| I.
REGISTRATION
Every person who is liable to pay service
tax under the provisions of this Chapter (that is, Chapter V of the Finance
Act, 1994 and Chapter VA of the Finance Act, 2003) or the rules made thereunder,
is required to make an application for registration, to the Superintendent
of Central Excise, within the prescribed time and in the prescribed form
and in the prescribed manner. This is provided in section 69.
-
Who is the
‘Person liable to pay service tax’?
Rule 2(1)(d) prescribes the person liable to pay the service tax
in respect of each service.
Non-resident:
Normally the service provider is liable to charge and pay service
tax except, in the case of a non-resident service provider, who does
not have an office in India, the person who receives the service will
be liable to pay and account for the service tax. Refer Rule 2(1)(d)(iv).
-
Whom and where should one approach
for registration?
Generally, all Commissionerates of Central Excise, have a Service
Tax Ceel, headed by Assistant Commissioner/Deputy Commissioner. However,
in certain Commissionerates, separate Service Tax Divisions have been
constituted. The work is also delegated to Central Excise Divisions
in many Commissionerates. A prospective assessee of Service Tax can
approach the Assistant Commissioner/Deputy Commissioner in charge
of Service Tax cell of the jurisdictional Commissionerates or Central
Excise Division for registration depending upon the arrangements made
in the Commissionerate. Refer Departmental Clarification on FAQs Q.1.
-
What is ‘the prescribed time’
for filing an application for Registration ? or
What is the ‘time limit’ within the service
provider should register with the Central Excise department for the
service tax purpose once the service is notified or once the assessee
commences the business of rendering the taxable service?
Every person liable to pay
the service tax should make an application to the concerned Central
Excise Officer for registration within the period of 30 days of the
Service Tax having come into force. In cases where a person commences
the business of providing a taxable service after such service has
been notified, he is required to make an application for registration
within a period of 30 days from the date of commencement of his activities.
Refer Rule 4(1) and Departmental Clarification on FAQs Q.3
-
What is the prescribed
‘Form’ for filing an application for Registration?
The application for registration is required to be made, in duplicate,
to the jurisdictional Superintendent of Central Excise (Service Tax
Officer), in Form ST-1, prescribed under the Rules.
The details to be provided in the
form are:
-
Name and address of the assessee/
service provider.
-
Address of the premise(s) or
office(s) from where the service is going to be provided.
-
Income-tax PAN No. of the assessee.
-
Telephone Nos, fax Nos. and telex
Nos. of the assessee. Soon, e-mail id would also be required.
-
Form of organization, that is,
whether, individual or partnership firm or company.
-
Category of service(s), and
-
In cases of stock brokers, the
name, code number, name of the stock exchange where registered,
date of admission, reg. No allotted by SEBI will have to be provided,
together with, copy of registration/application for registration
to SEBI.
Refer Form ST-1.
Additional information may
be required to be provided:
-
Brief note on accounting system
adopted by the assessee,
-
List of branches,
-
Branch-wise series of invoices
maintained along with a sample copy thereof,
-
Previous years audited Balance
Sheet along with Gross Trial Balance of different branches,
-
Bank account Nos. of the central
office and the branch offices,
-
Details of records maintained
by the central office and the branch offices.
Refer Trade Notice No. 76/2003 dated
6-11-2003 issued by the Commissioner of Customs and Central Excise,
Hyd. IV.
-
Is obtaining a PAN no.
from the Income-tax Department, a must for obtaining Service Tax Registration?
It is not mandatory to have a PAN for obtaining registration in
Service Tax. However, it is advisable for Service Tax assessees to
have a PAN No. as Service Tax Code (STC) No. based on PAN allotted
by Income-tax Department has been introduced in Service Tax also.
The main objective of allocating a number is to identify the concerned
person where he is located and registered. Refer Departmental Clarification
on FAQs Q.11.
Originally, the Government had decided
that the STC number allotted by the Department would be alpha-numeric.
The first part would be the 10-character PAN issued by the Income-tax
authorities to the Service Tax assessee to whom the STC is to be allotted.
The second part would comprise 2-Character alpha-code (ST). This will
be followed by numeric-code – 001, 002, 003, etc.
For example PAN + ST +001.
If there are more than one premises
of offices registered of such person having common PAN for all such
premises or offices, the last numeric code of STC No. would be 001,
002, 003, etc.
For example, PAN +ST + 001, PAN +
ST + 002, PAN + ST + 003, etc.
Refer CBEC ST Cir. No. 35/3/2001-CX-4
dated 27-8-2001.
-
From where do the Service
Tax assessee get the Forms, viz., ST-1, ST-2, etc?
The Forms are available on the website as well as with the jurisdictional
Central Excise Commissionerates. Refer Departmental Clarification
on FAQs Q.3.
-
Can the Department ask
for more information than what assessee is submitting to it in the
Forms ST-1 and ST-3?
Yes, if required the Department can always ask for additional
information. Refer Departmental Clarification on FAQs Q.4.
-
Single or multiple registration
in case of centralized billing
In case of an assessee providing taxable service from more than
one premises or office and having a centralized billing system, the
assessee may opt for either for a single registration where such centralized
billing is done or multiple registration of each office or
premises. This is provided under Rule 4(2). This is subject to the
approval of the Commissioner of Central Excise, who may refuse the
application, if he fell that it would be prejudicial or detrimental
to the interest of revenue. This is provided in Rule 4(3A).
-
Multiple registration in case
of non-centralized billing
In case of an assessee providing taxable service from more than
one premises or office and not having a centralized billing system,
the assessee has to make a separate application for registration of
each office or premises. This is provided under Rule 4(2).
-
If more than one service provided
Where an assessee is providing more than one taxable service from
the same premises, he may make a single application, mentioning therein
all the services provided by him. Refer Rule 4(4) and Departmental
Clarification on FAQs Q.4, Q.5 and Q.6
Certificate of Registration in Form
ST-2 should also indicate the details of all the taxable services
provided by the service provider. Refer Circular No. 72/2/2004 – ST
dated 2-1-2004 Q.1.
-
If more than one businesses
conducted from the same office / premises
If an assessee conducts more than one business or conducts the
same business in different names from the same office/ premises, he
would be required to obtain a separate registration is respect of
each business/business entity.
-
What action should be taken
by the concerned officer receiving the application for registration?
The application received for regisrtration in Form ST-1 will have
to be processed as per the Rule 4(5) of the Service Tax Rules. This
rule provides that "The Superintendent of Central Excise shall after
due verification of the application form, grant a certificate of Registration
in Form ST-2 within seven days from the date of receipt of the application.
If the registration certificate is not granted within the said period,
the registration applied for shall be deemed to have been granted."
Refer Rule 4(5) and Departmental Clarification on FAQs Q.7.
-
Can the jurisdictional officer
question about the correctness of the declaration?
No. While granting registration, the rule restricts (does not
permit) the jurisdictional officer to question about the correctness
of the declaration made by the service provider. Refer Rule 4(5) and
Departmental Clarification on FAQs Q.7.
-
What is to be done if a new
taxable service is provided or if the service has now become taxable,
in case of an existing assessee
If a new taxable service is provided or if the service has now
become taxable, in case of an existing assessee, then the assessee
would be required to make a fresh application within 30 days of the
service being rendered / service becoming taxable to the Superintendent
of Central Excise and get the original Registration Certificate in
ST-2 amended to include the new service.
-
What is to be done with the
registration when a registered assessee transfers his business to
another person?
When a registered assessee transfers his business to another person,
the transferee should obtain a fresh certificate of registration.
Rule 4(6) and Departmental Clarification on FAQs Q.8.
-
What is to be done with the
registration when a registered assessee ceases to carry on the activity
for which he is registered?
When a registered assessee ceases to carry on the service activity
for which he is registered, he should surrender his registration certificate
to the Central Excise authorities. Rule 4(7) and Departmental Clarification
on FAQs Q.8.
-
Is there any penal provision
for non-registration ?
Yes. Any offence, prior to 10-9-2004, of failure for non-registration
would attract a mandatory penalty of Rs. 500 under section 75A. This
penalty was mandatory and the concerned officer could not waive or
reduce it, if the assessee pleaded ‘reasonable cause’. However, if
there was delay in taking a single registration for more than one
taxable service, then only a single penalty would be imposed. Refer
CBEC Circular no. 76/6/2004 – ST dated 3-3-2004.
With effect from 10-9-2004, section
75A which provided for the mandatory penalty has been deleted. Section
77 has been amended with effect from 10-9-2004 to provide that, in
case of any contravention of any provision of the Chapter or any rule
made thereunder, for which no penalty is provided, then the adjudicating
authority may impose a penalty not exceeding Rs. 1,000. The
discretion of levy of the penalty lies with the adjudicating authority.
Further, section 80 provides that the penalty would not be imposable
if the assessee proves that he had a reasonable cause for the failure.
-
Do separate Records have to
be maintained?
No. The records (including computerized data) as maintained by
an assessee in accordance with the various laws in force from time
to time, shall be acceptable. Refer Rule 5(1).
No specific records have to been
prescribed to be maintained by a service-tax assessee. No statutory
documents have been prescribed by the Government such as specified
invoice proforma, specified registers, etc. for use by the service
provider. Rule 5(1) and Departmental Clarification on FAQs.
However, at the time of filing the
return for the first time, every assessee is required to furnish to
the Superintendent of Central Excise, a list of all account maintained
by the assessee in relation to service tax including memoranda received
from his branch office. Refer Rule 5(2).
-
Mentioning of Service Tax Registration
No. on the Invoices issued by Service Tax providers
A Service Tax provider would be required to mention the STC No.
on the invoices issued by him. Refer Letter No. F. No. V/DGST/40-Misc.-29/2001/3674
dated 18-9-2003 issued by the Directorate General of Service Tax,
Mumbai.
II. PAYMENT OF TAX
-
Who is liable to pay Service
Tax to the Govt.?
Every person providing taxable service to any person shall pay
service tax at the rate specified in section 66, in the prescribed
manner and within the prescribed period. This is provided in section
68(1).
Prior to 16-8-1998, section 68 provided
for the person liable to pay to collect and pay the tax on receipt
of the tax. However, with effect from 16-8-1998, the person providing
the service would now be liable to pay, whether he has collected it
or not.
-
Who is liable to pay Service
Tax in case service is provided by a person other than Indian resident
or who does not have any establishment in India ?
In this case the services receiver in India is liable to pay service
tax. Refer Departmental Clarifications on FAQs.
In case of non-residents who do not
have an office in India, the service tax is payable by the person
receiving the payment. This is provided in Rule 2(1)(d)(iv) w.e.f.
16-8-2002 and Circular No. 59/8/2003 dated 20-6-2003.
-
Would services provided
in India for the foreign client be liable for payment of service tax
?
Yes, the service tax is payable on all taxable services rendered
in India, whether to an Indian or foreign client.
Refer Departmental Clarifications on FAQs.
-
Would the service provided
abroad liable for payment of Service Tax?
No, the service tax is payable on all taxable services rendered
in India, whether to an Indian or foreign client.
Refer Departmental Clarifications on FAQs.
-
How and where to pay Service
Tax ?
The Service Tax amount is required to be paid in Form TR-6 challan
(yellow in colour) in the specified branches of designated banks.
The list of such Banks and Branches is available in every Commissionerate
of Central Excise. Different heads of accounts have been specified
for different taxable service by the Govt. under which payment has
to be made. While making the payment of service tax to the credit
of Central Govt., head of account should be correctly and properly
indicated under major and minor heads and sub-heads to avoid misclassifications.
Refer Departmental Clarifications on FAQs.
-
If more than one services
are rendered by an assessee, does he have to make payments in separate
TR-6 Challan or will one challan suffice ?
In this connection it has been clarified that while effecting payments
of the service tax on account of different services, service providers
can use single TR-6 Challan. However, amounts attributable to each
such service along with concerned accounting codes should be mentioned
clearly in the column provided for this purpose of the TR-6 Challan.
Alternatively, the service providers can use separate TR-6 Challans
for payment of service tax for each service provided.
Refer Trade Notice No. 2/2004 dated 13-4-2004 issued by Commissioner
of Central Excise, Pune.
-
What if the wrong Accounting
Code is mentioned ?
If a mistake has been made while mentioning the Accounting Code
and a wrong Code has been mentioned, in such an event, the assessee
should get in touch with the concerned officers and have the Code
corrected. As regards to the cases where the assessee was asked to
pay Service Tax again, the amount thus paid may be refunded by the
concerned officer.
Refer CBEC Circular No. 58/07/2003-CX(ST) dated 20-5-2003.
-
When is Service Tax required
to be paid ?
If the assessee is an individual or a proprietor or partnership,
the service tax is to be paid on quarterly basis. This payment is
to be made by the 25th day of the month following the quarter. For
example, Service Tax for the quarter ending 30th June is to be paid
by 25th July.
In respect of other categories, the
tax is payable on monthly basis and is to be paid by 25th of the succeeding
month.
Refer Departmental Clarifications
on FAQs.
-
What is meant by ‘quarter’
?
‘Quarter’ means the period between 1st January to 31st March or
1st April to 30th June or 1st July to 30th September or 1st October
to 31st December of a financial year.
Refer section 2(1)(e).
-
What is the date of payment
of Service Tax ? Is it the date on which the cheque for the same is
deposited / tendered in the designated bank or the date on which the
amount is credited ?
The date of deposit of cheque is the date of payment of Service
Tax. The Service Tax Rules as amended provide that it would suffice
if the cheque is presented to the bank by the 25th of the month. However,
if the cheque bounces, it would mean as if the tax has not been paid
and the necessary penal provisions will follow.
Refer Departmental Clarifications on FAQs.
-
What if the 25th of the
month happens to be public holiday ?
In such a case the tax may be paid on the next working day immediately
following the holiday.
Refer CBEC Circular No. 63/12/2003-ST dated 14-10-2003.
-
Whether the payment of
Service Tax is to be made for the billed amount or for the value received
?
The Service Tax for a particular period is payable on the value
of taxable service received in that period and not on the gross amount
billed to the client.
Refer Departmental Clarifications
on FAQs.
Is service tax payable by the assessee,
even in case where his client do not pay for the service rendered
or pay only a part of the bill raised in this regard ?
The Service Tax is required to be
paid only on the value of taxable service received in a particular
month or quarter, as the case may be and not the gross amount billed
to the client. However, in all such cases where the amount received
is less than the gross amount charged / billed to the client, the
Service Tax assessees are required to amend the bills either by rectifying
the existing bill or by issuing a revised bill and by properly endorsing
such charge in the billed amount. Incase an assessee fails to do so,
his liability to pay Service Tax shall be on the amount billed by
him to the client for the service rendered.
Refer Departmental Clarifications
on FAQs.
-
What if the service tax
is received before the service is fully rendered ?
If the service tax is received before the service is fully rendered,
then in such an event, only that service tax which is attributable
to the service rendered in that quarter or month, as the case may
be, would be due to be paid.
Refer Explanation to Rule 6(1) inserted with effect from 9-7-2004.
-
When payment is made by
a client or customer to an assessee after deducting his Income Tax
liability under "Tax Deducted at Source" provision, whether the Service
Tax liability of the assessee is only towards the amount actually
received from his client or customer or tax is to be paid on the amount
of income-tax deducted at source also ?
The Service Tax is to be paid on the value of taxable service
which is charged by an assessee. Any income tax deducted at source
is included in the charged amount. Therefore, Service Tax is to be
paid on the amount of income-tax deducted at source also.
Refer Departmental Clarifications on FAQs.
-
What if the assessee is
unable to compute the correct tax payable on the date of deposit?
If the assessee is unable to compute the correct tax payable on
the date of deposit, he may make a request, in writing, to the Assistant
Commissioner of Central Excise or the Deputy Director of Central Excise,
as the case may be, for making a payment on a provisional basis. The
concerned officer may allow such payment being made after considering
the facts of each case.
Where the assessee requests for a
provisional assessment, he shall file a statement giving details of
the difference between the service tax deposited and the service tax
to be paid for each month in memorandum in Form ST-3A accompanying
the quarterly or half-yearly return, as the case may be.
Refer Rules 6(4) and 6(5).
-
Whether service tax deposited
by the assessee in non-designated bank will amount to non-payment
of service tax?
Yes. For payment of service tax, specified bank has been nominated
for every Central Excise Commissionerate. If service tax amount is
deposited in a branch of a bank other than nominated bank, it amounts
to non-payment.
Refer Departmental Clarifications
on FAQs.
Rounding off :
-
When an amount of tax includes
50 paise or more, it shall be rounded off to one rupee and when it
is less than 50 paise, it shall be ignored.
Refer Trade Notice No. 2/97 dated 2-1-1997 issued by the Commissionerate
at Cochin and Circular No. 53/2/2003-ST dated 27-3-2004.
-
What are the precautions
to be taken by the assessee while depositing the Service Tax ?
The following precautions should be taken by the assessee at the
time of paying the Service Tax :
-
Service Tax should be paid within
the time limit laid down in this regard.
-
It should be deposited in the
specified branches of the banks designated for this purpose in
each Central Excise Commissionerate.
-
The major head and sub-head relating
to the service provided by the assessee should be correctly filled
in the TR-6 Challan.
-
The TR-6 challan should be yellow
in colour and should be filed in quintriplicate, after being properly
filled.
-
In case of delay in making payment
of service tax in time, the interest is also required to be paid
at a simple rate of one and a half per cent for each month or
part of the month for which payment is delayed.
Refer Departmental Clarifications
on FAQs.
III. REFUNDS & ADJUSTMENT OF EXCESS
TAX
-
Can any adjustment of tax
liability be made by an assessee on his own in cases where Service
Tax has been paid in excess?
Yes. Facility for adjusting excess payment of service tax by the
assessee towards future liability is now provided for in the law.
In cases, where an assessee has paid to the credit of Central Government
service tax in respect of a taxable service which is not so provided
by him either wholly or partially, for any reason, the assessee can
adjust the excess service tax so paid by him, calculated on a pro
rata basis against his service tax liability for the subsequent period,
provided that the assessee has refunded the value of taxable
service and the service-tax thereon to the person from whom it was
received. However, the assessee is required to file the details in
respect of such suo motu adjustments done by him at the time of filing
the service tax returns. In all other cases of excess payment, the
refund claims have to be filed with the department.
Refer Departmental Clarification or FAQs
-
How the adjustment of excess
tax paid by the assessee is made on his own on pro rata basis?
The excess service tax paid in the previous returns period can
be adjusted against the tax liability of the subsequent period on
pro rata basis in terms of sub-rule (3) of rule 6 of Service Tax Rules,
1994.
Examples:
-
If the assessee who is an Individual/Proprietary
or partnership firm has paid Rs. 6,000/- in excess of service
tax liability during the previous half year ending period, the
firm can adjust service tax for the subsequent period @ Rs. 3,000/-
per quarter.
-
If the assessee who is a Private
Limited Company and has paid Rs. 6,000/- in excess of the liability
of service tax, during the previous half year ending period, the
assessee can adjust Rs.1,000/- only per month in his subsequent
tax liability and not at a stretch.
Refer Departmental Clarifications
on FAQs.
IV. Refunds
-
What is the procedure for
claiming?
There is no procedure or form prescribed under the Chapter or the
rules made thereunder. Hence, the provisions of the Central Excise
Act will apply. Interestingly, even the amended Central Excise Act,
as it stands today, does not prescribe any form for claiming refund.
However, both the departments; i.e., Excise and Service tax, are accepting
claims in Form R. This was the form prescribed by the Central Excise
Act, prior to its amendment.
The Service Tax Department in its
Departmental Clarification on FAQs has clarified as under:
The procedure for claiming refund
for the amount due from the Department is as mentioned below:-
-
Submission of application in
prescribed Form R in triplicate to the jurisdictional Assistant
Commissioner.
-
Application should be filed within
the prescribed period; i.e., before the expiry of six months from
the relevant date as defined in section 11B of the Central Excise
Act, 1944 which is made applicable to service tax refund matters
also.
Application should be accompanied
by documentary evidence to establish that the amount of Service Tax
in relation to which such refund is being claimed has been paid by
the assessee in excess and the incidence of such tax had not been
passed on to any other person.
-
What is the "relevant date"
for calculation of limitation period of six months in respect of filing
refund claims related to service tax?
The "Relevant Date" for the purpose of refund (under section 11B
of Central Excise Act, 1944) is date of payment of Service Tax. Thus,
the limitation period of six months is to be calculated from the said
date.
V. RETURNS
-
Every person liable to
pay service tax shall himself assess the tax due on the services provided
by him and shall furnish to the Superintendent of Central Excise a
return in the prescribed form, prepared in the prescribed manner,
at the prescribed frequency.
Refer section 70 .
Prescribed Form
The return has to be furnished in Form ST-3.
Prescribed manner
-
In any return or statement prescribed
for the purposes of Service Tax and if so what are the documents to
be submitted along with the returns/statement?
-
The Service Tax assessee are
required to file a half yearly return in Form ST-3 or ST-3A, in
triplicate, to the Superintendent, Central Excise, dealing with
Service Tax work. The return is to be filed within 25 days from
the last day of the half-year it relates to and should be accompanied
by copies of all T.R. 6 challans issued in the relevant period.
Thus, the returns for half year ending 30th September and 31st
March, are required to be filed by 25th October and 25th April,
respectively. Further, assessee filing the return for the first
time should also furnish to the Department the list of all the
accounts maintained by them, relating to the Service Tax.
- How to file Service Tax Returns, on what
interval and with whom?
The Service Tax assessees are
required to file a half yearly return in Form ST-3 or ST-3A as applicable
in duplicate, to the Superintendent, Central Excise, dealing with
Service Tax work. The return is to be filed within 25 days from the
last day of the half year it relates to and should be accompanied
by copies of all TR-6 Challans issued in the relevant period. Thus,
returns for half year ending 30th September, and 31st March, are required
to be filed by 25th October and 25th April, respectively.
-
What if the 25th of the
month is a public holiday?
Adequate precautions should be taken by the service providers
to deposit the tax in time. In case of genuine hardship on account
of public holiday on 25th of the month in which a service provider
has to pay the service tax or file the returns. He may pay the service
tax in Government account on next working day immediately following
the holiday. Same thing applied with regard to the filing of return.
Refer CBEC Circular No. 63/12/2003-ST dated 14-10-2003.
- Whether a single return is sufficient when an
assessee provides more than one service or separate return is to be
filed for each service ?
A single return would suffice. However, the details in each of the
columns of Form ST-3 has to be furnished separately for each of the
taxable service rendered by the assessee.
- Details to be filed with the return?
- The return should be accompanied by copies of
all TR-6 Challans issued in the relevant period.
- Memoranda in Form ST-3A, in case of a provisional
assessment.
Refer Rules 6(4), 6(5) and 6(6).
-
Additional details
to be filed with the first return?
Every assessee must, at the time of filing the return for the first
time, furnish a list of all accounts maintained by the assessee in
relation to service tax, including memorandum received from his branch
offices.
Refer Rule 2(2).
-
Filing of ST-3 Return
by Registered Post?
Service Tax assessees, who may find it difficult to file return in
person, may file the same by Registered Post with the concerned Divisional
Officer. While the Department will ensure to acknowledge such receipts,
the assessees in turn, also should stick on the due date and ensure
that the returns reaches the Divisional Office on or before the due
date.
Refer Trade Notice No.6/2002 dated 23-1-2002 issued by the Commissioner
of Central Excise, Madhurai II.
VI. E-Filing of Returns
Departmental Clarifications on
FAQs on E-filing
-
What is e-filing ?
E-filing is a facility for the electronic filing of Service tax returns
by the assessee from his office, residence or any other place of choice,
through the Internet, by using a computer.
-
Who can e-file their
returns ?
Assessee having a 15 digit STP code and falling under the following
categories can avail of the facility of electronic filing their ‘Return’
for the following services :
-
Telegraph Services (TGH).
-
Telephones (TSU);
-
Life Insurance Services (LIS).
-
Insurance Auxiliary (IAX);
-
General Insurance Business (GIB);
-
Stockbrokers (STB);
-
Advertising Agencies (ADV);
-
Courier Services (COU);
-
Banking and Financial (BFN);
and
-
Custom House Agents (CHA).
This facility will be extended to
other services in stages.
The assessee should take care to
ensure that he has been indicating his 15 digit STP code in the challans
used by him from September 2002. An assessee who has not done this
may also opt for e-filing but he will have to submit copies of challans
manually to the department after e-filing his return, evidencing payment
of duties, after indicating his 15 digit STP code on each challan.
-
Can all types of returns
be filed electronically ?
At present only Service Tax return ‘ST3’ can be filed electronically.
-
Is e-filing compulsory?
Non-filing of returns is an assessee facilitation measures of the
department in continuation of its modernization and simplification
programme. It is an alternative to the manual filing of returns.
-
What about assessee
who fall under more than one category ?
Assessees coming under the above categories, have to file separate
returns for each of the services provided by them.
- Do they have to simultaneously also
file a manual return or submit manual TR-6 challans separately?
If an assessee files electronics returns for any of the permissible
categories of services and receives an electronic acknowledgement of
the same, he need not file a manual return for the same service. He
need not file the manual TR- 6 copies for the said return if he has
taken care to ensure that he has been indicating his 15 digit STP code
in the challans used by him from September, 2002. If the assessee is
a provider of more than one service, it is desirable that he pays his
challan service-wise, so as to take maximum benefit of the procedure.
He should however preserve the manual copies of the TR-6 challan for
production before the officer, in the rare occasion it is called for,
or as stated above, if the assessee has not been indicating his 15 digit
STP code in the challans used by him from September, 2002.
-
What is the procedure
for e-filing ?
Those assessees coming under the above service categories and who
have a 15 digit Service Tax Payer Code allotted to them, should file
an application to their jurisdictional AC/DC as laid out in Trade
Notice issued in this regard. They should mentioned a trusted e-mail
address in their application, so that the department can send them
their userword and password to help them file their return. They should
log on to the Service Tax 3-filing Home Page using the Internet. One
entering their STP Code, userword and password in the place provided
on the Home Page they will be permitted access to the e-filing facility.
They should then follow the instructions given therein.
-
To whom should I make a request
for e-filing permission?
The assessee should file an application to their jurisdictional AC/DC
as elucidated in TN mentioned above, for e-filing permission.
-
How will the permission
for e-filing of returns be communicated to me?
The permission for e-filing will be communicated to the assessee through
the e-mail address provided by him. It would also contain the user
ID and password required for e-filing.
-
Is it necessary for me to have
an e-mail address ?
Yes. They should mention a trusted e-mail address in their application,
so that the department can send them their userword and password,
to help them file their Return. The e-mail address will also be required
at the time of login.
-
Can I change my user
ID and password after I receive the same from the department?
While the assessee cannot change the user ID, he can and must change
the password immediately after receiving it by e-mail from the department.
This he can do by logging onto the CBEC website at the address http://www.cbcc.gov.in
and navigating to the e-filing site ‘Home Page’ where he has an option
to change his password. He can also directly go to the e-filing site
home range by typing the address htpp.service tax e-filing.nic.in
the address bar of the browser. It is the responsibility of the assessee
to keep the password confidential and ensure that it is not known
to anyone else. This is to prevent misuse. The responsibility for
the return filed using the password of the assessee will be his.
-
Can I authorize somebody
to file the return on my behalf ?
No. The responsibility for filing the returns and all the information
contained herein is that of the assessee. The assessee should hence
keep his user ID and password allotted by the department confidential.
-
How do I get an acknowledgement
after filing my return ?
After submitting his return, the assessee should wait to get an acknowledgement
on his computer screen, of having successfully filed his return. He
should then print a copy of the same as proof of having filed his
return. He should be advised to quote the Computer generated number
of the acknowledgement in all his future correspondence with the department
on this return.
-
Do I have a grace
period for completing the formalities and filing my return electronically
?
Yes Being the first time assessee opting for e-filing of ST 3 returns,
can do so within one month from the due date prescribed in the Service
Tax Rules for filing such returns. This concession however does not
extend to non-payment of tax in time, mis-declaration etc. For further
information please read the Trade Notice issued by the Commissionerate
on e-filing.
-
What are the benefit
of e-filing to me?
The benefits of e-filing to the assessee is that it saves the assessee’s
precious time from visiting the departmental office to file his returns.
He can file the return from his office, house, internet kiosk, or
any other lace of choice at a time most convenient to him. The e-filing
software also helps the assessee by making checks on the mathematical
accuracy of the tax paid. It makes available to him the facility of
making reports based on the returns filed by him. In the next stage
his refunds will be automatically credited to his bank account.
-
Where can I seek a
clarification of any doubts on e-filing ?
Any person can seek a clarification on problems relating to e-filing
of ST-3 returns, by sending an e-mail or contacting the designated
officer as per details intimated in the Trade Notices issued by the
Commissionerate in this regard.
-
How do I register for e-filing?
You should be providing one of the
eligible services.
You should have a valid 15 Digit
Service Tax Payer (STP) Code.
You should have valid e-mail address.
You should apply in Annexure A as
stated in the Public notice issued by your jurisdictional Commissionerate
and submit the same to the respective Commissionerate.
Once the user name is created, you
will be intimated by e-mail regarding the user name and password.
VII. ASSESSMENT, VERIFICATION,
RE-ASSESSMENT, RECOVERY, RECTIFICATION, REVISION, ETC.
Provisional assessment
Where an assessee is, for any reason,
unable to correctly estimate, on the date of deposit, the actual amount
payable for any particular month or quarter, as the case may be, he may
make a request in writing to the Asst. Commissioner of Central Excise
or the Deputy Commissioner of Central Excise, as the case may be, giving
reasons for payment of service tax on provisional basis and the Asst.
Commissioner of Central Excise or the Deputy Commissioner of Central Excise
as the case may be, on receipt of such request, may allow payment of service
tax on provisional basis on such value of taxable service as may be specified
by him and the provisions of the Central Excise Rules, relating to provisional
assessment, except so far as they relate to execution of bond, shall,
so far as may be, apply to such assessment.
Refer Rule 6(4).
When an assessee opts for a provisional
assessment, the assessee must file a statement giving the details of the
difference between the service tax deposited and the service tax liable
to be paid for each month/quarter, in a memorandum in Form ST-3A accompanying
the return.
Refer Rule 6(5).
Where the assessee submits a memorandum
in Form 3A, the concerned officer would be entitled to complete the assessment
after calling for further documents as necessary, to verify the correctness
of the Return.
Refer Rule 6(6).
Assessment by the assessee at
the time of filing return
Every assessee is required to himself
assess the tax due on the services provided by him and to furnish a return.
Refer Section 70.
Verification of Return by the Superintendent
of Central Excise
The Superintendent of Central Excise
was authorised to verify the correctness of the tax assessee by the assessee,
on the basis of information contained in the return and documents/records
called for or required to be produced by the assessee. This was provided
in section 71. This section has now been omitted w.e.f. 10-9-2004.
Thus, w.e.f. 10-9-2004, the Superintendent
will not be entitled to verify the Return.
Refer section 71.
Best Judgement Assessment
The Asst. Commissioner of Central Excise
or the Deputy Commissioner of Central Excise (concerned Officer), as the
case may be, was entitled to make an assessment to the best of his judgement
and determine the tax payable by an assessee or refundable to an assessee,
if an assessee failed to file the return under section 70 or failed to
comply with the provisions under section 71 or if the concerned Officer
was not satisfied with the correctness or the trueness of the accounts
of the assessee. This was provided in section 72. This section has now
been omitted w.e.f. 10-9-2004. Hence w.e.f. 10-9-2004, the concerned Officer
would not be able to make a Best Judgement Assessment.
Refer section 72.
Self Assessment
As stated earlier, every assessee would
now be required to assess himself and determine the tax payable by him.
Refer section 70.
Re-assessment of tax replaced
with Recovery of tax
Coupled with the omission of section
71 and section 72, section 73 has been substituted with a new (if I may
say so) section 73 w.e.f. 10-9-2004.
Re-assessment
: Earlier section 73 provided that the concerned Officer was
authorized to reopen or reassess an assessment already made, if he felt
that there was an omission or failure on the part of the assessee to file
the true and correct Return and/or of he was of the opinion that certain
services had escaped taxation. With effect from 10-9-2004 there shall
be no reassessment by the concerned officer.
Recovery :
The new section 73 empowers the concerned Officer to initiate
proceedings for recovery of tax in certain cases.
The concerned Officer would be entitled
to recover tax when:
-
any Service Tax has not been levied
or paid or
-
any Service Tax has been short levied
or short paid or
-
any Service Tax has erroneously refunded.
If the concerned Officer has after due
verification, come to the conclusion that any one of the above conditions
are present, he may issue and serve a Show Cause Notice on the assessee
for the recovery of the Service Tax.
The time limit for issue of such notice
is as under:—
-
If the Service Tax has not be levied
or paid or has been short levied or short paid or erroneously refunded
by reason of fraud or collusion or wilful mis-statement or suppression
of acts or due to contravention of any provision of this Chapter or
the Rules made hereunder with the intention to evade payment of Service
Tax then the time limit available to the concerned Officer would be
5 years from the relevant date, and
-
In all other cases the time limit
would be one year from the relevant date.
Refer section 73(1).
It is further explained that when the
service of a notice is stayed by order of a Court, the period of such
stay will be excluded while computing the aforesaid period of one year
or 5 years as the case may be.
The concerned Officer shall after considering
the representation, if any, made by the assessee on whom the notice is
served, call upon such assessee to pay the amount so determined.
Refer sections 73(2), 73(3) & 73(4)
It has been clarified that the provisions
of sub-section (3) which relate to fraud, collusion etc would not apply
in cases where the Service Tax had become payable before 14-5-2003.
Refer section 73(5).
‘Relevant date’ has been defined to mean:
-
in case of taxable service in respect
of which service tax has not been levied or paid or has been short-levied
or short-paid –
-
where under the rules made under
this Chapter, a periodical return, showing particulars of service
tax paid during the period to which the said return relates, is
to be filed by an assessee, the date on which such return is so
filed;
-
where no periodical return as
aforesaid is filed, the last date on which such return is to be
filed under the said rules;
-
in any other case, the date on
which the service tax is to be paid under this Chapter or the
rules made thereunder;
-
in a case where the service tax is
provisionally assessed under this Chapter or the rules made thereunder,
the date of adjustment of the service tax after the final assessment
thereof;
-
in a case where any sum, relating
to service tax, has erroneously been refunded, the date of such refund.
Rectification of mistakes
The Asst. Commissioner of Central Excise
or Deputy Commissioner of Central Excise, (concerned Officer), as the
case may be is empowered to rectify any mistake apparent from the record
within two years from the date of which the order was passed and amend
his order. This authority is only to the officer to passing the original
order.
Refer to section 74(1).
The concerned Officer is entitled to
pass a rectification order in cases where proceedings by way of appeal
or revision have resulted into an order passed under sub-section (1) of
Section 74.
Refer to section 74(2).
The concerned officer is also entitled
to make an amendment under section. 74(1) suo moto i.e. out of his own
motion or make amendment if any mistake is brought to his notice by the
assessee or the Commissioner of Central Excise or Commissioner of Central
Excise (Appeals).
Refer to section 73(3).
In a case where due to an amendment,
the tax liability of an assessee is enhanced or a refund is reduced, the
concerned officer is required to issue a notice (Show cause notice) to
the assessee stating his intention to do so and after giving an assessee
a reasonable opportunity of being heard, the concerned Officer is entitled
to pass such order as he may deem fit.
Refer to section 74(4).
The concerned officer is required to
pass a rectification order in writing.
Refer to section 74(5).
Together with the order, the concerned
officer is required to issue a Notice when the liability has been increased
or issue a refund order which is due to the assessee, when the liability
is reduced.
Refer to section 74(6).
Revision by Commissioner
A Commissioner of Central Excise may
call for the records of the proceedings / assessments made by the Asst.
Commissioner of Central Excise or the Deputy Commissioner of Central Excise
(concerned Officer) as the case may be and would be entitled to make such
inquiry or cause such inquiry to be made and pass such orders as he thinks
fit. Such order which is prejudicial to the interest of the assessee cannot
be passed unless an opportunity of being heard is given to the assessee.
The Commissioner of Central Excise would
be required to communicate the order passed by him to the assessee, concerned
officer and also to the court. The Commissioner is restricted to pass
any order in respect of any issue which is pending or which is a subject
matter of an appeal before the Commissioner of Central Excise (Appeals).
The time limit for passing an order by
the Commissioner is two years from the date on which the order sought
to be revised has been passed.
Refer to section 84.
VIII. APPEALS AND OTHER REMEDIES
Appeals to the Commissioner of
Central Excise (Appeals)
The Assistant Commissioner of Central
Excise or the Deputy Commissioner of Central Excise (concerned Officer)
is required to pass an assessment order under section 73. Any person aggrieved
by such assessment order or by an order levying interest or penalty or
by an order denying any refund of service tax can file an appeal to the
Commissioner of Central Excise (Appeals). Similarly, any person denying
his liability to be assessed under this Chapter can file an appeal to
the Commissioner of Central Excise (Appeals).
Refer section 85(1).
Every appeal is required to be filed
in the prescribed form and shall be verified in the prescribed manner.
The form prescribed is Form ST-4. The Form of appeal including the Grounds
of Appeal and the Statement of Facts shall be filed in duplicate. A copy
of the decision or order appealed against has to be enclosed.
Refer section 85(2).
The appeal has to be filed within three
months from the date of the order. The Commissioner of Central Excise
(Appeals) may extend this period with a further period to three months,
if he is satisfied that the assessee was prevented by a reasonable cause
in filing the appeal.
Refer section 85(3).
The Commissioner of Central Excise (Appeals)
shall hear and determine the appeal and pass such orders as he may deem
fit. The Commissioner of Central Excise (Appeals) is also entitled to
enhance the service tax, interest or penalty payable. However, such order
of enhancement can be made only after the assessee has been given a reasonable
opportunity of showing cause against such enhancement.
Refer section 85(4).
Appeals to Appellate Tribunal
Any assessee aggrieved by the order passed
by the Commissioner of Central Excise under section 84 or by an order
of the Commissioner of Central Excise (Appeals) under section 85, may
file an appeal to the Appellate Tribunal against such order. ‘Appellate
Tribunal’ as defined under section 65(5) means the Customs, Excise and
Service Tax Appellate Tribunal (CESTAT) constituted under section 129
of the Customs Act, 1962.
Refer section 86(1).
The Board may, if it objects to the order
of the Commissioner of Central Excise under section 84, direct him to
file an appeal to the Appellate Tribunal against such order.
Refer section 86(2).
The Commissioner of Central Excise may,
if he objects to the order passed by the Commissioner of Central Excise
(Appeals), direct the Assistant Commissioner of Central Excise or the
Deputy Commissioner of Central Excise as the case may be, to file an appeal
against such order to the Appellate Tribunal.
Refer section 86(2A).
The appeal filed by an assessee shall
be in Form ST-5. The appeal filed by the Department shall be in Form ST-7.
The Form shall be filed in quadruplicate with an equal number of copies
of the order appealed against (one of which at least shall be certified
copy), Grounds of Appeal, Statement of Facts, Grounds and Statement of
Facts before the Commissioner, Form ST-4 (where applicable), original
order and prescribed fees. The grounds should set forth, concisely and
under distinct heads, without any argument or narrative and such grounds
should be numbered consecutively.
Every appeal must be filed within a period
of three months from the date of the receipt of the order sought to be
appealed.
Refer section 86(3).
On receipt of the notice/copy of the
appeal being filed, the other party may file a Memorandum of Cross-Objection
with the Appellate Tribunal, in the prescribed Form, in the prescribed
manner within a period of 45 days of receipt of the notice. The prescribed
Memorandum of Cross-Objection is Form
ST-6. This Form ST-6 has to be filed in quintriplicate.
Refer section 86(4).
The Appellate Tribunal may admit an appeal
after the prescribed time, if it is satisfied that the appellant was prevented
by sufficient cause for filing it in time.
Refer section 86(5).
The prescribed fees as revised by the
Finance (No. 2) Act, 2004 with effect from 10-9-2004 are:
- if the amount of service
tax and interest or levy
of penalty is Rs. 5 lakhs
or less Fee
Rs. 1,000
- if the amount of service
tax and interest or levy
of penalty is more than
Rs. 5 lakhs but not
exceeding Rs. 50 lakhs Fee
Rs. 5,000
- if the amount of service
tax and interest or
levy of penalty is
more than
Rs. 50 lakhs Fee
Rs.10,000
- any appeal filed by
the department Fee Rs. Nil
- any cross objection
filed by the assessee Fee
Rs. Nil
- any cross objection filed
by the department Fee
Rs. Nil
- any application for
grant of stay or for rectification
of mistake or for any other
purpose or for restoration of
an appeal or for restoration of
an application Fee
Rs. 500
Refer section 86(6).
The Appellate Tribunal such hear the
appeals and the cross-objections, follow the procedure and pass such orders
as per the provisions of the Central Excise Act, 1944.
Refer section 86(7).
Pre-deposit of tax demanded or
penalty levied
The provisions of the CEGAT (Procedure)
Rules for filing an appeal to Appellate Tribunal under the Central Excise
would apply to filing of appeals under Service Tax also. Section 83 of
the Chapter states that section 35F of the Central Excise Act would be
applicable to Service Tax proceedings. Section 35F of the Central Excise
Act talks of pre-deposit of tax, pending hearing of the appeal on merits
by the Commissioner of Central Excise (Appeals) and the Appellate Tribunal.
Section 35F further provides that on application by the appellant, the
Commissioner of Central Excise (Appeals) and the Appellate Tribunal may
dispense with such pre-deposit, if it would cause undue hardship to the
assessee. An application for waiver of pre-deposit should be enclosed
with the appeal being filed. The application should provide an explanation
as to how it would cause undue hardship to the appellant, to deposit the
tax levied. The application should include documentary evidence like the
current financial statements, bank statements, etc.
IX. ADVANCE RULING
-
What is meant by ‘advance ruling’
?
‘Advance ruling’ means the determination, by the Authority for Advanced
Ruling, of a question of law or fact specified in an application,
by an applicant, regarding his liability to pay service tax, in respect
of the services provided by him.
-
Who can apply for
advance ruling?
A person who is
-
a non-resident setting up a joint
venture in India in collaboration with a non-resident or a resident;
or
-
a resident setting up a joint
venture in India in collaboration with a non-resident; or
-
a wholly owned subsidiary Indian
company, of which the holding company is a foreign company
and who proposes to undertake any
business activity in India.
Refer section 96A(b).
-
What issues can be
decided by the authority?
The questions on which the advance ruling can be given are:
-
classification of any service
as a taxable service under Chapter V;
-
valuation of taxable services
for charging of service tax;
-
the principle to be adopted for
determination of value of the taxable service under the provisions
of
Chapter V;
-
applicability of notifications
issued under Chapter V;
-
admissibility of credit of service
tax.
Refer section 96C(2).
Procedure for making application :
-
Application should be made in
quadruplicate. Refer section 96C(3).
-
Application should include a
fee of Rs. 2,500. Refer section 96C(3)
-
The application can be withdrawn
within 30 days from the date of filing the application. Refer
section 96C(4)
-
On receipt of the application,
the authority shall forward a copy to the concerned Commissioner
and call upon him to furnish relevant records. Refer section 96D(2)
-
On examining the application
and the records called for, the authority may either allow or
reject the application
-
No application can be rejected
without giving an applicant an opportunity of being heard and
recording, in writing, the reasons for rejecting. Refer section
96D(2).
-
On request by the applicant,
the Authority shall grant a hearing to the applicant before passing
its order. Refer section 96D(5)
-
The Authority shall examine the
records and pronounce its ruling in writing, within 90 days of
the receipt of the application. Refer sections 96D(3) and 96D(5).
-
Copies of the order shall be
served on the applicant and the concerned Commissioner. Refer
sections 96D(3), 96 D(7).]
- Is the ruling binding on the
applicant and the Commissioner ?
Yes, the ruling binding on the applicant and the Commissioner, unless
there are a change of facts. The ruling is applicable only in respect
of those set of facts mentioned in the application. Any change in the
facts, would require a fresh application.
Refer section 96E(1), 96E(2).
- Advance ruling to be void
in certain circumstances
The ruling would be void ab initio (that is, it never existed) if it
is found that it was obtained by fraud or misrepresentation of facts.
Refer section 96F.
X. AUDIT
Audits of service tax assessees were
first conducted in November, 1996. Initially audit of assessees in the
metropolitan cities of New Delhi, Mumbai, Chennai and Kolkata were taken
up. The audit of the selected companies was required to be completed in
10 days. The Department has brought out a Service Tax Audit Manual to
facilitate its officers to conduct its audit. Refer Circular No. 742/58/2003-CX
dated 3-9-2003.
Details to be provided to the
audit team
-
Name and address of all the offices/premises.
-
Records maintained at these premises.
-
Note on the method of accounting
and the accounting principles followed.
-
List of clients.
-
Note on the activities conducted
by the assessee.
-
Details of the registration, charging
of tax, collection of tax, payment of tax, etc and reasons why certain
services have been claimed as exempt.
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