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TMI BlogUnion Budget 2015 - Changes in Service TaxX X X X Extracts X X X X X X X X Extracts X X X X ..... entries in notification Nos. 25/2012-ST, 26/2012-ST, 30/2012-ST and 31/2012-ST. Further, notification No. 42/2012-ST is being rescinded. 2. It may be noted that changes being made in the Budget are coming into effect on various dates, as indicated in the following paragraphs. These changes are categorized below based on the above criterion: (i) Changes coming into effect immediately w.e.f. the 1st day of March, 2015; (ii) Changes coming into effect from the 1st day of April, 2015 ; (iii) The amendments which will get incorporated in the Finance Act, 1994 immediately on enactment of the Finance Bill, 2015; (iv) The amendments made in the Finance Act, 1994, including the change in service tax rate that will come into effect from a date to be notified by the Government in this regard after the enactment of the Finance Bill, 2015 ; (v) Certain fresh entries and amendments to existing entries in notification No. 25/12-ST, and certain amendments in the Service Tax Rules that will come into effect as and when the amendments in the Negative List and revised rate of Service Tax come into effect; and (vi) Chapter VI of the Finance Bill, 2015, regarding levy of Swachh Bharat Cess on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng omitted. The implication of these changes are as follows,- (a) Service Tax shall be levied on the service provided by way of access to amusement facility providing fun or recreation by means of rides, gaming devices or bowling alleys in amusement parks, amusement arcades, water parks and theme parks. (b) Service tax to be levied on service by way of admission to entertainment event of concerts, pageants, musical performances concerts, award functions and sporting events other than the recognized sporting event, if the amount charged is more than ₹ 500 for right to admission to such an event. However, the existing exemption, by way of the Negative List entry, to service by way of admission to entertainment event, namely, exhibition of cinematographic film, circus, recognized sporting event, dance, theatrical performance including drama and ballet shall be continued, through the route of exemption. For this purpose a new entry is being inserted in notification No. 25/12-ST. The term recognized sporting event has been defined in the proposed amendment in the said notification. (ii) The entry in the Negative List that covers service by way of any process amounting to man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) distributor or selling agents of lottery, as appointed or authorized by the organizing state for promoting, marketing, distributing, selling, or assisting the state in any other way for organizing and conducting a lottery. However, Courts have taken a contrary view in some cases, while in some cases the levy has been upheld. An Explanation is being inserted in the definition of "service" to specifically state the intention of the legislature to levy Service Tax on activities undertaken by chit fund foremen in relation to chit, and lottery distributors and selling agents, in relation to lotteries [section 65 B (44)]. Further, an explanation is being added in entry (i) of section 66D to specifically state that these activities are not covered by the Negative List. (Clauses 105 and 107 of the Bill refers) (iii) Section 66F (1) prescribes that unless otherwise specified, reference to a service shall not include reference to any input service used for providing such services. An illustration is being incorporated in this section to exemplify the scope of this provision. As illustrated, reference to service provided by the Reserve Bank of India (RBI), in section 66D (b) does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is paid within 30 days of such order; and (d) if the Service Tax amount gets reduced in any appellate proceeding, then the penalty amount shall also stand modified accordingly, and benefit of reduced penalty ( 25% of penalty imposed) shall be admissible if service tax, interest and reduced penalty is paid within 30 days of such appellate order. (Clause 111 of the Bill refers) (vii) Section 78 is being amended to rationalize penalty, in cases involving fraud or collusion or wilful mis-statement of suppression of facts or contravention of any provision of the Act or rules with the intent to evade payment of Service Tax, in the following manner,- (a) penalty shall be hundred per cent of Service Tax amount involved in such cases; (b) a reduced penalty equal to 15% of the Service Tax amount is to be paid if Service Tax, interest and reduced penalty is paid within 30 days of service of notice in this regard; (c) a reduced penalty equal to 25% of the Service Tax amount, determined by the Central Excise officer by an order, is to be paid if the Service Tax, interest and reduced penalty is paid within 30 days of such order; and (d) if the Service Tax amount gets reduced in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e S. No. 12 of the notification No. 25/12-ST ) shall be limited only to,- (a) a historical monument, archaeological site or remains of national importance, archeological excavation or antiquity; (b) canal, dam or other irrigation work; and (c) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal. Exemption to other services presently covered under S. No. 12 of notification No. 25/12-ST is being withdrawn. 6.2 Exemption to construction, erection, commissioning or installation of original works pertaining to an airport or port is being withdrawn (S. No 14 of the notification No. 25/12-ST). The other exemptions covered under S. No. 14 of notification No. 25/12-ST shall continue unchanged. 6.3 Exemption to services provided by a performing artist in folk or classical art form of (i) music, or (ii) dance, or (iii) theater, will be limited only to such cases where amount charged is upto ₹ 1,00,000 for a performance (S. No 16 of notification No. 25/12-ST). 6.4 Exemption to transportation of food stuff by rail, or vessels or road will be limited to food grains including rice and pulses, flour, milk and salt. Transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.2 Life insurance service provided by way of Varishtha Pension Bima Yojna is being exempted. (Amendment in entry at S. No. 26A of notification No. 25/12-ST refers) 7.3 Service provided by a Common Effluent Treatment Plant operator for treatment of effluent is being exempted. (New entry at S. No. 43 of notification No. 25/12-ST). 7.4 Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables is being exempted. (New entry at S. No. 44 of notification No. 25/12-ST). 7.5 Service provided by way of admission to a museum, zoo, national park, wild life sanctuary and a tiger reserve is being exempted. These services when provided by the Government or local authority are already covered by the Negative List. (New entry at S. No. 45 of notification No. 25/12-ST). 7.6 Service provided by way of exhibition of movie by the exhibitor (theatre owner) to the distributor or an association of persons consisting of such exhibitor as one of it's members is being exempted. (New entry at S. No. 46 of notification No. 25/12-ST). 7.7 Goods transport agency service provided for transport of export goods by road from the place of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take Cenvat Credit. The proposed rationalization in abatements shall come into effect from the 1st day of April, 2015. 10. Reverse Charge Mechanism 10.1 Manpower supply and security services when provided by an individual, HUF, or partnership firm to a body corporate are being brought to full reverse charge. Presently, these are taxed under partial reverse charge mechanism. 10.2 Services provided by,- (i) mutual fund agents, mutual fund distributors; and (ii) agents of lottery distributor are being brought under reverse charge consequent to withdrawal of the exemption on such services. Accordingly, Service Tax in respect of mutual fund agent and mutual fund distributor services shall be paid by the assets management company or, as the case may be, by the mutual fund receiving such services. In respect of agents of lottery, Service Tax shall be paid by the distributor of lottery. This above changes in reverse charge mechanism will come into effect from the 1st day of April, 2015. 11. Service Tax Rules 11.1 In respect of any service provided under aggregator model, the aggregator, or any of his representative office located in India, is being made liable to pay Service Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king it to the payment to the service provider. This change will come into effect from 1.4.2015. 12.2 The period for taking Cenvat Credit is being extended from six months from the date of invoice to one year from the date of invoice. 12.3 Certain other changes are being made in the provisions of the Cenvat Credit Rules, 2004, which, inter-alia, include allowing Cenvat Credit on input and capital goods received directly by job workers, defining "export goods" for the purposes of rule 5, defining "exempt goods" for the purposes of rule 6, making applicable the provision of rule 9(4) to importer dealers, authorizing imposition of restrictions on registered dealers under rule 12AAA, and provisions relating to recovery of credit wrongly taken and imposition of penalty. For details, the D.O. letter of J.S (TRU-I) may please be referred to. 13. Advance Rulings: The facility of Advance Ruling is being extended to all resident firms by specifying such firms under section 96A (b)(iii) of the Finance Act, 1994. (Notification No. 9/2015-ST, dated 1.3.2015 refers) 14. Summary of changes being made and the dates on which they would come into effect: - Subject Refer Para With immediat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66F(1) to explain the scope of this subsection (iv) Amendment in the definition of the terms "consideration" in section 67 (v) Amendments in sections 73, 76 and 78. (vi) Insertion of transition provision by way of section 78B (vii) Omitting section 80(viii) Amendments in section 86 (ix) Amendments in the provisions relating to Settlement Commission (x) Omitting of rule 6 (6A) of the Service Tax Rules 5.2(i) 5.2 (ii) 5.2(iii) 5.2 (iv) 5.2(v) to (vii) 5.2 (viii) 5.2 (ix) 5.2(x) 5.2 (xi) 11.4 With effect from a date to be notified after the enactment of the Finance Bill, 2015 in respect of each provision New Service Tax rate 3 Swachh Bharat Cess 4 Amendments in the Negative List (section 66D) and definitions (section 65B), namely,- (i) Omitting the definitions of the terms "amusement facility"[section 65 B (9)], "entertainment event" [section 65 B(24)], and entry (j) in section 66D (ii) Amendments in the definition of terms "process amounting to manufacture or production of goods" [section 65 B (40)] and entry (f) in section 66D (iii) Omitting the definition of the terms "support service"[section 65 B (49)], and amendment in section 66D(a) (iv) 5.1 (i) 5.1 ..... 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