SERVICE TAX—CLARIFICATION - Service Tax - 01/01/94

This Circular has been rescinded by Circular No. 93/04/2007-ST, Dated: May 10, 2007 SERVICE TAX CIRCULAR NO 1/1/94 DATED 29.06.1994 SERVICE TAX CLARIFICATION Chapter V of the Finance Act, 1994 (32 of 1994) deals with the imposition of service tax on three services, namely: (1) service provided by the Telegraph authorities to the subscribers in relation to telephone connections. (2) service provided by the insurer to the policy holder in relation to General Insurance business, (3) service provided by a stock broker. 2. Notification No. 1/94-Service Tax, dated 28-06-1994 has been issued in exercise of the powers conferred by sub-section 2 of Section 64 of the Finance Act, 1994 (32 of 1994) appointing the 1st July of 1994 as the date on which Chapter V of the Act shall come into force. 3. In exercise of the powers conferred by sub-section 1 read with sub-section 2 of Section 94 of the Finance Act, 1994, the Service Tax Rules,1994 have been framed vide Notification No. 2/94-Service Tax, dated 28-06-1994 . 4. Service Tax has been imposed for the first time and it is necessary that detailed instructions are available to the Filed Officers for collection and assessment of the service tax. A general scheme for the purpose of implementation, covering aspects of registration, maintenance of records, assessment, quarterly return and appellate mechanism has been covered by the rules. A special provision has been made in Rule 6 for provisional assessment of the service tax. Under Rule 3 of the Service Tax Rules, 1994 the Board has appointed vide Order No. I /94-(Service Tax Rules), Central Excise Officer having the jurisdiction for the purpose of assessment and collection of service tax. 5. The salient features of the entire scheme is as follows: 2. TELEPHONE SERVICE There are two assessees as far as service relating to telephone connections is concerned. These two assessees are: (a) The Director General of Post and Telegraph. (b) The Chairman-cum-Managing Director of Mahanagar Telephone Nigam Ltd., Delhi . Both these assessees will be within the jurisdiction of Collector of Central Excise, Delhi. Service tax will be collected from them on a monthly basis. In other words, the tax will not be collected from their circles/hilling units. These two assessees will apply for registration to Collector of Central Excise, Delhi. CCE, Delhi may advise them to furnish a list of all their offices who will be involved in the mechanism of collection of service tax and from whom return indicating computation of service tax is furnished to their Headquarters. These assessees will be required to furnish at the time of filing their quarterly return for the first time, a list of accounts maintained by them. This will include the statement that they receive from their billing unit/circles for their headquarters for compilation of service tax. 3. INSURANCE In relation to General Insurance business also the facility of one point payment of service tax by the Chairman or Chairman-cum-Managing Director of the insurance companies has been extended. For this purpose, the service tax will be paid by GIC and New India Assurance Company Ltd. in Bombay; National Insurance Company will be paying the tax in Calcutta; Oriental Insurance Company will be paying the tax in Delhi. The United India Insurance Company Ltd. will be paying the service tax in Madras. The branches and divisions of the insurance companies will not pay the service tax and it is their head office which has been made responsible for payment of service tax. They will apply for registration to the jurisdictional CCEs. The jurisdictional CCEs may advise them to furnish a list of their offices with addresses who will be involved in the mechanism of collection of service tax and from whom returns indicating computation of service tax is furnished to their Head Office. These assessees will be required to furnish at the time of filing their quarterly return for the first time, a list of accounts maintained by them. This include the statement that they receive from their banks/division offices for headquarters for consolidation of service tax figures. 4. STOCK BROKERS In respect of Stock Brokers, they will have to apply for registration individually and assessment will take place on individual basis. They will apply for registration to the jurisdictional Collectorates. 5. REGISTRATION The assessees will apply for registration in Form ST-1 . An acknowledgement will be provided on the duplicate copy of the ST- 1 Form by the Superintendent of Central Excise. Registration number may be allotted to the assessee in the following manner: Telephone : Telephone/Delhi/l -DG (P T) Telephone/Delhi/2-MTNL Insurance : Insurance/Bombay/l -GIC Insurance/Bombay/2-NIAC Insurance/Calcutta/l -NIC Insurance/Dethi/1 - OIC Insurance/Madras/1 -UIC Stock Brokers : SB/Name of Collectorate The registration certificate will have to be granted in Form ST-2 appended to the rules, within 7 days from the date of receipt of application for registration. If the registration certificate is not granted within the said period the registration applied for shall be deemed to have been granted. 6. PAYMENT OF SERVICE TAX Rule 6 of the Service Tax Rules, 1994, deals with the payment of Service Tax. A letter has been received from the Office of the Principal Chief Controller of Accounts that the existing banks authorised to collect central excise duties in each of the Collectorates will also undertake the collection work of service tax for the present. (A copy of their letter is enclosed) A copy of TR-6 Form is enclosed for the purpose of deposit of service tax. The service tax will be deposited under Head 0044. The concept or provisional assessment has been built into the scheme of Service Tax Rules. Whenever an assessee is, for any reason, unable to correctly estimate on the date of deposit the actual amounts collected for any particular month or period, the assessee may make a request in writing to the Central Excise Officer to make a provisional assessment of the tax on the basis of the amount deposited. The Central Excise Officer, may, on receipt of such request, order provisional assessment of tax. In this regard the provisions of the Central Excise Rules, 1944 have been made applicable except for the provisions of the bond. The assessment will be made quarterly when the assessee files the quarterly return in Form ST-3 in triplicate. In the case of provisional assessment the assessee is required to submit a memorandum in Form ST-3A showing details of difference between the service tax deposited and the service tax actually collected for each month. The assessee shall submit quarterly return alongwith the copy each of the Form TR-6 for the month covered in the quarter. The assessment shall be completed on the basis of the particulars furnished in the quarterly return ST-3 and ST-3A , wherever submitted. The triplicate copy of the quarterly return ST-3 and ST-3A , wherever submitted. The triplicate copy of the quarterly return so assessed shall be sent to the assessee. In cases where the Service Tax assessed is more than the service tax determined and paid by the assessee, the assessee shall pay the deficiency alongwith the amount of interest determined thereon within 10 days of the receipt of the copy of the quarterly return from the Central Excise Officer. The assessee may also apply for refund whenever he has paid service tax more than the tax assessed in accordance with the provisions of Section 11B of the Central Excises and Salt Act, 1944. 7. APPELLATE MECHANISM Appellate mechanism relating to central excise has been made applicable for the purpose of service tax also with necessary modifications. Administrative Machinery for Collection of Service Tax 1. The Collector of Central Excise will constitute a cell division in the head quarters office of the Collectorate to deal with all matters relating to Service Tax. 2. The cell / division shall be headed by an Assistant Collector of Central Excise and shall be under the direct supervisory control of the Collector. 3. (a) Application, for registration in Form ST-1 received from the assessee shall be acknowledged by an officer of the rank of Superintendent of Central Excise. (b) Certificate of registration to be issued in Form ST-2 will be issued under the name and signature of the Assistant Collector. (c) Quarterly return will be assessed by the Superintendent. (d) For the purpose of provisional assessment whenever a request is received, the Assistant Collector will make an order for provisional assessment for the tax. (e) The powers of assessment under Sections 72, 73, 74 of Chapter V of the Finance Act dealing with best judgment assessment, value of taxable service, escaping assessment, rectification of mistakes will be exercised by the Assistant Collector. However, whenever period of 5 years or more is involved under Section 73 of the Finance Act, 1994 (32 of 1994), Collector will be required to exercise the powers. There will be no visit by the Central Excise Officers to the premises of the assessees of service tax for carrying out any routine checks. Assistant Collectors will be required to accord permission for visit of any officer lower in rank. The search powers will be exercised by the Assistant Collectors with the approval of Collectors. The Collectors are requested to provide feedback so that whatever difficulties are faced in the day-to-day functioning can be removed either by legislative changes or by the administrative mechanism. They should also ensure that to begin with no harassment is faced by any assessee and they should be available to the assessee for removing their doubts. ANNEXURE No. Co-ordll3 (6)/94-95/Service-Tax/1473 OFFICE OF THE PRINCIPAL CHIEF CONTROLLER OF ACCOUNTS CENTRAL BOARD OF EXCISE CUSTOMS A.G.C.R.BUILDING, (1 ST FLOOR) NEW DELHI-110 002 Dated: 9 June, 1994 To Shri Arvind Singh, Deputy Secretary (Cx. 4), Ministry of Finance, Department of Revenue, New Delhi. Sub: Finance Bill 1994 - Chapter V-Imposition of Service Tax-Regarding Ref : Ministry's O.M. No. 137/1/94-CX-4 dated 15-04-1994 Sir, With reference to the above, I am directed to inform that it has been decided in consultation with the Controller General of Accounts that the existing banks authorised to collect CBEC dues in each collectorate will undertake the collection work of Service Tax also for the present. After determining the Volume of work involved and the actual collection figures, the issue will be considered afresh as to whether or not to reallot banks for this purpose. Yours faithfully, Sd/- (M. Sridharan) Deputy Controller of Accounts (Coord.) ANNEXURE Major Head 0044-Service Tax TR6/OAR7 Challan no .. (Treasury Rule 92/Receipt Payment Rules) Challan for amount paid into the .Appointing Collectorate (Code No.) .. (Code No.) Name of the Bank/Branch with code Division .(Code No.) No Name of the Focal Point Bank Range . (Code No.) . .(Code No.) Name and address of the assessee (Code No ..) By whom tendered . Full Particulars of Head of Accounts Accounting By Cash By Cheque Counter Signature the remittance and Major Head Code No Rs. Ps./Draft/ of the and of authority. (Indicate against Pay Order Departmental the appropriate etc. Officer (where . Minor Head) Rs. Ps. required) 0044-Service Tax 101-Tax on .Telephone Billing 102-Tax on General Insurance Premia .103-Tax on Stock Brokerage . Commission. . TOTAL (in Words) Rupees .. Date Signature of the tenderer (To be filled by the Bank) Received payment (in words) Space for Focal Bank Stamp Indicating the date, amount Rupees credited to Government Account. Bank's Receipt Stamp: Signature of the Authorised Officer of the Bank Name of the Bank (Please see reverse for instruction) Head of Account Major Head: 0044 Service Tax Minor Heads: 101 Tax on Telephone Bulling (1) 102 Tax on General Insurance Premia (1) 103 Tax on Stock Brokerage Commission (1) Notes: (1) The minor heads will be divided into the following sub-heads: (a) Tax Collections (b) Other Receipts (c) Deduct Refunds The sub-head (b) viz., 'Other Receipts' will record interest, penalty leviable on delayed payments of Service Tax.