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CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX . by g. natarajan advocate, swamy associates. MODES OF EXEMPTIONS. Exemption Notifications under Section 93 of the Finance Act, 1994. Exclusion in the coverage of the levy itself.

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slide1

CERTIFICATE COURSE ON INDIRECT TAXES – SERVICE TAX

by

g. natarajan

advocate, swamy associates

modes of exemptions
MODES OF EXEMPTIONS
  • Exemption Notifications under Section 93 of the Finance Act, 1994.
  • Exclusion in the coverage of the levy itself.
  • Eg. Commercial or industrial construction service.
  • Works Contract Service.
  • (roads, railways, port, airport, transport terminal, bridges, tunnels & dam)
  • Construction of residential complex service (personal use).
  • Renting of immovable property service.
  • (vacant land, residential, parking, sports, circus, etc.)
  • BAS / Packaging Services (manufacture)
  • Abatements.
slide4

Notification No. 06/05-ST dated 01.03.2005

  • Intended to exempt small service providers.
  • Present limit- aggregate value not exceeding Rs.10 lakhs in any financial year.
  • Not applicable to – services provided under brand name & value of services under reverse charge.
  • Conditions
  • Option once exercise cannot be withdrawn in a financial year.
  • No credit on inputs, input services and capital goods.
  • Previous year turnover to be less than Rs. 10 lakhs.
slide5

Notification No. 12/03-ST dated 20-06-03

  • Scope
  • Exemption to value of goods and materials sold by service provider to recipient during the course of provision of service; ( Eg- authorised service station service).
  • Conditions
  • Documentary proof indicating value of goods and materials.
  • Not to avail credit of excise duty paid on such goods and materials .
  • in case of availment of credit, reversal of same before sale to service recipient.
  • Contra : Decision of LB in Aggarwal Colour Advance Photo System vs. CCE 2011 23 STR 608 (Tri-LB).
slide6

Notification No. 17/2011-ST dated 01.03.2011

  • Exemption to taxable services received by unit/developer of SEZ.
  • (Earlier governed by 17/2002, 4/2004 & 9/2009)
  • Conditions
  • Exemption for ST paid on input services (U/S.66 & 66A) used for authorised operations.
  • Ab inito exemption for services wholly consumed inside SEZ. Provisions of Export of Service Rules, 2005 to be referred to.
  • Exemption vide refund for services not wholly consumed in SEZ.
  • Time limit – one year from date of payment to service provider.
  • No credit on input services.
slide7

Notification No. 8/2005 -ST dated 01-03-2005

  • BAS -Exemption to goods produced on jobwork.
  • Conditions
  • Raw materials /semi finished goods to be supplied by client.
  • Goods to be returned to client for use in or in relation to manufacture of excisable goods.
  • Such final products are liable for appropriate duty of excise.
  • If production of goods by job worker amounts to manufacture u/s 2 (f) of Central Excise Act, 1944, there is no levy at all.
slide8

Notification No. 13/2003 - ST

dated 20-06-2003

  • BAS -Exemption to commission agents.
  • Effective from 01.07.2003.
  • Scope restricted to “agricultural produce” from 09.07.2004.
slide9

Notification No. 24/2007 -ST dated 22.05.2007

  • Exemption to component of property tax while paying service tax on renting of immovable property service .
  • Conditions
  • Interest, penalty etc paid to local bodies on account of delayed payment of property tax not eligible for deduction.
  • When period for which property tax paid is different from period for which service tax is payable , proportionate property tax to be calculated for deduction.
  • Rule 6 (4c) - Bonanza for landlords.
slide10

Notification No. 34/2004 - ST dated 03.12.2004

  • GTA - Exemption for freight upto Rs.1,500 / Rs.750.
slide11

Notification 52/11 dated 30.12.11

ST Exemption for exporters.

  • Earlier Notification 41/2007, Notification 17/2009.
  • Now replaced by Notification 52/2011.
  • EDI Refund as per scheduled rate or actual refund.
  • Time limit for filing refund – one year from date of export.
  • Notification 18/2009 for commission agent services / GTA services.
slide12

Notification No. 30/2011 - ST dated 25.04.2011.

  • Health Services – Limited taxability from 01.07.2010.
  • Proposed expansion in 2011.
  • Volte facie due to “misery tax” campaign.
slide13

Notification No. 53/2010 - ST dated 21.12.2010.

  • Information Technology Services – Packaged Software.
  • Subject to payment of ED / CVD.
  • Parallel exemption under ED / CVD, if ST is payable.
slide14

Miscellaneous Exemptions.

  • Services provided to United Nations or an international organisation – Notification No. 16/02-ST dated 02-08-02.
  • Services provided or to be provided by Technology business incubator (TBI) Science & Technology Entrepreneurship Park (NSTEDB) – Notification No. 09/07-ST dated 01.03.07.
  • Services provided for official use of foreign diplomatic mission or consular post in India - Notification No. 33/07-ST dated 23.05.07.
  • Services provided for personal use or for use of family members of diplomatic agents or career consular offices posted in foreign diplomatic missions or consular post in India - Notification No. 34/07-ST dated 23.05.07.
slide16

Notification No. 01/2006-ST dated 01.03.2006.

  • Scope
  • Abatement to various taxable services;
  • Intention to exclude value of goods transferred in course of provision of service.
  • Conditions
  • No credit of duty paid on inputs and capital goods and service tax paid on input services used for providing taxable service;
  • Not to avail benefit of Notification No. 12/03-ST dated 20-06-2003.
  • Inclusion of value of materials – construction / ECI.
  • Implication under Rule 6 of CCR, 2004.
slide22

Additional conditions – Confusions and Clarifications

  • “ provided from India and used outside India “
  • Circular 111/5/2009- ST dated 24.02.09 –
      • meaning of expression to be understood in context of characteristic of particular category of service ;
      • accrual of benefit outside is sufficient.
  • Circular 141/10/2011 –TRU dated 13.05. 2011 –
      • accrual of benefit further clarified.
slide23

Case laws

  • “used outside India “
  • TNT India Private Ltd vs. CST 2007 (7) STR 142 (Tri-Bang) – Courier agency delivering consignments outside India.
  • Blue Star Ltd vs. CCE 2008 (11) STR 23 (Tri-Bang) – Commission for procuring orders in India for foreign principal.
  • CST vs. BA Research India Ltd 2009 TIOL 1981 CESTAT Ahm- Testing in India, reports sent outside India.
  • Consideration in Foreign exchange
  • ETA Travel Agency Pvt Ltd vs CCE 2007 (7) STR 454 (Tri-Bang) - Commission received in INR from foreign airlines.
  • Suprasesh GIS & Brokers P. Ltd vs. CST 2009 (13) STR 641 (Tri-Che)- Reinsurance brokerage in INR.
  • Nipuna Services Ltd vs. CCE 2009 (14) STR 706 (Tri-Bang) – Agent receiving commission on forex and paying appellant in INR.
thank you
Thank you

g. natarajan

93400 54477

mail@swamyassociates.com