work is not Architect’s service.

Valuation

No service tax is payable on supply of materials, items of furniture or decoration.

Other issues

Accounting Code - Service Tax : 00440072. Payment of interest, penalty, etc. : 00440073.

When the tax was levied

16-7-2001 and scope expanded later.

What is liable to tax

4.1 Any service provided or to be provided to any person, by an authorised service station [see 4.2], in relation to any service, repair, reconditioning or restoration of motor cars [see 4.3], light motor vehicles [see 4.4] or two wheeled motor vehicles, in any manner [section 65(105)(zo)]

4.2 “Authorised service station” means any service station, or centre, authorised by any motor vehicle manufacturer, to carry out any service, repair, reconditioning or restoration of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer [Section 65(9)]

4.3 ‘Motor car’ means any motor vehicle other than a transport vehicle, omnibus, road-roller, tractor, motor cycle or invalid carriage [Section 65(72) read with MV Act]. (It would cover cars, jeep or vans).

4.4 Light Motor Vehicle (LMV) means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver [section 65(62)].

What is covered

Any service, repair, reconditioning or restoration of motor car, LMV, two wheelers

Free services during warranty for which reimbursement is obtained from manufacturers

What is not covered?

Service provided at the time of purchase of new vehicle.

Free services at the time of sale for which no payment received.

Service to transport vehicle, LMV for carrying goods, buses, trucks, excavator, omnibus, road-roller, tractor, or invalid carriage.

What is covered under different head?

Commission or rent paid by finance or insurance companies to vehicle dealers under BAS or renting of immovable property as the case may be.

Valuation

No service tax on sale of spare parts

Cost of paint used in painting or consumables is includible in ‘value’ (i.e. no deduction)

Other issues

Accounting Code - Service Tax : 00440181. Payment of interest, penalty, etc. : 00440182.

Rule for determining export or import of service : 3(ii)

When the tax was levied

16-7-2001 and scope expanded later.

What is liable to tax

5.1 Any service provided or to be provided to any person, by a banking company or a financial institution including NBFC, or any other body corporate or commercial concern, in relation to banking and other financial services [see 5.3] [section 65(105)(zm)]

5.2 Any service provided or to be provided to any person, by a foreign exchange broker, including an authorised dealer in foreign exchange or an authorised money changer (other than those covered in para 5.1) [Section 65(105)(zzk)]

5.3 “Banking and other financial services” means -

    (a)  the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern, namely -

     (i)  Financial leasing services including equipment leasing and hire-purchase. Explanation. – For the purposes of this item, “financial leasing” means a lease transaction where– (i) contract for lease entered into between two parties for leasing of a specific asset (ii) such contract is for use and occupation of the asset by the lessee (iii) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and (iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment

    (ii)  (Omitted)

   (iii)  Merchant banking services;

   (iv)  Securities and foreign exchange (forex) broking; and purchase or sale of foreign currency including money changing

    (v)  Asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services

   (vi)  Advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy;

  (vii)  Provision and transfer of information and data processing;

(viii)  Banker to an issue services;

   (ix)  Other financial services namely, lending; issue of pay order, demand draft, cheque, letter of credit and bill of exchange; transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults; operation of bank accounts.

    (b)  foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorised dealer in foreign exchange or an authorised money changer, other than those covered under sub-clause (a) Explanation.— For the purposes of this clause, it is hereby declared that ‘purchase or sale of foreign currency, including money changing’ includes purchase or sale of foreign currency, whether or not the consideration for such purchase or sale, as the case may be, is specified separately [Section 65(12)]

What is covered

All services as specified in para 5.3 (see left column). These cover financial leasing, merchant banking, foreign exchange broking, asset management, advisory and other auxiliary financial services, banker to an issue, lending, DD, LC, money transfer, bank guarantee, bill discounting, safe vaults, operation of bank accounts.

Cash management

Back commission, loan application processing charges.

Cooperative Banks liable.

What is not covered?

Hire purchase taxable but not hire purchase finance.

As per Board circular, Simple chit funds not taxable but business chit funds taxable. This circular has been squashed by AP High Court.

No service tax on entry and exit load charged by mutual fund to the investor [now, as per SEBI,  no entry load w.e.f. 1-8-2009]

Basic postal services not covered but courier, insurance or agency services taxable.

What is covered under different head?

Operating lease or hire taxable under ‘supply of tangible goods for use’ service.

Valuation

Option to pay service tax calculated at the rate of 0.25% of the gross amount of foreign currency exchanged [Rule 6(7B)].

Exemptions

Services provided to Government for tax collection exempt - Notification No. 13/2004-ST dated 10-9-2004.

Services provided by RBI exempt  – Notification No. 22/2006-ST dated 31-5-2006 (services provided to RBI are not exempt)

No service tax on interest on loans - rule 6(2)(iv)

Interest on overdraft, cash credit facility and discounting of bills/bills of exchange/cheques is exempt - Notification No. 29/2004-ST dated 29-9-2004

Tax on financial leasing only on 10% of interest plus management fee, processing fee, documentation charges and administration charges - Notification No. 4/2006-Service Tax dated 1.3.2006.

Tax on service of business chit fund is payable on 70% of value - Notification No. 1/2006-ST dated 27-5-2008 [The levy has been squashed by AP HC]

Inter-bank transactions of purchase and sale of foreign currency are exempt from service tax w.e.f. 7-7-2009, when undertaken by scheduled banks – Notification No. 19/2009-ST dated 7-7-2009.

Other issues

Invoice need not be serially numbered and name and address of person receiving service need not be mentioned  [proviso to rule 4A(1) of Service Tax Rules]

Accounting Code - Service Tax : 00440173. Payment of interest, penalty, etc. : 00440174.

Rule for determining export or import of service : 3(iii)

When the tax was levied

1-7-2003 and scope expended later. Commission agent taxable w.e.f. 9-7-2004.

What is liable to tax

6.1 Any service provided or to be provided to a client, by any person in relation to business auxiliary service [see 6.2] [section 65(105)(zzb)].

6.2 ‘Business auxiliary service’ means any service in relation to —

     (i)  Promotion or marketing or sale of goods produced or provided by or belonging to the client; or

    (ii)  Promotion or marketing of service provided by the client; Explanation.— For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, “service in relation to promotion or marketing of service provided by the client” includes any service provided in relation to promotion or marketing of games of chance, organised, conducted or promoted by the client, in whatever form or by whatever name called, whether or not conducted online, including lottery, lotto, bingo  or

   (iii)  any customer care service provided on behalf of the client; or

   (iv)  procurement of goods or services, which are inputs for the client; or Explanation - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause, “inputs” means all goods or services intended for use by the client

    (v)  production or processing of goods for, or on behalf of, the client; or

   (vi)  provision of service on behalf of the client; or

  (vii)  a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision,

and includes services as a commission agent, but does not include  any activity that amounts to manufacture of excisable goods

and includes services as a commission agent, but does not include  any activity that amounts to “manufacture” within the meaning of clause (f) of section 2 of the Central Excise Act, 1944

Explanation - For the removal of doubts, it is hereby declared that for the purposes of this clause,—

    (a)  “Commission agent” means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person — (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services.

    (b)  -- Omitted [Section 65(19)]

What is covered

Services as specified in para 6.2 [see left] like promotion or marketing of goods or services, customer care service, procurement of goods or services for client, production or processing of goods (which is not ‘manufacture’), providing service on behalf of client and specified incidental services.

Service of commission agents.

Purchase agents.

Sale of lottery tickets (issue is debatable)

Celebrities acting as Brand ambassadors [ordinary models may not be covered]

Processing of loan papers and verifying documents for Bank [contrary decision that service to Bank of analyzing credentials of customers who approached them for retail finance is not taxable]

Call centers and transcription centres.

Sub-contractor providing service on behalf of client.

Commission of mutual fund agents.

Commission paid to auto dealers by finance companies and NBFC.

Del credere agent.

Back office processing relating to sale, production or marketing.

Bottling and packing of liquor is manufacture but goods are to ‘excisable’ and hence service tax is payable.

What is not covered?

Job work if it amounts to ‘manufacture’ of ‘excisable goods’ is not taxable, even if not done under Cenvat provisions

Commission paid by company to its directors (even if linked with performance or with financial results of the company) not taxable.

Same principle will apply to commission paid to salesmen.

Service of collection of blood samples and sending the same to principal lab.

Dharamkanta i.e. issuing weighment slip is not Business Auxiliary Service.

Purchase and sale of goods.

Ginning and pressing of cotton.

Contract hatching of eggs.

Trading in service is not provision of service.

What is covered under different head?

Collection of bills may be covered under Recovery Agent’s service

Packaging will get covered under ‘Packaging Activity’ service.

Stock Exchanges, commodity exchanges, stock clearing house services taxable under different head.

Valuation

Tax payable on gross value of services

Exemptions

Following services in relation to agriculture, printing, textile processing or education are fully exempt - (a) procurement of goods or services, which are inputs for the client; or (b) production or processing of goods for, or on behalf of, of the client; or (c) provision of service on behalf of the client; or (d) service incidental or auxiliary to any activity specified in sub-clauses (a) to (c) above [Notification No. 14/2004-ST dated 10-9-2004].

Job work exempt if the goods after processing are returned back to client (raw material supplier) for use in or in relation to manufacture of ‘other goods’ by the client. The ‘other goods’ should be such that appropriate duty should be payable on such goods - Notification No. 8/2005-ST dated 1-3-2005.

Job workers of parts and accessories of cycles, cycle rickshaws and hand operated sewing machines have to pay service tax is payable on 70% of gross amount if gross amount is inclusive of cost of inputs and input services. The ‘exemption’ is available if job worker does not avail any Cenvat Credit – Notification No. 1/2006-ST dated 1-3-2006.

Services of commission agents in relation to sale or purchase of agricultural produce are exempt - Notification No. 13/2003-ST dated 20-6-2003.

Job work done in gem, jewellery and diamonds sector are exempt - Notification No. 21/2005-ST dated 7-6-2005.

Job work in respect of pharmaceutical products exempted - Exemption has been granted to business auxiliary services in relation to manufacture of pharmaceutical products, medicines, perfumery, cosmetics or toilet preparations containing alcohol which are charged to excise duty under Medial and Toilet Preparations (Excise Duties) Act, 1955 have been fully exempted from service tax - Notification No. 32/2009-ST dated 1-9-2009.

Sub-broker on stock exchange exempted from BAS - Services of sub-broker are not liable under ‘stock broker’ service w.e.f. 1-9-2009. They have also been exempted under Business Auxiliary Service also vide Notification No. 31/2009-ST dated 1-9-2009. Thus, they are completely out of service tax net.

Other issues

Accounting Code - Service Tax : 00440225. Payment of interest, penalty, etc. : 00440226.

Rule for determining export or import of service : 3(iii)

When the tax was levied

1-5-2006.

What is liable to tax

7.1 Any service provided or to be provided; to any person, by any other person, in relation to support services of business or commerce [see 7.2], in any manner [Section 65(105)(zzzq)]

7.2 “Support services of business or commerce” means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.

Explanation -For the purposes of this clause, the expression ‘infrastructural support services’ includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security [Section 65(104c)].

What is covered

BPO type services

Infrastructure support

Business Centers.

Services provided by shipping companies to postal department of mail handling.

Service of distribution of electricity (issue is arguable).

What is not covered?

Legal services not taxable

Screening of movie by theatre owner is not a support service

Contract hatching of eggs not taxable.

Only support or assistance activity covered, independent activity on its own accord not taxable under this head.

Other issues

Accounting Code - Service Tax : 00440366. Payment of interest, penalty, etc. : 00440367.

Rule for determining export or import of service : 3(iii)

When the tax was levied

16-8-2002.

What is liable to tax

8.1 Any service provided or to be provided to any person, by a cargo handling agency in relation to cargo handling services [see 8.2] [Section 65(105)(zr)]

8.2 ‘Cargo handling service’ means loading, unloading, packing or unpacking of cargo and includes,— (a) cargo handling services provided for freight in special containers or for noncontainerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling service incidental to freight; and (b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking, but does not include, handling of export cargo or passenger baggage or mere transportation of goods [section 65(23)]

What is covered

Cargo handling for freight, services in container freight terminal, CFS, packing with transportation

Movers and packers service.

What is not covered?

Handling of export cargo or passenger baggage

Mere handling of coal or iron ore in mines is not ‘cargo handling’ [May be taxable under mining service].

Stevedoring (loading and unloading) in port is cargo handling service and not port service. If it is for export goods, there is no service tax.

Material loading and unloading incidental to transport of goods is not ‘cargo handling’.

Cargo handling in port is ‘cargo handling service’ and not ‘port service’

What is covered under different head?

Mere transportation is under Goods Transport Agency (GTA) service.

Supply of labour will be under manpower recruitment and supply service.

Storage of empty containers will be taxable under ‘Storage and Warehousing Service’.

Valuation

Tax not on transportation charges if charged on actual basis [strong prima facie view of Tribunal]

Exemptions

Cargo handling services relating to agricultural produce or goods intended to be stored in a cold storage are exempt - Notification No. 10/2002-ST dated 16-8-2002.

Other issues

Accounting Code - Service Tax : 00440189. Payment of interest, penalty, etc. : 00440190.

Rule for determining export or import of service : 3(ii)

When the tax was levied

16-6-2005.

What is liable to tax

9.1 Any service provided or to be provided to any person, by any other person, in relation to cleaning activity [see 9.2] [section 65(105)(zzzd)].

9.2 “Cleaning activity” means cleaning, including specialised cleaning services such as disinfecting, exterminating or sterilising of objects or premises, of — (i) commercial or industrial buildings and premises thereof; or (ii) factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof, - - but does not include such services in relation to agriculture, horticulture, animal husbandry or dairying [Section 65(24b)]

What is covered

Cleaning services such as disinfecting, exterminating or sterilising of objects or premises provided to commercial or industrial building or premises.

What is not covered?

Cleaning of goods i.e. movable property.

Cleaning of residential buildings and premises.

Cleaning services in relation to agriculture, horticulture, animal husbandry or dairying

Other issues

Accounting Code - Service Tax : 00440318. Payment of interest, penalty, etc. : 00440319.

Rule for determining export or import of service : 3(ii) 

When the tax was levied

16-7-1997.

What is liable to tax

10.1 Any service provided or to be provided to any person, by a clearing and forwarding agent (see 10.2) in relation to clearing and forwarding operations in any manner [Section 65(105)(j)].

10.2 “Clearing and forwarding agent” means any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consignment agent [Section 65(25)].

What is covered

Both clearing and forwarding operations required. Only clearing or only forwarding service is not sufficient.

Receiving goods, warehousing and dispatch, preparing invoices on behalf of Principal.

Services of coal merchants, who are acting as buyer’s agents

Providing marketing and product support services.

What is not covered?

Consignment Agent, who has right to sale goods on behalf of Principal, is not C&F Agent (even if definition of C&F Agent includes ‘consignment agent’) [He may get covered under BAS]

Simple buying and selling of goods.

What is covered under different head?

Service of ICD and CFS are taxable under ‘storage and warehousing’ services.

Simple storage service is taxable under ‘storage and warehousing’ services.

Mere procuring or booking orders for the Principal by an agent on commission basis would not be ‘Clearing and forwarding Agent service’. It will go under BAS.

Service of commission agent will be taxable under Business Auxiliary Service.

Valuation

Tax only on commission, not on reimbursable expenses like godown rent, loading/unloading, freight, telephone, rent, salary etc.

Other issues

Accounting Code - Service Tax : 00440045. Payment of interest, penalty, etc. : 00440046.

Rule for determining export or import of service : 3(ii)

When the tax was levied

16-6-2005.

What is liable to tax

11.1 Any service provided or to be provided to its members, by any club or association [see 11.2] in relation to provision of services, facilities or advantages for a subscription or any other amount [section 65(105)(zzze)].

11.2 “Club or association” means any person or body of persons providing services, facilities or advantages, for a subscription or any other amount, to its members, but does not include— (i) any body established or constituted by or under any law for the time being in force; or (ii) any person or body of persons engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry; or (iii) any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or (iv) any person or body of persons associated with press or media [section 65(25a)].

What is covered

Services, facilities or advantages to members of club or for a subscription or a charge.

Holiday resort provide facility of accommodation to its members on time sharing basis.

What is not covered?

Association engaged in public service and which are of a charitable, religious or political nature are not taxable.

‘Charitable purpose’ includes relief to poor, education, medical relief and the advancement of any other object of general public utility, but does not include a purpose which relates exclusively to religious teaching or worship.

Body established by or under law, trade union, promotion of agriculture, horticulture or animal husbandry, press or media are not taxable.

Trade or industrial associations should not be taxable.

Valuation

Service tax will be payable on life membership fees.

Amount charged for food or beverages is not taxable.

Exemptions

Services of housing societies or Resident Welfare Associations to their members are exempt if the monthly contribution is less than Rs 3,000 - Notification No. 8/2007-ST dated 01-03-2007.

Other issues

Accounting Code - Service Tax : 00440322. Payment of interest, penalty, etc. : 00440323.

Rule for determining export or import of service : 3(ii)

When the tax was levied

1-7-2003.

What is liable to tax

12.1 Any service provided or to be provided to any person, by a commercial training or coaching center [see 12.2] in relation to commercial training or coaching [see 12.3] [Section 65(105)(zzc)]

12.2 ‘Commercial training or coaching centre’ means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than sports, with or without issuance of a certificate and includes coaching or tutorial classes but does not include pre-school coaching and training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognised by law for the time being in force [section 65(27)].

12.3 ‘Commercial training or coaching’ means any training or coaching provided by a commercial training or coaching centre [section 65(26)].

What is covered

Only private coaching or training services are covered.

Computer training or coaching Institutes are liable to service tax.

Coaching imparted to students of standards 1 to 9 taxable.

Postal or interactive online coaching is taxable.

What is not covered?

Training or coaching is taxable – not ‘education’ which is broader.

Teaching in Government recognised institutes will not be a taxable service.

A society registered under Societies Act is not liable as it is not ‘commercial’ coaching institute and hence not taxable [Department has not accepted this view]

Pre-school coaching not taxable.

Training centre or any institute or establishment which issues any certificate or diploma or degree or any educational qualification recognised by law.

Services provided by recognised colleges for training of competitive examinations or entrance tests not taxable.

Home tuitions not taxable.

Training provided by employer free not taxable but if outside agency provides service, it will be taxable.

Continuous education programmes for professional development and/or creating awareness of latest developments but not to prepare the candidates or not to impart skills etc. is not commercial training. These are not taxable.

What is covered under different head?

Valuation

Service tax is not payable on value of material supplied [Department has not accepted this view]

Exemptions

Commercial training which forms essential part of course leading to recognised certificate/diploma exempt - Notification No. 10/2003-ST dated 20-6-2003.

Vocational and recreational training Institutes are exempt - Notification No. 24/2004-ST dated 10-9-2004.

Other issues

Accounting Code - Service Tax : 00440229. Payment of interest, penalty, etc. : 00440230.

Rule for determining export or import of service : 3(ii)

When the tax was levied

Tax on commercial or industrial construction service taxable w.e.f. 10-9-2004 and on residential complex w.e.f. 16-6-2005.

What is liable to tax

13.1 Any service provided or to be provided to any person, by any other person, in relation to commercial or industrial construction service [see 13.3] [Section 65(105)(zzq)]

13.2 Any service provided or to be provided to any person, by any other person, in relation to construction of complex [see 13.4 and 13.5] [section 65(105)(zzzh)]

13.3 “Commercial or industrial construction service” means— (a) construction of a new building or a civil structure or a part thereof; or (b) construction of pipeline or conduit; or (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit,

which is— (i) used, or to be used, primarily for; or (ii) occupied, or to be occupied, primarily with; or (iii) engaged, or to be engaged, primarily in,

commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams [Section 65(25b)].

13.4 ‘Construction of complex’ means— (a) construction of a new residential complex [see 13.5] or a part thereof; or (b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or (c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex [Section 65(30a)]

13.5 “Residential complex” means any complex comprising of— (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space, community hall, common water supply or effluent treatment system, - - located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. - - Explanation — For the removal of doubts, it is hereby declared that for the purposes of this clause,— (a) “personal use” includes permitting the complex for use as residence by another person on rent or without consideration (b) “residential unit” means a single house or a single apartment intended for use as a place of residence [Section 65(91a)].

What is covered

Industrial and commercial construction and construction of residential complex having more than 12 residential units (flats/houses) is taxable.

Repairs, alteration, renovation of existing building is also subject to tax.

Approved plan and municipal regulations to determine whether building is for commerce or industry.

Post construction stand alone services relating to completion or finishing are taxable.

Sub-contractors providing the construction services (to main contractor or to any other person) will be liable to service tax.

Repairs of roads is taxable? [The issue is arguable].

What is not covered?

Services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams.

Construction of educational, religious, Government buildings etc. not taxable, as it is not commercial or industrial construction.

Residential complex which is constructed by a person directly engaging any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person - “personal use” includes permitting the complex for use as residence by another person on rent or without consideration.

Construction by builder or developer for personal use of customer (even if it is in residential complex).

Construction of one house in residential complex is not taxable if direct contract given by individual for residential purposes to builder or developer.

Construction of single house or residential complex with 12 or less than 12 residential units is not taxable.

What is covered under different head?

If Vat/sales tax is payable on goods involved in the contract, the service will be classifiable under ‘works contract’ service tax.

Maintenance or management of immovable property has been made taxable under ‘Maintenance or Repair Services’.

Valuation

Value is the gross value of taxable services.

However, any person providing taxable service of commercial or industrial construction or construction of complex can opt to pay service tax on 33% of gross amount charged. This is at the option of service provider This relaxation is not available if only completion and finishing services are provided - Notification No. 1/2006-ST dated 1-3-2006. The partial exemption is available only if the gross amount charged includes value of goods and materials supplied or provided or used by provider of the commercial or industrial construction of service for providing such service (Explanation to Notification No. 1/2006-ST]. However, value of land is not required to be added as it is neither goods nor material.

This simple method is not available in case the service provider provides only completion and finishing services (as in such cases, material content will be much less).

Exemptions

Construction and works contract services relating to port or other port are exempt. However, services of completion and finishing, repair, alteration, renovation, restoration, maintenance or repair provided in relation to existing port or other port are not exempt - Notification No. 25/2007-ST dated 22-5-2007

Other issues

Commercial or Industrial Construction - Date of Introduction : 10-9-2004. Accounting Code - Service Tax : 00440290. Payment of interest, penalty, etc. : 00440291.

Construction of Residential Complex - Date of Introduction : 16-6-2005 Accounting Code - Service Tax : 00440334. Payment of interest, penalty, etc. : 00440335.

Rule for determining export or import of service  (for both types of services) : 3(i)

When the tax was levied

7-7-1997.

What is liable to tax

14.1 Any service provided or to be provided; to any person, by a consulting engineer (see 14.2) in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering

Explanation.— For the purposes of this sub-clause, it is hereby declared that services provided by a consulting engineer in relation to advice, consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause [Section 65(105)(g)].

14.2 “Consulting engineer” means any professionally qualified engineer or any body corporate or any other firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to any person in one or more disciplines of engineering [Section 65(31)]

What is covered

Technical assistance, training, software support are all ‘taxable services’

Services of Valuation taxable.

Only services provided by qualified engineer taxable.

What is not covered?

Royalty payment for use of technology and know-how cannot be equated with any services provided by foreign collaborator. Hence, no service tax is payable on such royalty payment.

Transfer of technical know-how is not a consulting engineering service.

Contract should be predominantly consultancy contract. An indivisible contract cannot be vivisected.

Sale of drawings is sale of goods and not service.

Contract for execution of a project is not consulting engineering service.

Execution services are not covered under this head.

Design and development of moulds for manufacture of parts required by customer is not ‘service rendered by consulting engineer’.

Contract for Operations and Maintenance of plant is not Management Consultancy service or consulting engineering service.

Exemption

Cess is payable under section 3 of Research and Development Cess Act, 1986, on transfer of technology. If such cess is payable, the consulting engineer will be granted exemption from service tax to the extent of cess paid - Notification No. 18/2002-ST dated 16-12-2002. Thus, if value of service is Rs 100, tax payable is Rs 12 and cess paid is Rs 5, net service tax actually payable will be Rs 7.

Other issues

Accounting Code - Service Tax : 00440057. Payment of interest, penalty, etc. : 00440058.

Rule for determining export or import of service : 3(iii)

When the tax was levied

1-9-2009.

What is liable to tax

14A.1 Any service provided or to be provided to any person, by any other person, in relation to cosmetic surgery or plastic surgery is a taxable service, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma [section 65(105)(zzzzk)] 

What is covered

Cosmetic surgery and plastic surgery undertaken to preserve or enhance physical appearance or beauty

Abdominoplasty (tummy tuck); bletharoplasty (eyelid surgery); mammoplasty; buttock augmentation and lift; rhinoplasty (reshaping of nose); otoplasty (ear surgery); Rhytidectomy (face lift); liposuction (removal of fat from the body); brow lift; cheek augmentation; facial implants; lip augmentation; forehead lift; cosmetic dental surgery; orthodontics; aesthetic dentistry; laser skin surfacing etc.

What is not covered?

Normal medical services

Reconstructive surgery undertaken to restore one’s appearance, anatomy or bodily functions affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma etc. These processes could be undertaken to correct impairment caused by burns, fractures or congenital abnormalities like cleft lip etc.

Other issues

Rule for determining export or import of service : 3(iii)

When the tax was levied

1-11-1996.

What is liable to tax

15.1 Any service provided or to be provided to any person, by a courier agency (see 15.2)  in relation to door-to-door transportation of time sensitive documents, goods (see 15.3) or articles [Section 65(105)(f)]

15.2 “Courier agency” means any person engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles [Section 65(33)]

15.3 ‘Goods’ has the meaning assigned to it in section 2(7) of Sale of Goods Act [section 65(50)].

What is covered

Door-to-door transportation of time sensitive documents, goods or articles.

‘Angadias’ who provide courier services are liable to pay service tax

Co-loaders i.e. persons providing services to courier liable (earlier circular withdrawn).

Transporters who are rendering “Express Cargo Service” for door delivery will be held as taxable since they deliver goods on ‘time sensitive’ basis on door to door basis.

What is not covered?

Basic postal services not taxable. However, courier services (Speed Post), insurance services (Postal Life Insurance), agency or intermediary services on commission basis which are also provided by other commercial organizations, are taxable - Ref Code 999.02/23.8.07 of CBE&C Circular No. 96/7/2007-ST dated 23-8-2007.

What is covered under different head?

Money transfer through courier will get covered under Banking and other Financial Services.

Franchisee not eligible for small service provider’s exemption

If courier service is provided through franchise, the franchisee may not be eligible for exemption available to small service providers as he is providing service under brand name of other.

Export and import of service

It is ‘export of service’, but not exempt as payment is received in Indian Rupees.

It is also ‘import of service’ since partly performed in India.

Other issues

Accounting Code - Service Tax : 00440014. Payment of interest, penalty, etc. : 00440018.

Rule for determining export or import of service : 3(ii)

When the tax was levied

15-6-1997.

What is liable to tax

16.1 Any service provided or to be provided to any person, by a custom house agent (see 16.2) in relation to the entry or departure of conveyances or the import or export of goods [section 65(105)(h)]

16.2 “Custom house agent” means a person licensed, temporarily or otherwise, under the regulations made under section 146(2) of the Customs Act, 1962 [Section 65(35)].

What is covered

Only services in relation to ‘entry or departure of conveyances or the import or export of goods’ will be taxable.

What is not covered?

Expenses incurred on behalf of client.

Valuation

Activity of CHA relates to entry or departure of conveyances or import or export of goods any customs station. It cannot extend beyond it. Charges collected for freight, cartage, MSIL/JWG charges, examination charges, DO fees, Bill of Lading fee, CFS charges, storage and handling etc. do not pertain to CHA service. In case of charges collected by CHA for activities not related to CHA, he is not liable to pay service tax. Even if he earns profit on these activities, it is not includible in value of CHA services.

Payments made by CHA on behalf of client such as statutory levies (cess, customs duties, port dues etc.) and various reimbursable expenses are not to be included for computing service tax.

Other issues

Accounting Code - Service Tax : 00440026. Payment of interest, penalty, etc. : 00440027.

Rule for determining export or import of service : 3(ii)