Service tax- recent notifications a brief analysis

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Service tax- recent notifications a brief analysis

				By: C.A. DEV KUMAR KOTHARI
				June 28, 2010
All Articles by: C.A. DEV KUMAR KOTHARI View Profile

Contents

The Central Government has issued several notifications to notify the effective dates for levy of service tax on new services brought under tax net by new insertions or amendments in the existing services vide the Finance Act, 2010. Some further exemptions have also been given. According to these notifications:

a) New taxable services will be taxable w.e.f. 1.7.2010

(b) The expanded scope of certain existing services will also w.e.f. 1.7.2010

(d) Levy of service tax on transportation of goods by rail has been further postponed by six months from 1 July, 2010 to 1 January, 2011.

(e) Definition of capital goods under Cenvat Credit Rules gets expanded by inclusion of dumpers and tippers used in construction, site formation, mining services etc.

The relevant notifications are summarized in the following table:

Notification No.	Subject
24/2010-ST	Some of new provisions to become effective from 1 st July 2010.
25/2010-ST	Exemption of international travel en route India without break - tax on Air Travel for passengers who are on transit through India and do not leave the Customs Area.
26/2010-ST	Maximum ST of Rs.100/- or 10% (whichever is less) of Gross Ticket Value for Domestic Air Passengers and Rs.500/- for International Passengers.
27/2010-ST	Exemption from ST on Air travel to or from North-East and Baghdogra in West Bengal.
28/2010-ST	Exemption for construction service provided to specified projects namely Jawaharlal Nehru National Urban Renewal Mission and Rajiv Awaas Yojana.
29/2010-ST	Abatement IRO land and building for construction service to the extent of 75% when the cost of land is included in the gross amount charged, Notification No.1/2006 stand amended to that effect.
30/2010-ST	Exemption for sponsorship of sports events conducted by National Federations, Universities.
31/2010-ST	Exemption to certain services provided within a Port or Airport.
32/2010-ST	Exemption for ST on distribution of electricity by authorized person under the Electricity Act with immediate effect.
33/2010-ST	Exemption -transport of goods by rail will continue till January 2011.
34/2010-ST	Exemption to Transport of certain goods by Rail - to be effective from January 2011.
35/2010-ST	Abatement for Transport of goods by Rail - to be effective from January 2011.
25/2010-Central Excise(NT)	Dumpers or Tippers registered in the name of Output service provider defined as Capital Goods for site formation and Mining Services - CENVAT Credit Rules amended.

NEW SERVICES :

From the above table red with relevant notifications we find that eight new services which were introduced by Finance Act, 2010 have been made taxable vide Notification No. 24/2010 dated 22.06.2010, w.e.f. 01.07.2010.

The new services are -

Sl.no.	Relevant clause
1	[Section 65 (105) (zzzzn)].	Services of promoting, marketing or organizing of games of chance, including lottery
2	[Section 65 (105) (zzzzo)]	Health services, namely: health check up undertaken by hospitals or medical establishments for the employees of business entities; and health services provided under health insurance schemes offered by insurance companies. [Section 65 (105) (zzzzo) when payment for such medical check up or preventive care or treatment etc. is made directly by the business entity or the insurance company to the hospital or medical establishment.
3	[Section 65 (105) (zzzzp)].	Services provided for maintenance of medical records of employees of a business entity
4	[Section 65 (105) (zzzzq)].	Services of promoting of a 'brand' of goods, services, events, business entity etc
5	[Section 65 (105) (zzzzr)].	Services of permitting commercial use or exploitation of any event organized by a person or organization [Section 65 (105) (zzzzr)].
6	[Section 65 (105) (zzzzs)].	Services provided by Electricity Exchanges.
7	[Section 65 (105) (zzzzt)].	Services related to two types of copyrights hitherto not covered under existing taxable service 'Intellectual Property Right (IPR)', namely, those on (a) cinematographic films; and (b) sound recording
8	[Section 65 (105) (zzzzu)].	Special services provided by a builder etc. to the prospective buyers such as providing preferential location or external or internal development of complexes on extra charges [Section 65 (105) (zzzzu)].

Exemption and relaxations:

From the above table red with relevant notifications we also find that some exemptions and relaxations have also been allowed or the liability of tax has been restricted or reduced. Some relaxations are clarificatory and are in accordance with interpretations found in judicial pronouncements. Major relief are as follows:

Nature of taxable service and relevant clasue	Exemption, relaxations or restriction on tax- releifs granted.
Air Passenger Transport Service [section 65(105) (zzzo)]	Keeping advalorem rate, maximum limits are fixed at Rs.100 and Rs.500 for domestic and international air travel. Exemptions are allowed for certain travels.
'Sponsorship Service' [section 65 (105) (zzzn)],	Sponsorship of tournaments/championship by specified bodies/organization has been exempted
'Construction of Complex service' [section 65 (105) (zzzh)], and 'Commercial or industrial construction service' [section 65 (105) (zzq)],	When price is inclusive of price for land 75% abatementwill be allowed. Further, the competent authority for issuing completion certificate has also been defined in a widened manner.
'Airport Services' [section 65(105) (zzm)], the 'Port Services' [section 65 (105) (zn)] and the 'Other Port Services' [section 65 (105) (zzl)]	Exemption has been given for some of the services rendered with in a port/airport area in relation to some services and facilities which are mostly in nature of essential services in such areas.
Services provided by Electricity Exchanges [65(105)(zzzzs)]	Service provided by a distribution licensee, a distribution franchisee, or any other person by whatever name called, authorized to distribute power under the Electricity Act, 2003 for distribution of electricity