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SERVICE TAX: READY RECKONER FOR THE CALANDER YEAR
[Submitted by CA. Pradeep Modi,
B.Com. FCA, DISA,
Kolkata, West Bengal]
July 17, 2008
STEP-1. REGISTRATION
Registration within a period of 30 days in FORM ST-1 is
Compulsory where the aggregate value of taxable service exceeds Rupees
Nine Lakhs.
Registration in form S.T. -2 shall be granted within seven
days.
New services introduced w.e.f. 16.05.2008 are:-
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Information Technology Software Service;
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Investment Management Service under ULIP;
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Stock Exchange Service;
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Commodity Exchange service;
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Clearing & processing House services;
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Supply of tangible goods for use service.
STEP-2. BOOKS & RECORDS
No specific records have been prescribed. The records,
including computerized data if any, being maintained by an assessee as
required under any other laws in force (e.g. Income tax, Sales tax) is
acceptable
STEP-3. VALUATION
-
The value of any taxable service shall be the gross amount
charged by the service provider of such service provided or to be
provided by him. The transactions between associated enterprises, any
amount credited or debited to any account (including suspense account)
in the book of account of person liable to pay Service tax will be taken
for reckoning gross amount charged.
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TDS: The Service Tax is to be paid on the value of taxable
services, which is charged by an assessee. Therefore, the Service Tax is
to be paid on the amount of income tax deducted at source because it is
also a part of Consideration.
-
UTILIZING CENVAT CREDIT ON INPUT, SERVICE, INPUT & CAPITAL
GOODS
- When input service are common for exempted service as well as output
service, the credit to the extent 20% of tax liability on the output
service.
- However, on certain specified input service the CENVAT Credit could
be utilized without having any restriction of 20%.
- Service tax Rate in general is 12%, Education Cess 2% and Secondary
& Higher education Cess 1% but for Works Contract, the rate is 4% under
composition Scheme.
STEP-4. PAYMENT
- The payment of service tax on monthly / quarterly basis shall be
deposited by way of GAR-7 Challan.
- In case where an assessee is an individual or a partnership firm:-
The value of taxable services received during any quarter shall be
required to be paid by him 5th day of the month immediately following
the said quarter.
- (b) In case of all other categories of service tax assessee:-
The value of taxable services received during any calendar month shall
be required to be paid by them to the credit of the Central Government
by the 5th day of the month immediately following the said calendar
month.
- However, service tax for the month of March or the quarter ending in
the month of March is to be paid by 31st March, of that calendar year.
- DELAY IN PAYMENT
Interest @ 13% per annum for the period by which the crediting of the
levy or any part thereof is delayed.
STEP.5- ADJUSTMENT IN TAX
Where an assessee has paid to the credit of Central Government any
amount in excess of the amount required to be paid towards service tax
liability for a month or quarter, as the case may be, the assessee may
adjust such excess amount paid by him against his service tax liability
for the succeeding month or quarter, as the case may be, subject to the
following conditions:-
- excess amount paid is on account of reasons not involving
interpretation of law, taxability, classification, valuation or
applicability of any exemption notification,
- excess amount paid by an assessee, on account of delayed receipt of
details of payments towards taxable services may be adjusted without
monetary limit,
- in other cases the excess amount paid may be adjusted with a
monetary limit of Rs. 100,000/- for a relevant month or quarter, as the
case may be,
- the details and reasons for such adjustment shall be intimated to
the jurisdictional Superintendent of Central Excise within a period of
15 days from the date of such adjustment.".
STEP.6- FILING OF RETURN
All categories of service tax assessee shall be required to submit a
half-yearly return by the 25th day of the month following the particular
half-year (i.e.25th October & 25th April) in FORM ST-3 in triplicate
along with:-
- Copy of each of the form GAR-7 challans submitted for the
month/quarter covered in the half, and
- A memorandum in form ST-3A giving full details of the difference
between the amounts of Service Tax collected and the actual amount
deposit (month wise) if applicable.
- If no services have been provided or no recovery is made, such assessee may file a Nil Return.
STEP.7- REVISION OF RETURN
An assessee may submit a revised return, in Form ST-3, in triplicate, to
correct a mistake or omission, within a period of ninety days from the
date of submission of the return.
STEP.8- PENALTY
- The failure to pay service tax within the specified period attracts
penalty. The amount of penalty shall be Rs.200/- per day or 2% of such
tax per month whichever is higher [which shall not exceed the amount of
service tax payable].
- For delay in furnishing the return:
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15 days from the date prescribed, an amount of Rs. 500/-;
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beyond 15 days but not later than 30 days, an amount of Rs.
1,000/-; and
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beyond 30 days from the date prescribed for submission of such
return an amount of Rs. 1,000/- plus Rs. 100/- for every day from the
thirty first day till the date of furnishing the said return:
Provided that the total amount payable in terms of this rule, for
delayed submission of return, shall not exceed Rs. 2,000/-.
STEP.9- SHOW CAUSE NOTICE
- WHO: - The Assistant / Deputy Commissioner of Central Excise.
- WHY: - Service Tax on any service provided by the assessee has been
paid shortly, not paid, refunded erroneously.
- WHEN: - Short levy or erroneously granted any refund due to
suppression of facts, misstatement or evasion with intent to evade
payment of service tax to be levied, the notice could be issued within
five year from the relevant date.
STEP.10 - APPEALS
10.1 APPEAL TO THE COMMISSIONER (APPEALS):-
- WHO: - An Assessee
- WHY:-
(i) assessment order passed by the Assistant / Deputy
Commissioner.or
(ii) denying his liability to be assessed under Service Tax, or
(iii) against order levying interest or penalty or
(iv) denying any refund of service tax.
- WHEN: - Within 3 months from the receipt of the order in question.
Commissioner (Appeals)may extend that said period by a further period of
three months, If he feels that Appellant was prevented by sufficient
cause from filing the appeal within the aforesaid period of 3 months
- HOW:- Form ST- 4
- ADJOURNMENT: - That any adjournment during hearing may be give only
after recording the reasons and the adjournment given shall not be more
than three times.
- DECISION:- The Commissioner of Central Excise (Appeals) shall hear
and decide the appeal within a period of 6 months of its being filed and
pass such orders as he thinks fit and he may enhance the service tax,
interest or penalty or denying any refund of service tax.
10.2. APPEAL TO THE APPELLATE TRIBUNAL:-
- WHO:-
(i) Any person aggrieved by an order passed by the
Commissioner of Central Excise or
(ii) An appellate order passed by the Commissioner of Central Excise
(Appeals)
- WHY:-
(i) the Committee of Chief Commissions or the Committee of
Commissioners objects to any order passed by the Commissioner of Central
Excise in relation to the service tax, it may direct the Commissioner of
Central Excise to appeal to the Tribunal.
(ii) denying the Commissioner of Central Excise objects any appellate
order passed by the Commissioner of Central Excise (Appeals), he may
direct the Assistant / Deputy Commissioner to file an appeal to the
Appellate Tribunal against such order.
- WHEN:- (i) Respondent has a right to file cross objection with 45
days from the date of receipt of Notice or such extended period as
permitted by the Tribunal and the cross memorandum shall be disposed off
along with the appeal.
(ii) An appeal to the Tribunal shall be filed within 3 months, time
period may be extended if sufficient cause. The Appellate Tribunal can
condone the delay in filing the appeal or cross objection on sufficient
cause being shown.
- HOW: - (i) in Form ST-5 & ST-7 as the case may be & Form ST-6 ( for
Cross objection and has to be accompanied with a fee as prescribed.
- ADJOURNMENT: - That any adjournment during hearing may be give only
after recording the reasons and the adjournment given shall not be more
than three times.
10.3. POWER OF SEARCH
If the Commissioner of Central Excise has reason to believe that any
documents or books or things which in his opinion will be useful for or
relevant to any proceeding under this Chapter are secreted in any place,
he may authorize any officer [Assistant Commissioner of Central Excise
or Deputy Commissioner of Central Excise, as the case may be] to search
for and seize or may himself search for and seize such documents or
books or things.
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974),
relating to searches, shall, so far as may be, apply to searches under
this section as they apply to searches under that Code.
- Gazetted Officer of Central Excise (Superintendent and above) has
the power to summon any person for giving evidence or producing
documents necessary for any inquiry.
- The person must attend in response to summons and answer such
questions as do not incriminate him and on his failure to do so, he
attracts penalties.
10.4. SERVICE TAX AUDIT
- WHO:- Central Excise Officer authorized by the AC/DC or audit party
deputed by the C&AG.
- WHEN:- Norms for Audit of service providers are as under:
| S.No. |
Amount of tax in CASH
and CENVAT paid annually |
Frequency of Audit |
| 1. |
Taxpayers paying more than Rs. 50 lakhs |
Every Year |
| 2. |
Taxpayers paying between Rs. 25 to Rs.
50 lakhs |
Once in two Years |
| 3. |
Taxpayers paying between Rs. 10 to Rs.
25 lakhs |
Once in Five Years |
| 4. |
Taxpayers paying below Rs. 10 lakhs |
2% of the taxpayer every Year |
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HOW:- Every Assessee shall make available at the registered premises
at all reasonable time of all records for inspection and examination.
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