Service Tax on services rendered by a (i) Rent-a-Cab Scheme Operator (ii) Tour Operators with effect from 1-4-2000 — Procedure - Service Tax - 1/2000

Service Tax on services rendered by a (i) Rent-a-Cab Scheme Operator (ii) Tour Operators with effect from 1-4-2000 Procedure Trade Notice No. 1/2000, dated 27-4-2000 of the Pune Commissionerate 1. Attention of Trade and Industry is invited to the Commissionerate's Trade Notice No. 87/97 dated 14-7-1997 and Trade Notice No. 102/97 dated 29-8-1997 regarding introduction of Service Tax on services rendered by Rent-a-Cab scheme Operator which was introduced on 16-7-1997; and Tour Operator in relation to a tour which was brought under the net of Service Tax with effect from 1-9-1997 respectively. 2. As per Notification No. 52/98-ST, dated 18-7-1998 and Notification No. 3/99-ST, dated 28-2-1999 the exemption was granted to Tour Operator and Rent-a-Cab Scheme Operator up to 31-2-2000. In this connection Trade Notice No. 6/98 was issued by Commissioner of Central Excise, Pune I Commissionerate on 27-7-1998. 3. Now as per the Union Budget 2000-2001, no extension for exemption has been granted to these two services. The service tax is therefore applicable on these two services with effect from 1-4-2000. 4. Attention is also invited to Trade Notice No. 8/98 dated 13-10-1998 and 10/98 dated 9-12-1998 explaining the scope of Service Tax levy on Rent-a-Cab Scheme Operator and Tour Operator introducing the changed definition as per Section 65 (38) and Section 65 (52) of the Finance Act, 1994. The definition and provisions in details of these two services are given below for the information of the Trade and all concerned. 5. Rent-a-Cab Scheme Operator The definition of term"Rent-a-Cab Scheme Operator" as per Section 65 (38) of Finance Act, 1994 as amended means "any person engaged in the business of renting of cabs". Prior to amendment, scope of the said term was limited to a person who was holding a licence under the Rent-a-Cab Scheme, 1989, framed by the Central Government, under the Motor Vehicle Act, 1988, as a Rent-a-Cab Scheme Operator. Under the said scheme, Licence is granted only in the case where a person has a minimum of 50 cabs. However, in the revised definition, the requirement of operators being registered under the Rent-a-Cab Scheme has been dispensed with. Consequently, any person who is engaged in the business of renting of cabs would be required to pay Service Tax irrespective of number of vehicles engaged by him in providing this service. The definition of 'Cab' includes 'Motor Cab' or 'MAXI CABS' Section 2 (25) of the Motor Vehicles Act, 1988, a Motor Cab is defined as any motor vehicle constructed or adapted to carry not more than 6 passengers excluding the driver for hire or reward, and MAXI CABS means 'any motor vehicle constructed or adapted to carry more than 6 passengers, but not more than twelve passengers excluding the driver, for hire or reward. In either case, these are vehicles available for time, and are more popularly known as Vans. 5.1 Any person who gives his vehicle viz. Car/Taxi/Van to a third person for the purpose of local transport will also be covered under the Rent-a-Cab Scheme Operator. The taxable service rendered by a Rent-a-Cab scheme operator means any service provided to any person by a Rent-a-Cab scheme operator in relation to the renting of a cab. The rate of service tax is 5% and the value of taxable service in relation to the service provided by a Rent-a-Cab Scheme operator to any person, shall be the gross amount charged by such operator from such person for services in relation to the renting of a cab and include such rental. 5.2 The value of taxable service in relation to the service provided by a Rent-a-Cab Scheme Operator to any Customer, shall be the gross amount charged by such operator from such customer for services in relation to the renting of a cab and include the rental so charged. Any other charged billed to the customer such as processing charges, administrative fees, charges for providing extra accessories or providing other value added services such as a provision of driver etc. shall also be includible in the gross amount chargeable to service tax. 5.3 However service tax will not be payable in cases where a bill has been raised on a Rent-a-Cab Scheme Operator, by another Rent-a-Cab Scheme Operator who has sub-let the motor cab to the latter operator provided he pays service tax on the amount billed to his client for renting out the motor cab so obtained by him. 6. Tour Operator 6.1 The definition of "Tour Operators" is provided in Section 65(52) of the Finance Act, 1994. "Tour" means a journey from one place to another irrespective of the distance between such places and the "taxable service" means any service provided to any person by a tour operator in relation to a tour. The rate of service tax is 5% and the value of taxable service in relation to the service provided by a tour operator to a client, shall be the gross amount charged by such operator from the client for services in relation to a tour and includes the charges for any accommodation, food or any other facilities provided in relation to such tour. 6.2 The revised definition provides that any person engaged in the business of operating tours in a tourist vehicle, covered by a permit granted under the Motor Vehicle Act, 1988 or Rules made thereunder, would be treated as a Tour Operator. Consequently, 'non-permit holders', who operate as Tour Operator by using vehicle which may have been leased or hired from persons who hold tourist permit, are also covered under the definition of a Tour Operator and are liable to pay Service Tax. 6.3 As per rule 82 of the Central Motor Vehicle Rules, 1989 a tourist permit is granted only for a 'tourist vehicle'. As per the Motor Vehicle Act, Section 2 (43) a tourist vehicle means a contract carriage constructed or adapted and equipped and maintained in accordance with such specifications as may be prescribed. The term 'tour operators' covers any person who holds a tourist permit in respect of any vehicle. The service tax on tour operators is on operators who run/operate a tour on motor vehicle provided that the tour operator holds a tourist permit under the Motor Vehicles Act, 1988 in respect of any motor vehicle. Service Tax will be chargeable on all domestic and inbound tourist services provided by a tour operator holding a tourist permit. Service Tax will also be chargeable on journeys/tours undertaken by tourist taxis and tourist business (which also hold tourist permits) within and outside the State where they have been registered as tourist vehicles. 6.4 The tour operator can be all self-employed, single vehicle owner individual or a well organized firm providing a vast range of professional services in the field of tourism whether organized as a sole proprietorship, partnership, a private or a public limited company. Even public sector undertakings operating tours such as Indian Tourism Development Corporation etc. are covered under this levy. However, State Roadways Corporations who fly the passengers in the neighbouring State will not be covered by the levy as they do not require a tourist permit but operate on the strength of agreements between the concerned state authorities. 6.5 The services rendered by the tour operator may be only for providing transport service within or outside, the town, city or State's territorial limits. The services rendered by the tour operators may only be limited to providing transport services in relation to a tour or it may also include a host of other services as in case of a package tour. The services provided by such a tour operator may also include, apart from providing the basic service of transportation from one place to another, services of providing boarding and lodging arrangements, local sight seeing and guide services and a wide range of other value added services provided by the tour operators such as providing for porters, booking or arranging accommodation, reservation for entertainment/amusement parks, theatres and museums, providing health and baby sitting services etc. 6.6 The service tax on services rendered by tour operators in relation to a tour shall be the gross amount charged by such operator from the client and shall include the charges for other services provided, such as accommodation, food and other facilities in relation to such tour. In other words, it will be on the gross amount charged to the customer. However, in cases where the tour operator provides a package tour i.e. which necessarily includes accommodation for stay and may also include other facilities such as food, guide services etc, an abatement of 60% of the total amount charged may be given for the purpose of the service tax provided that the bill issued for this purpose clearly indicates that it is inclusive of such charges. In other words, service tax would be leviable on 40% of the total amount charged in cases where the tour operator provides a package tour and the price of which mandatorily includes charges for accommodation for stay provided during the course of tour (Notification No. 39/97-ST refers). Further an abatement of 90% from the gross amount charged to the client has been provided where the tour operator provides the services solely for booking or arranging accommodation (Notification 40/97-ST refers). However, this abatement will not be allowed in case the bill issued does not include the cost of such accommodation. 6.7 Service tax on services rendered by tour operators is only on services rendered in India in respect of a tour within Indian territory. Services rendered by tour operators in respect of out-bound tourism i.e. for tours abroad, do not attract service tax. In case of a composite tour which combines tours within India and also outside India, service tax will be leviable only on services rendered for tours within India provided separate billing has been done by the tour operators for services provided in respect of tours within India. 7. Registration 7.1 As per Section 69 of the Finance Act, 1994 read with Rule 4 of the Service Tax Rules, 1994, every person liable to pay service tax under this Chapter and is required to be registered with the concerned Central Excise Officer appointed under Rule 3 with effect from 1-4-2000. 7.2 It has been decided by the Govt., that the concerned Commissioner of Central Excise Customs having jurisdiction in Central Excise matters will have corresponding jurisdiction for service tax matters. 7.3 Therefore, the persons as defined and explained above shall immediately apply for registration in form ST-1 in duplicate and submit these forms to the Superintendent of Service Tax Cell at Central Excise, Pune-I Commissionerate Hdqrs., 41-a, ICE House, Opp. Wadia College, Sasoon Road, Pune - 411 001. An acknowledgement will be issued on the duplicate copy of the ST-1 form. 8. Payment of Service Tax 8.1 As per Section 68 of Finance Act, 1994 every person providing taxable service to any person shall pay service tax at the rate of 5% as specified in Section 66 of the Finance Act, 1944. The value of taxable service has been defined under Section 67 of the Finance Act, 1994. The service tax collected during any calendar month has to be paid to the credit of the Central Government by 25th of the month immediately following the said calendar month by all other categories other than Individuals, Proprietorship and Partnership firms who have to pay tax quarterly i.e. 25th of the month following the quarter. 8.2 As per Section 75 of the Finance Act, 1994 any assessee who fails to credit the tax or any part thereof to the account of the Central Government within the period specified in Section 68, is required to pay simple interest at the rate of one and one half percent for every month or part of the month, by which such crediting of the tax or any part thereof is delayed. 8.3 Rule 6 of the Service Tax Rules, 1994 provides for the procedural aspect of the payment of service tax on monthly/quarterly basis. Government has decided that this collection of Service Tax shall be deposited by way of (Yellow colour) TR-6 challan forms (Major Head 0044) submitted only through those banks which are presently authorized to collect the Central Excise duties in the Commissionerate. In Pune Central Excise Commissionerate various branches of Bank of Maharashtra have been nominated for this purpose. For computerised accounting of Service Tax, each assessee shall be assigned a code called E.C.C. Code which must be invariably mentioned on the TR-6 challan forms while depositing the monthly Service Tax. These and other code numbers shall be informed to the assessee which he should invariably mention on the TR-6 challans. 8.4 As far as possible, the assessees should get the TR-6 challans with their own details so as to avoid mistakes. 9. Provisional Assessment 9.1 The concept of provisional assessment has been built into the Service Tax Rules. Whenever an assessee is, for any reason, unable to correctly estimate, on the date of deposit of Service Tax, the actual amount collected for any particular month or period, he may make a request in writing to the Deputy Commissioner of Service Tax to make a provisional assessment of the tax on the basis of the amount of service tax deposited. The Deputy Commissioner may on receipt of such request, order provisional assessment of tax. In this regard the provisions of Central Excise Rules, 1944 relating to the provisional assessment have been made applicable except for the provisions of the Bond. 10. Filing of Returns and Assessments 10.1 Though Service Tax is deposited on monthly/quarterly basis as briefly indicated above, a prescribed return giving details of tax liabilities, deposits made etc. are required to be filed with the Service Tax Cell only on half yearly basis. 10.2 Under Rule 7 of the Service Tax rule, 1994 every assessee is required to submit the half yearly return in form ST-3 in triplicate alongwith : - (a) Copy of each of the form TR-6 challans submitted for the month/quarter covered in the half year, and (b) A memorandum in form ST-3 A giving full details of the difference between the amount of Service Tax collected and the actual amount deposited (monthwise) if applicable. 10.3 The revised format of ST-3 circulated by Trade Notice No. 8/98 dated 13-8-1998 shall be used by the assessees. The first ST-3 return by the new assessee shall be submitted to the Service Tax Cell, Central Excise Pune-I Commissionerate, 41-A, ICE House, Sasoon Road, Opp. Wadia College, Pune-I by 25th October, 2000 11. Assessment Based upon the date furnished in the aforesaid returns and documents and further information/documents as may be called, contemplated in Section 71 of the Finance Act, 1994, the assessment will be finalised by the concerned Central Excise Officer and Service Tax payable including interest if any, payable thereon, will be determined and assessment memorandum completed. Triplicate copy of the ST-3 returns so assessed shall be returned to the assessee. 11.1 In cases where the Service Tax (including Interest) assessed is more than determined and paid by the assessee the latter will have to pay the deficiency (including the amount of interest liable thereon) within 10 days of receipt of the copy of ST-3 return from the Central Excise Officer. The assessee may also apply for refund, wherever he has paid service tax more than the tax assessed, in accordance with the provisions of Section 11B of the Central Excise Act, 1944. 12. Relaxation from Records and Cheques No special records for service tax is being prescribed. The records including the computerized data, if any, as maintained by the assessee in accordance with the provisions of the various other laws in force will normally be accepted for administering service tax. Every assessee shall furnish to Deputy Commissioner, Incharge of Service Tax cell at the time of filing the first half yearly return, i.e. ST-3, a list of all accounts maintained in relation to the services provided by him under various existing laws. 13. There will be no routine visits by any Central Excise Officers to the premises of the Service Tax Payers for routine checks. Any special visits by an officer lower in ranks than the Deputy/Assistant Commissioner for the purpose of any enquiries or verification of documents/records maintain will be undertaken only with the due approval of Deputy/Assistant Commissioner, Incharge of Service Tax Cell. 14. Appellate Mechanism Appellate Mechanism relating to Central Excise matters has been made applicable for the purpose of Service Tax with necessary modifications. 15. For any assistance or enquiries in connection with the administration of Service Tax, the Trade is advised to approach the Deputy Commissioner of Service Tax Cell at the Commissionerate, Hdqrs., 2nd Floor, Office of the Commissioner of Central Excise, 41-A, ICE House, Sasoon Road, Opp. Wadia College, Pune-I at Phone No. 6051602, 6051604, 6051858 extn. No. 3606, 3607, 3609, 3610 between 15.00 Hrs. to 17.00 hrs. 16. All the Trade Associations, Chamber of Commerce and Industries, are requested to bring the contents of this trade notice to their member constituents.