Weekly Lecture Series on

Service Tax

Efforts made by:Naman Jitendra Siroya

What is Service?
Service means any activity carried out by a person
for another for consideration, and includes a declared
service but shall not include
A transfer of title in goods or immovable property, by way
of sale, gift or in any other manner
Such transfer, delivery or supply of any goods which is
deemed to be sale within the meaning of clause (29A) of
article 366 of the Constitution
A transaction in money or actionable claim;
A provision of service by an employee to the employer in
the course of or in relation to his employment
Fees taken in any Court or tribunal established under any
law for the time being in force.

In Short.
Services is not
Sale of any goods
Sale of immovable property
Service performed by Member of
Parliament or Assembly, Local Authority
in such capacity
Discharging his constitutional
obligations
Employment

Examples
Mr. Bhumit Mehta sells imported perfumes in
Municipal Market. Total sale value in year 2015-16 is
Rs. 25 lakhs. Is he liable for service tax?
Mr. Dixit Patel owns a flat in Vaniyavad. He wants to
sell it for Rs. 50 lakhs. His friend Mr. Rankit Ramani
inform that he should pay service tax on said value
Mr.Dipak Vala is working as sales executive in
Aditiya Birla. His function is to provide support and
after sales services to customers. The Company gave
him Best Service Performer Award 2015.Mr. Federer
receives annual salary of Rs. 60 lakhs. Should he pay
service tax on service provided to Reliance Limited?

Service Tax

Finance Act,1994
Indirect tax
Service tax is a tax on services
Responsibility of service provider
Central government
Cant levied on some specified
service

Introduction of Service Tax in India

Dr. Raja Chelliah committee
Finance minister Mr. Manmohan Singh
introduced
Initially, service tax was levied on three
services
Telephone service
General Insurance
Stock Broking

Rate was 5%.

Rate of Service Tax

Service tax is levied on all services at
15%
14 % Service tax
0.50 % Krishi Kalyan Cess
0.50 % Swachh Bharat Cess
Effective from 1st June 2016

Selective v/s Comprehensive

Approach
Comprehensive Approach
All services are taxable and a negative
list is specified for services, which are
not taxable

Selective Approach
Only selective services are subject to
service tax

Before 1st July 2012

After 1st July 2012

Financial year

Revenue in
rupees(in crores)

Number of services

1994-95

407

2003-04

7891

62

2004-05

14,200

75

2011-12

97,509

119

2012-13

1,32,518

Negative list

2013-14

1,54,778

Negative list

2014-15

2,09,774(Estimated)

Negative list

Source:-http://taxguru.in/service-tax/service-tax-india-historymeaning-service.html

Negative list of services

Services by Government or a local

excluding certain services
Services by the Reserve Bank of India;
Services by a foreign diplomatic mission
located in India;
Services relating to agriculture or
agricultural produce including services
provided by any Agricultural Produce
Marketing Committee or Board or services
provided by a commission agent for sale
or purchase of agricultural produce;
Trading of goods;

Negative list of services(Continue)

Any process amounting to manufacture or

production of goods;
Selling of space or time slots for advertisements
other than advertisements broadcast by radio or
television;
Service by way of access to a road or a bridge on
payment of toll charges;
Betting, gambling or lottery;
Admission to entertainment events or access to
amusement facilities;
Transmission or distribution of electricity by an
electricity transmission or distribution utility;
Services by way of pre-school, higher secondary
school or university education.

Negative list of services(Continue)

Services by way of renting of residential dwelling

for use as residence;
Certain services of Bank or Financial institutions;
Service of transportation of passengers, with or
without accompanied belongings, by railways in a
class other than first class; or (B) an airconditioned coach; metro, monorail or tramway;
metered cabs, radio taxis or auto rickshaws;
Services by way of transportation of goods
subject to certain conditions
Funeral, burial, crematorium or mortuary services
including transportation of the deceased.
There are other services, which are exempted.
They include medical, research, advocate, sports,

Examples
Mr. Keyur Patel provides business auxiliary
service to various farmers. He provides them
assistance to sell said produce in open market.
For, such services, he receives commission.
Should he pay service tax?
DDIT received notice from service tax
department. They demanded service tax on
education fees collected from students. Advice
DDIT.
Suppose, in the last question, it is TIME Classes,
instead of DDIT

Exemption to Small Service

Provider

Not exceeding ten lakh rupees

To avail benefit of said exemption, the following
conditions are required to be satisfied: The provider of taxable service has the option not to
avail the exemption contained in this notification and
pay service tax on the taxable services provided by
him
The provider of taxable service shall not avail the
CENVAT credit
Where a taxable service provider provides one or
more taxable services from one or more premises, the
exemption under this notification shall apply to the
aggregate value of all such taxable services and from
all such premises and not separately for each
premises or each services
the aggregate value of taxable services rendered by a

Examples
Mr. Pratik Purohit provides coaching service. Its
turnover is Rs. 7 lakhs. He also provides
consultancy service from which he received Rs. 4
lakhs. He claims that his receipt from each service
is below Rs. 10 lakh. So he is not required to pay
service tax. Advice.
Mr. Vishal Shah is practicing Chartered Accountant.
He is having one branch in Delhi, Mumbai, Kolkata
and Chennai. Their Income is Rs. 5 lakhs, Rs. 8
lakhs, Rs. 7 lakhs and Rs. 4 lakhs respectively.
Income from no branch exceeds Rs. 10 lakhs. Is he
liable for service tax?

Service Tax Laws

Service tax provisions derive its power from followings:Chapter V and VA of Finance Act, 1994, as amended till date
V- 1994
VA -2003
VI-2004
Service Tax Rules
Rules are made for carrying out the provisions of the Act
and the rules cannot override the provisions contained in
the Act i.e. in short, the rules can never override the Act
and cannot be in conflict with the same. Where any act
or rule conflicts, act prevails.
Notifications by Central Government
Accordingly, notifications on service tax have been
issued by the Central Government from time to time
Circular issued by Central Board of Excise and Customs
Just as Boss issue advice or orders to subordinate, the
Central Board of Excise and Customs (CBEC) issues

Service Tax Laws(Continue)

Trade Notices issued by Jurisdictional Commissioners
Trade Notices are issued by the Central Excise/Service Tax
Commissionerates. These Commissionerates receive various
instructions from the Ministry of Finance or Central Board of
Excise & Customs for effective implementation and
administration of the various provisions of service tax law

Definitions Given in Other statues

For, understanding of Service Tax law, it is very much
required to have understanding of allied law. The law also
refers to and depends on various definitions given under
various statues. Any meaning given in Excise Act, Customs
Act, etc can be made applicable to service tax law

Judgments of Tribunal and Courts

Any decision given by the Supreme Court becomes binding
on all the courts. It becomes law of land. Decisions of High
Court are binding on all the courts and authorities within
State.

Administration of Service
Tax

Ministry of finance
Department of revenue
Central board of excise and customs
Central excise zones headed by chief commissioners
Central excise commisionerates headed by
commissioners service tax comissionerate
Service tax commissionerate
Additional commissioner
Joint commissioner
Assistant commissioner/Deputy commissioner
Superintendent
Inspector

Extend of Service Tax

Covers entire India
Except Jammu & Kashmir
Reason:- As per Article 370 of the
Constitution
Service provided within the territorial
waters will be liable to service tax
Service provided within the
Continental Shelf will be liable to
service tax

Jammu & Kashmir

Service
Provider

Service
Recipient

Service
Provided

Taxable

Remark

Gujarat

Gujarat

Gujarat

Yes

In India

Gujarat

Gujarat

Jammu

No

Provided in
Jammu

Gujarat

Jammu

Gujarat

Yes

Provided in
Gujarat

Jammu

Gujarat

Gujarat

Yes

Provided in
Gujarat

Jammu

Gujarat

Jammu

No

Provided in
Jammu

Jammu

Jammu

Jammu

No

Exempt

Gujarat

Jammu

Jammu

No

Exempt

Jammu

Jammu

Gujarat

Yes

Provided in
Gujarat

Source:-https://www.quora.com/Whatare-the-territorial-waters-of-India-andthe-exclusive-economic-zone

Example
Jammu & Kashmir government has decided to
organize Vibrant Kashmir festival. Ms.
Sulekha and Salikha has received contract to
make mandap decorations. Is he liable to pay
service tax?
Mr. Sachin Gosai is living in UK. He owns a
house in Amdavad. He has rented this house
to Mr. Milap Suthar who lives in USA. Indian
government demands service tax from
Mr.Sachin Gosai on rent received from Mr.
Tom. Advice him

Service Tax (Place of Provisions

Rules)
The Service tax is liable to be paid only if it is provided in
taxable territory
Generally we follow consumption principal in service tax.
If it is consumed in taxable territory, service tax is
attracted
Hence, normally place of provision is location of service
recipient.
Similarly, if service is in relation to any immovable property, it
is location of immovable property, which becomes place of
provision.
If service is in relation to specific event (like Vibrant Gujarat),
place of provision shall be place at which such event is held.
And if location of service receiver is not applicable, location of
service provider shall be place of provisions.

ON WHICH VALUE, WE SHOULD PAY

SERVICE TAX?
Gross amount charged by service
provider for similar services
Consideration in terms of money
Consideration not wholly or partly in
terms of money
Where the gross amount charged
inclusive of service tax payable

Example
E.g. Woodland is famous restaurant
in Nadiad. Ms. Henika goes and
orders for Cold Coco. Total bill is Rs.
115/- which includes Rs. 15/- for
service tax. However Ms. Henika
denies to pay service tax and gives
only Rs. 100/- as final amount for bill.
Woodlands manager Mr.Namrit says,
as he has not received service tax
from Ms. Henika, they will not pay.

Answer
No. Mr. Namrit cannot escape liability
merely because they have not
received service tax from Ms.Henika.
In this case, it will be assumed that
Rs. 100 is inclusive of service tax. So
we have to make reverse
calculations.
100*15 = 13.04
115

Registration
Every person who is liable to pay service tax is required
to apply for registration in Form No ST1
http://www.aces.gov.in
Submit necessary proofs in support of his application
physically. This proofs includes
Print out of Application in FormST1 in triplicate dully signed
Attested Copy of PAN Card
Address proof of Premise sought to be registered
Constitution of Organization
Authority letter in favour of person authorized to collect
Registration Certificate
Power of Attorney in case document is signed by Authorized
Representative

Registration(Continue)
After, submitting these documents,
registration certificate is granted in Form
ST2 within seven days
No than.
Service tax number will be 15 digit alpha
numeric numbers
Exceeds Rs. 9 lakhs during financial year
within 30 days
(a) commencement of business or
(b) service has become taxable

Examples
Mr. Riken Patel has has applied to registration
with service tax department on 1 July 2012.
However, even after two months, he has not
received any service tax number. Advice him
Mr. Mitesh Jadav is management consultant.
His total income is Rs. 9.10 lakhs p.a. He says
that his income is marginally above the limit.
Further, he is confident that in future his
turnover will never cross Rs. 9 lakhs. Hence, he
does not want to obtain service tax
registration number. Is he correct?

How to get Register?

Steps are to follow:1. Fill the ACES DECLARATION FORM www.aces.gov.in
and deposit it with the concerned Range
Superintendent.
2. Please ensure to fill emailid correctly in the form
because TPIN and password will be communicated by
the department to this emailid only.
3. After receiving the TPIN and Password, visit the
website www.aces.gov.in and Click on the service tax
button provided on the left side of ACES Homepage to
login.
4. Enter the TPIN and password to log into the system.
For first time login, ACES will mandatorily prompt for
changing the Password.
5. Set the new password & Note that user id (called as T
PIN) once selected can never be changed, even during

Payment of tax
As per this rule, the service tax will be paid to the credit of the
central government by the 6th of every month, if paid electronically
and 5th of every month, if paid via other means (except march)
Account code
The tax is payable by a GAR-7 Challan in the bank
cash or cheque
Cess should be shown separately under separate account head in
TR-6/GAR-7 challan
Account Codes are as follows.
Service Tax - 00441089
Education Cess - 00440298
Higher Sec Edu. Cess - 00440426
Interest - 00441090
Penalty - 00441093

Return
Every assessee has to submit half yearly return in
form ST-3 in triplicate within 25 days of the end of
the half-year
Provisional return can be filled in Form 3A
Revised return
Assessee can rectify mistakes and file revised
return within 90 days from the date of filing of
the original return
What is to be done if mistake comes to notice
after 90 days?
Pay the amount by TR6/GAR-7 challan and
inform department suitably
If he has paid excess amount by mistake, he is
required to file refund claim

Content of Service Tax

Return

Value of Taxable Service Billed

Value of Service which is exempted
Value of Service which is exported
Abetment claimed with respect to
notification
Amount Received including amount
Received in Advance
Amount of Tax and Cess Payable
Details of CENVAT Credit

Late fee and penalty for filing late

ST-3 return
The Law makes provision for late filing of
return with late fee which can be upto `
20,000. The late fee payable is as follows
Delay Upto 15 days ` 500
Beyond 15 days and upto 30 days ` 1,000
Delay beyond 30 days ` 1,000 plus ` 100 per day
of delay ,maximum ` 20,000.

Once a person is registered, he has to file

return even if there is no tax liability. He should
file Nil return if there was no service tax
payable.

How to file Return electronically

(Online filling of data in service tax
return and then submit it)
Steps are to follow:1. Login into ACES by entering the userid and
password
2. Home page of the assessee will appear.
3. Go to RET Main menu Click on the Fill option
of Fill ST3 submenu i.e. RET Menu
4. Fill ST3
5. Page will appear listing the Premises code and
Address of the registered premises of the
Assessee. Premises code will appear as hyperlink
6. Click on the hyperlink to prepare the ST3 Return

How to file Return electronically

(Online filling of data in service tax
return and then submit it)
7. After filling the Service Tax return correctly, Click on the
SAVE Button appearing on last page and confirmation page
of ST3 will appear.
8. To Amend, Click on the Modify button or Save to store the
Return in the database
9. Return saved in ACES can be amended before submission by
the assessee by clicking on the Amend ST3 button under
Fill ST3 submenu.
10. To submit the ST3 Return to the department, press SUBMIT
button.
11. Confirmation will appear for successful submission of ST3
Return displaying the Unique No. for such Return.
12. Return after submission can be revised once in 90 days by
clicking on the Revise ST3 option of Fill ST3 submenu

How to file Return electronically

(Offline filing of Data & Upload)
1. Click on the Download button provided on the left side of ACES
Homepage and download excel utility by clicking on the hyperlink
Download ST3 Return Excel Utilityi.e. RET
2. e Filing
3. Download Excel Utility
4. Use the excel utility to prepare ST3 return and click on Validate &
Submit button on the last page to generate XML file.
5. The XML file will be saved in the same folder where the download
utility is saved by the user.
6. To upload the ST3 Return, login into ACES by entering the userid
and password. Click on Upload File option of efiling submenu
under RET
7. Main Menu i.e. RET Main Menu
8. efiling
9. Upload file

How to file Return electronically

(Offline filing of Data & Upload)
10. Click the Save button to save the return in the database of
the assessee or Else click on SUBMIT button to file the
return.
11. Confirmation will appear for successful uploading of Return
without any Unique No.
12. After uploading, click on View Status option of efiling
submenu under RET Menu to view status of Return.
13. A return will be considered as filed only when its status is
shown as FILED which should be appeared on or before the
last due date of 25th April/25th October, as the case may be,
for treating the return filed on time.
14. Further, Assessee can also VIEW, SAVE AND PRINT ST3
RETURN at any time by clicking on the button view ST3
under RET menu after successful login into ACES.

Multiple Services Rendered

In case the assessee provides more than one
taxable services, he can file single return for
all the category of taxable services. However,
the complete information should be presented
in the return month wise or category wise.
Mr. Mayank Patel is in telecommunication
business, for which he is duly registered with
ST Department. He also ventured in internet
marketing from 1 April 2012. Service tax
officer ask him to obtain separate number for
said marketing service. Is he right?

Electronic Accounting System In

Excise and Service Tax (EASIEST)

To make payment of tax easy

28 banks
Payment is made by GAR-7 challan
Mandatory e-payment if annual
service tax payment exceeds ` 10
lakhs
Mandatory payment of simple interest
for the period which the payment is
delayed
18%

Service Tax Point of Taxation

service tax shall be paid at the
earliest of following: Date of Issue of invoice
Receipt of Consideration or Advance
Date of Completion of Service, if invoice
is not issued in 30 days.

Sr.
no

Date of
comple
tion of
service

Date of
invoice

Date
on
which
payme
nt is
receiv
ed

Point of
Taxatio
n

Remarks

April 10, April 25,

2016
2016

April
30,
2016

April 25,
2016

Invoice issued in 30
days and before receipt
of payment

April 10, May 13,

2016
2016

April
30,
2016

April 10,
2016

Invoice not issued

within 30 days and
payment received after
completion of service

April 10, April 20,

2016
2016

April
15,
2016

April 15,
2016

Invoice issued in 30
days but payment
received before invoice

April 10, May 12,

2016
2016

April 5,
2016
(part)
April
25,
2016

April 5,
2016
and April
10, 2016
for
respectiv

Invoice not issued in 30

days. Part payment
before completion,
remaining later

Abatements & Deductions

Sr.
No

Description of Service

Abatement /
Deduction

Effective
Rate **

Financial leasing including Hire

Purchase

90%

1.50%

Transport of goods by Rail

(other than service mentioned
below in Sr. No. 3)

70%

4.50%

Transport of goods in
containers by rail by any
person other than Indian
Railways

60%

6.00%

Transport of passenger by rail

70%

4.50%

Bundled service by way of

supply of food or any drink, in
a premises together with
renting of such premises

30%

10.50%

Transport of passengers by air

(1)Economy Class

60%

6.00%

Abatements & Deductions(Continue)

Sr.
No

Description of Service

Abatement /
Deduction

Effective
Rate **

Renting of hotels, inns, guest

40%
houses, clubs, campsites or
other commercial places
meant for residential or lodging
purposes

9.00%

Services of goods transport

agency in relation to transport
of goods other than used
household goods

70%

4.50%

Services of goods transport

agency in relation to transport
of used household goods

60%

6.00%

10

Services provided by a
foreman of Chit Fund in
relation to chit

30%

10.50%

11

Renting of a motor cab

60%

6.0%

Abatements & Deductions(Continue)

Sr.
No

Description of Service

Abatemen
t/
Deduction

Effectiv
e Rate
**

12

(1)Transport of passengers by a
Contract Carriage
(2)Transport of passengers by a radio
taxi
(3)Transport of passenger by air
conditioned stage carriage

60%

6.00%

60%
60%

6.00%
6.00%

13

Transport of goods in a Vessel

70%

4.50%

14

Service by a tour operator in relation

to :
(1)Only arranging, booking,
accomodation
(2)(2) Services other than services
specified in (1) above

90%
70%

1.50%
4.50%

70%

4.50%

15

Construction of residential &

commercial complex/building

16

Service portion in the execution of

Abatements &
Deductions(Continue)
Sr.
No

Description of Service

17

Service portion in any activity

wherein food or any drink is
(1)supplied at a restaurant
(2)supplied in outdoor catering

Abatement Effective
/ Deduction Rate **

60%
40%

6.00%
9.00%

ANY QUESTIONS