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TMI BlogFREQUENTLY ASKED QUESTIONS ON SERVICE TAX AND THEIR ANSWERSX X X X Extracts X X X X X X X X Extracts X X X X ..... .2.1) Whom where should one approach for registration? Ans:- Generally, all Commissionerates of Central Excise, have a Service Tax Cell, 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 Commissionerates. Q2.2.) What is the procedure for registration? Ans:- A prospective taxable service provider seeking registration should file an application in Form ST-1(in duplicate) before the jurisdictional Central Excise officer/Service Tax officer within thirty days from the date of notification of the taxable service. Department is required to issue the registration certificate within 7 days of the receipt of the application. In case of failure to issue registration certificate within 7 days, the registration applied for is deemed to have been granted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N No. from Income Tax Department a must for obtaining Service Tax Registration? Ans:- 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) Number 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. 3) PAYMENT OF SERVICE TAX :- Q.3.1) How and where to pay Service Tax. Ans:- 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 misclassification. Q.3.2.) When is Service Tax required to be paid. Ans:- If the assessee is an indiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educted at source" provision, whether the service tax liability of the assessees 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? Ans:- The Service tax is to be paid on the value of taxable services which is charged by an assessee. Any income tax deduced 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. Q.3.10) What is the interest rate applicable on delayed payment of Service Tax? Ans:- Every person, liable to pay the tax in accordance with the provisions of Section 68 or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at the rate of fifteen percent per annum for the period by which such crediting of the tax or any part thereof is delayed. Q.3.11) Is the amount for Service Tax charged from the client compulsorily to be indicated separately in the Bills/Invoices raised on him? Ans:- Yes it is compulsory to separately indicate the amount of Service tax charged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received". In all other cases of excess payment, the refund claims have to be filed with the department. 4. FILING OF RETURNS:- Q.4.1) How to file Service Tax Returns on what interval and with whom? Ans:- 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 30 th September and 31st March are required to be filed by 25 th October and 25 th April, respectively. Q.4.2.) What is e-filing of Service Tax returns? Ans:- E-filing is a facility for the electronic filing of Service tax returns by assesee from his office, residence or any other place of choice, through the Internet, by using a computer. The assessee can go to the e-filing site "Home page" by typing the address http://servicetaxefiling.nic.in in the address bar of the browser. Q4.3) Who can e-file their returns? Ans:- Any Assesses having a 15 digit STP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o specific records have been prescribed to be maintained by a Service Tax assessee. The records including computerised data if any being maintained by an assessee as required under any other law in force. (e.g. Income Tax, Sales Tax) is acceptable to the Central Excise Department for the purpose of Service tax. Q5.2.) From where do the Service Tax assessee get the forms viz. ST-1, Service Tax-2 etc.? Ans:- The Forms are available on the websites as well as with the jurisdictional Central Excise Commissionerates. Q.5.3) Can be Department ask for more information than what assessee is submitting to it in the Form ST-1 and ST-3? Ans:- Yes, if required the Department can always ask for additional information. 6. REFUNDS:- Q.6.1) Is the Service Tax payable by the assessee even in cases where his clients do not pay for the service rendered or pay only a part of the bill raised in this regard? Ans:- 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 on the gross amount billed to the client. However, in all such cases where the amount received is less than the gross am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l shall be filed in the prescribed Form ST-4 ii) It shall be presented within three months from the date of receipt of order which is being appeal against. iii) It should be filed in duplicate. iv) It should be accompanied by a copy of the order appealed against. Q.7.3) Can the time limit of three months for filing the appeal to the Commissioner (Appeal) be extended, if yes, under what circumstances? Ans:- Yes, if the Commissioner of Central Excise (Appeals) is satisfied that the appellant was prevented by sufficient cause, from presenting the appeal within the statutory period of three months, he may allow the appeal to be presented within a further period of three months. Q.7.4) Can an appeal be filed against the order of Commissioner of Central Excise or Commissioner of Central Excise (Appeals)? Ans:- Yes, the law provides for filing an appeal against the order of Commissioner of Central Excise or Commissioner(Appeals). Such appeals can be filed with the CESTAT within them three months of the date of receipt of the order sought to be appealed against. Q.7.5) What is the procedure for filing appeal against the order of Commissioner of Central Excise or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Tax credit shall submit to the Superintendent of Central Excise, a return in the form annexed to the Service Tax credit Rules, 2003 along with Form ST-3. Q.8.4) Whether Input credit can be accumulated and adjusted at the time of payment of Service Tax? Ans:- Service tax credit availed on input service may be utilized for payment of Service Tax on output service. Since no refund of any excess credit available is admissible, the assessee has to utilize the same on payment of Service tax. While paying Service Tax on the output service, the service tax credit shall be utilized only to the extent such credit is available on the last date of the month for payment of Service Tax relating to the month or in case where the assessee is an individual or proprietary or partnership firm to the extent the credit is available on the last day of the quarter for payment of Service Tax relating to the quarter. Q.8.5) How do the service provider operate within the scheme of service tax credit when he is providing both taxable and non taxable or exempt services? Ans:- Where a service provider avails credit on any input service and renders such output services which are chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pare applicants for Board examinations and competitive exams., like entrance examinations for IIT, Joint Entrance Exams./Premedical Tests, Civil Services Exam., etc. are chargeable to Service tax However, services in relation to Commercial Coaching and training, provided by:- a) Vocational Training Institute b) Computer Training Institute and c) Recreational Training Institute; have been exempted service tax w.e.f. 1st July, 2003 vide Notf.no.9/2003 Service Tax. Therefore, vocational coaching and training services provided by typing and shorthand institutes, T.V./Vechile repairs training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer training centers, hobby classes, institutes teaching martial arts, painting, dancing etc. would not be chargeable to Service tax. This exemption notification no. 9/203 ST is effective only up to 29 th February 2004. Q.1.2) Whether service tax is leviable on postal/correspondence coaching? Ans:- Service Tax is leviable on any coaching or training provided by an institution on commercial basis. Therefore, the coaching provided by postal means would also be covered under the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epair or servicing of any goods or equipment, excluding motor vechile. Therefore, service tax is applicable on maintenance and repair services provided by all such persons. Q.2.3) If there is a total sub-contract of the service, whether sub-contractor is supposed to take out a registration and discharge the tax liability? Ans: The sub-contractor need not take a registration under service tax. In all such cases, service tax is to be paid by main service provider. Q.2.4) Whether maintenance and repair provided without any contract is taxable? Ans:- The maintenance or repair service undertaken under a maintenance contract or agreement is only chargeable to Service tax. Q.2.5) Whether Annual Maintenance contracts (AMC) for maintenance of roads are excluded from service tax? Ans:- As roads are neither goods nor equipment, the AMC for roads would not be covered under service tax. Q.2.6) Whether service tax on maintenance and repair would be charged in cases where during the guarantee period, the services are provided to the buyer of the goods while the payments for the same are received from the supplier of the goods? Ans:- Irrespective of the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alers and money changers has been brought under tax net. 4. ARCHITECT/INTERIOR DECORATOR SERVICE:- Q.4.1.) Whether Vaastu/Feng Shui Consultants come under the category of Interior Decorators? Ans:- Interior Decorator means any person engaged whether directly or indirectly, in the business providing by way of advice, consultancy, technical assistance or in any other manner services related to planning, design, or be antification of spaces, whether man made or other wise. Since Vaastu/Feng Shui Consultants are offering services by way of advice relating planning and designing of spaces, they come under the category of Interior Decorators. 5. SOUND RECORDING SERVICES:- Q.5.1) Whether lending/hiring of Video/Sound Recording equipment come under service tax? Ans:- The lending/hiring of Video/Sound Recording equipment is in the nature of sub-contracts and because the sub-contractors are not providing the services to the customer directly, they are not required to pay the service tax. 6. ADVERTISING AGENCIES:- Q.6.1) Can Cinema theatres be treated as advertisement agencies as they project advertisement? Ans:- The Cinema theatres cannot be treated as adve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , treatment, medical observations and like, are exempted from payment of service tax. 10. FRANCHISE SERVICE :- Q.10.1) What is the taxable service under Franchise Service? Ans:- Franchise Service is a service provided by franchisor to a franchisee under a specific type of agreement know as franchise agreement. This agreement includes the franchise being obliged to follow the concept of business operation, managerial expertise, market techniques etc. of franchisor and is under an obligation not to engage in selling, producing or providing similar goods or services, identified with any other person. The franchisee is required to pay to the franchisor, directly or indirectly, a fee which is chargeable to service tax. Q.10.2) If the franchisor is not normally resident of India, who has to pay service tax? Ans:- As per service tax rules in all such cases the service receiver in India would be liable to pay service tax on behalf of the service provider. 11. COMMISSIONING AND INSTALLATION SERVICE:- Q.11.1) Whether commissioning or installation services provided by an individual would be taxable? Ans: Exemption from payment of service tax has been provided for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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