By CA Punit Gupta
email: punit@punitgupta.in
Seminar on Procedural Aspects of
Service tax
On 29th August 2015 from 10 am - 11.30 am
AT
WIRC OF ICAI,
The Institute of Chartered Accountants of India
J.S. Lodha Auditorium, ICAI Bhawan, Cuffe Parade,
Colaba, Mumbai 400 005
CA Punit Gupta.
1
Registration under Service Tax
• Section 69 of the Finance Act, 1994 read with rule 4 of Service Tax
Rules, 1994 requires that every p e r s o n l i a b l e t o p a y
service tax must make an application for registration (in Form ST-1)
to the Jurisdictional Superintendent of Central Excise / Service Tax.
•
Section 65B (12) – Assessee means person liable to pay tax and
includes his agent.
Film personality / cricketer
provides services to Service
receiver & payment is collected by Agent of FP / C
• Agent obtains STC & pays service tax & pays net amount to FP /C
after deducting its charges.
CA Punit Gupta.
2
Exemption from tax – 10 lacs
• If value of taxable services r e n d e r e d does not
exceed Rs 10 lacs in the preceding financial year Notification No. 33/2012-ST provides threshold
exemption up to aggregate value of Rs. 10 lakhs of
taxable service in any financial year to a service
provider from one or more premises
except in case of:
a. Service provided under brand name or trade name of
another person
b. Service Tax payable on reverse charge basis u/s. 68(2)
(viii) the aggregate value of taxable services rendered by a
provider of taxable service from one or more premises, does
not exceed ten lakh rupees in the preceding financial year.
CA Punit Gupta.
3
Exemption from Tax – 10 lacs
(vii) where a taxable service provider provides one or more taxable services
from one or more premises, the exemption under this notification shall
apply to the aggregate value of all such taxable services and from all such
premises and not separately for each premises or each services;
• As per explanation (B) to Notification No. 33/2012-ST "aggregate value"
means the sum total of value of taxable services c h a r g e d in the first
consecutive invoices i s s u e d during a financial year but does not include
value charged in invoices issued towards such services which are exempt
from whole of service tax leviable thereon under section 66B of the said
Finance Act under any other notification."
CA Punit Gupta.
4
Registration under Service Tax – exemptions therein
• Service Tax (Registration of special category of persons) Rules, 2005
( 27/2005 ST dtd 7-6-2005) requires:
(a) Input service distributor within 30 days of the commencement of business or
16.06.2005, whichever is later.
(b) service provider to obtain registration - within 30 days from the day the
aggregate value of taxable service in the financial year crosses receipt of
Rs. 9 lakhs
•
9 Lakhs applicable from 1st April, 2008.
(Prior to that between 1st April, 2007 to 31st March, 2008 Value > 7 Lakhs and between 16th June,
2005 to 31st March, 2007 value > 3 Lakhs.)
•
As per the Rules "aggregate value of taxable service" means the sum total of first consecutive
p a y m e n t s r e c e i v e d during a financial year towards the gross amount….
•
It seems that Service Tax (Registration of Special Category of Persons) Rules, 2005 has not
been amended in line with SSI exemption to taxable services charged upto 10
lacs during FY.
CA Punit Gupta.
5
Person required to obtain registration & applicable time limits is
summarised in the chart given below:
Person required to obtain registration from
Superintendent of Central Excise.
Person Liable to pay
service tax [Sec. 69(1)]
Service
Provider
New
Business
Value >
9Lakhs
Other person or class of
person [Sec. 69(2)]
Service
Receiver RCM
New
Services
30 days
provision / billing /
receipt –CAearlier.
Punit Gupta.
Input
Service
Distributor
New
Service
s
Within 30 days payment
6
Registration under Service Tax – ????
Whether registration under Service Tax is required or not in
following cases? Why?
1.
A builder has purchased a plot of land and started construction project. He has
received booking amount of Rs. 15 lakhs in FY 2015-16.
2.
Moonlight Industries LLP wants to start its manufacturing business. It has given
erection and commissioning contract of plant and machinery with material and
paid advance Rs. 10 crore during FY 2015-16.
3.
XYZ service provider has issued bills of taxable service of Rs. 15 lakhs but his
receipt is Rs. 8 lakh during FY 2015-16 - PY.
4.
Meghdoot Motor Services has started authorised service center of Honda Motors
and received Rs. 8.95 lakhs during FY 2015-16.
5.
An architect has rendered architect service of Rs. 8.5 lakh in respect of property
situated in India and of Rs. 25 lakh in respect of property situated outside India
during the FY 2015-16.
CA Punit Gupta.
7
Multiple / Centralised Registration [Rule 4(2)]
• Service tax registration is “qua premises” and not “qua assessee”
unlike Income tax where single PAN is granted for all the premises.
• Separate application has to be made for registration of each
premises from which taxable services are rendered.
• Even within single premises, if there are multiple firms, all of them
have to be separately registered.
• Also, if an individual carries on the activity in two different names
under sole proprietorship, both the proprietary concerns have to get
separately registered.
• Single application mentioning all services is to be furnished, in case
of more than one taxable service.
CA Punit Gupta.
8
Multiple / Centralised Registration [Rule 4(2)]
• After due verification of the application form, registration in the
Form ST2 is to be granted within 7 days from the date of receipt of
the application.
• If the registration certificate is not granted within the said period,
the registration applied for shall be deemed to have been granted.
• Where person liable to pay service tax (either provider or receiver of
taxable service) from more than one premises and has a centralized
billing systems or centralized accounting systems and such
centralized billing systems or centralized accounting systems are
located in one or more premises he may, at his option, register such
premises or office where such centralized billing systems or
centralized accounting systems are located.
CA Punit Gupta.
9
Step vise Online Registration Procedure w.e.f 1-3-2015
Step 1
• Register with ACES- www.aces.gov.in
• Fill & submit form ST-1 online- officer can help if need be.
• PAN mandatory- Take print out of E-acknowledgement –
Registration within 2 days – print out from ACES w/o sign of officer.
Step 2
• Submit it with other documents to the dept. within 7 days by
registered post/ speed post for verification.
• Failing to submit this within time lead to rejection of the
application itself – else verification – PH before rejection.
Step 3
• Department will issue Form ST-2 via e-mail.
• Taking signature and stamp on form ST-2 from jurisdictional
Superintendent is not required Order No 1/15 St 28-2-2015.
CA Punit Gupta.
10
Documents to be Attached
All the following documents including ST-1 shall be Self certified.
1. Attested Copy of the PAN Card
2. Proof of Address of the premises, which is required to be registered
3. Copy of the Document governing the constitution of the organization
(partnership deed in case of a partnership firm, Memorandum of
Association in case of a company, Trust Deed in case of a trusts or
associations, etc.)
4. Copy of PAN Card of directors/partners/proprietor
5. Name, address and proof of residence of directors/partners
6. Power of Attorney on stamp paper in case the documents are signed by
an authorized representative/ Director of the company/ Partner of Firm.
7. In case of company resolution of board authorising signatory person
8. Any other document at its discretion may be sought ....???
CA Punit Gupta.
11
Documents to be Attached
In respect of Centralised registration following additional documents
or details are also require
1. Previous year’s audited balance sheet, if any.
2. Address proof of all the branches to be covered by centralized
registration .
3. Attested copy of TAN.
• In respect of registration of input service distributor, address of all
the premises to which credit of input services is distributed or
intended to be distributed along with attested copy of proof of
address of all such premises to be attached.
CA Punit Gupta.
12
Penal Liability for Failure to Obtain Service Tax Registration
[Sec. 77(1)(a)]
Penal liability for failure to
obtain registration before
10.5.2013
Rs. 200/- per day till failure
continue maximum upto Rs.
10,000/- whichever is higher.
Penal liability for failure to
obtain registration from
10.05.2013
May extend to Rs. 10,000/-
Discretionary from 0 to Rs
10,000/- - not flat / fixed.
Section 11AC of CEA, 1944 – provides for imposing penalty equal
to duty - Erstwhile Rule 173 Q of CER, 1944 – on confiscation of
goods penalty upto amount specified -
CA Punit Gupta.
13
Changes in Registration Certificate
• Where there is a change in any information or details furnished by
an assessee in form ST-1 at the time of obtaining registration or he
intends to furnish any additional information or details than
assessee has to mandatorily intimate such change to the Central
Excise Officer within 30 days of the said change. [Rule 4(5A)]
• The new registration is required when there is a change in the
constitution of business as the Service Tax Registration Certificate is
not transferable.
• When a registered assessee transfers his business to another person
than transferor shall surrender the registration certificate and the
transferee shall obtain a fresh certificate of registration. [Rule 4(6)]
CA Punit Gupta.
14
Cancellation / Surrender of Registration
Certificate [Rule 4(7) & 4(8)]
 Every registered assessee, who ceases to provide the taxable service for
which he is registered, shall surrender his registration certificate
immediately with concerned Superintendent of Central Excise. Certificate
has to be surrender online by filing the forms available at
WWW.ACES.GOV.IN.
 Following is the process for surrender of ST2
a. Fill in the form given online for surrender of registration certificate. After
filling in the same, take a print of the form and then submit form online.
Along with print out of surrender form ST-2 E-acknowledgement
of successful submission of the same shall be submitted to jurisdictional
Superintendent along with following further documents.
CA Punit Gupta.
15
Cancellation/Surrender of Registration Certificate [Rule 4(7) &
4(8)]
b. declaration form.
c. Self certified ST-2 certificate – TRU 334/1/2007 dtd 28-2-2007para 10.1 read with para 6 in ST-2.
d. Latest Income Tax returns for three years
e. Latest copy of ST-3 return
• The above list of documents to be submitted is based on our
practical experience.
• After receiving the aforesaid documents and after ensuring that
assessee has paid all monies due to government, concerned
Superintendent of Central Excise shall cancel the registration.
• Once it is accepted in ACES – you would not be able to login.
CA Punit Gupta.
16
Issue Of Invoice/Bill/Challan/Consignment Note
[rule 4A & 4B]
• Service provider of taxable service shall issue Invoice within 30 days
from date of completion of such taxable services or receipt of
payment towards the value of such taxable service,
whichever is earlier.
• In case of continuous supply of service, every person providing such
taxable service shall issue an invoice, bill or challan, as the case may
be, within 30 days of the date when each event specified in the
contract, which requires the service receiver to make any payment
to service provider, is completed.
• The invoice, bill or, as the case may be, challan issued by service
provider of taxable service shall be serially numbered and shall
contain the following, namely:CA Punit Gupta.
17
Issue Of Invoice/Bill/Challan/Consignment Note [rule 4A & 4B]
I.
II.
III.
IV.
The name, address and the registration number of such person;
The name and address of the person receiving such taxable service;
Description and value of taxable service provided or to be provided; and
The service tax payable thereon.
 The invoice issued shall be signed by authorised person. Can be
digitally signed w.e.f 1-3-2015 – Rule 4C of STR.
 Service tax, Primary Education cess & Secondary and Higher
Education cess shall also be shown separately on the invoice. Para
5.1 - Cir 97/8/07 dtd 23-8-2007.
 BANKING & OTHER FINANCIAL SERVICES: Invoice, a bill or, as the case
may be, should be issued within 45 days. Invoice/bill/challan issued by
banking company, Financial institution including NBFC is not required to
be ;
serially numbered nor address of the person receiving the taxable service is
required , but it should contain other information.
CA Punit Gupta.
18
Issue of Invoice/ Bill/ Challan by Input Service Distributor – Rule
4A (2) of STR,1994
• Input service distributor shall issue an invoice, a bill or, as the case
may be, a challan signed by authorized person, for each of the
recipient of the credit distributed, and such invoice, bill or, challan
shall be serially numbered and shall contain the following, namely:(i)
The name, address and registration number of the person
providing input services and serial number and date of the
invoice / bill / challan.
(ii) The name and address of the said input service distributor.
(iii) The name and address of the recipient of the credit distributed
(iv) The amount of credit distributed
(v) Banks can issue ISD invoice w/o Sr. No. – rest as above.
CA Punit Gupta.
19
Issue of Consignment Note – Rule 4B STR
• Goods transport agency which provides service in relation to transport of
goods by road in a goods carriage shall provide a consignment note to the
recipient of the service - which is serially numbered to the customer
containing following details:
(i)
Name and address of Goods transport agency
(ii) Name of the consignor and consignee
(iii) Registration number of the goods carriage in which the goods are
transported
(iv) Details of goods transported
(v) Details of the place of origin and destination
(vi) Person liable for paying service tax whether consignor, consignee or
the goods transport agency
(vii) Gross weight of consignment
CA Punit Gupta.
20
Payment of Service Tax – Sec 68 and Rule 6
 Service Tax shall be paid immediately after the end of the quarter in
case of individual, proprietary firm, partnership firm and LLP; after
end of the month in all other cases:
 By the 6th of the subsequent month, if the same is deposited electronically
through internet – mandatory – Rule 6(2) STR w.e.f 1-10-2014.
 By the 5th of the subsequent month, in any other case – as AC may allow by its
order.
 For month/quarter ending in March service tax is to be deposited by the 31st
day of March
 The date of tendering of cheque to the bank shall be deemed to be the date of
service tax payment, provided the cheque is not dishonoured in the course of
clearing.
 LLP is body corporate – except for limited purposes CA in LLP is not BO
under Co’s Act , 1956 for being allotted audits- thus needs to pay on
monthly basis –A C T w i l l p r e v a i l o v e r S T R
CA Punit Gupta.
21
Payment of Service Tax
• E-payment – EASIEST – GAR-7 challan – ACES site E-payment option will
take you to payment modules – after filling the details the page will take to
your bank site – after entering its username & password- payment can be
done & challan be printed in PDF & on plain paper for records. Challan
Identification Number – 20 digit CIN – BSR- 7 –date -8 – Challan Sr NO 5
• If last day is bank holiday : tax can be paid on next working day – Cir
63/12/2003 dtd 14-10-2003
• Effect of using wrong code: If the assessee has used wrong accounting
code, he need not be asked to pay service tax again and matter should be
sorted out internally by department.
• Rounding of service tax: As per section 37D of The Central Excise Act,
which is also applicable to Service Tax and Circular No. ST-53/2/2003,
Dated 27.03.2003, the Service tax amount payable is to be rounded off to
the nearest rupee.
CA Punit Gupta.
22
Payment of Service Tax – Sec 68 and Rule 6
• Normally service tax is payable on billing/accrual basis for all
categories of service providers- Rule 6(1) STR.
• 4th Proviso to above said rule gives option to pay Service Tax in
the month/quarter in which payment is received –
In case of individual, proprietary firm, partnership firms {and LLP ( ??)}
whose aggregate value of taxable services (provided) is Rs 50 lakh
rupees or less in the previous financial year,
the service provider shall have the option to pay tax on receipt basis up
to a total value of taxable service (provided) is Rs 50 lakhs in the
current financial year.
CA Punit Gupta.
23
Advance Payment of Service Tax [Rule 6(1A)]
Assessee may suo –motto / on its own - pay service tax in
advance against his liability for the subsequent period
provided:
 He intimates to Superintendent within 15 days from the date of
payment
 Indicate details of advance payment and its adjustment in the
subsequent return
CA Punit Gupta.
24
Adjustment Of Excess Service Tax Paid [Rule 6(3), 6(4A), 6(4B) and
6(4C)]
 Where an assessee has issued an invoice, or received any payment,
against a service to be provided which is not so provided by him
either wholly or partially for any reason or where the amount of
invoice is renegotiated due to deficient provision of service, or any
terms contained in a contract, the assessee may take the credit of
such excess service tax paid by him, if the assessee,—
a) has refunded the payment or part thereof, so received for the
service provided to the person from whom it was received; or
b) has issued a credit note for the value of the service not so
provided to the person to whom such an invoice had been
issued. [Rule 6(3)]
CA Punit Gupta.
25
Adjustment of Excess Service Tax Paid [Rule 6(3),
6(4A), 6(4B) and 6(4C)]
 Asessee may adjust excess payment of service tax against his service
tax liability for the succeeding month / quarter and the excess
amount paid is on account of reasons not involving interpretation of
law, taxability, valuation or applicability of any exemption
notification. [Rule 6(4A) & (4B)]
 In respect of service of renting of immovable property any excess
payment of service tax for a month or quarter, on account of nonavailment of deduction of property tax paid in terms of Notification
No. 29/2012-ST, the assessee may adjust such excess amount paid
within one year from the date of payment of such property tax and
the details of such adjustment shall be intimated to the
Superintendent within a period of fifteen days from the date of such
adjustment. [Rule 6(4A)]
CA Punit Gupta.
26
Provisional Payment of Tax [Rule 6(4), 6(5) and
6(6)]
• Where an assessee is unable to correctly estimate the actual amounts
of service tax payable for any month or quarter, the assessee may make
a request in writing to the AC/DC of Central Excise to make a payment
on provisional basis and after receiving request AC/DC may allow the
provisional payment of tax.
• In such cases, memorandum in form No. ST-3A shall be accompanied
with the service tax return for the relevant period.
• After receiving memorandum in ST-3A - AC/DC is require to complete
the assessment after calling further documents and records as he may
consider necessary.
• Upon finalization of such assessment, if a liability of service tax arises,
the differential amount be paid by the assessee. If he has paid excess
amount he would be entitled to refund.
CA Punit Gupta.
27
Excess or Wrong Collection of Service Tax [Section 73A
and Section 73B]
Any person liable to pay service tax , who has collected any amount
in excess of service tax leviable or collected service tax which is not
required to be collected - to deposit the same with the Central
Government and also
provide authority to Central Excise Officer for recovery of such excess
amount.
This also enables the Central Government to collect interest U/S 73B
on the amount referred to in Section 73A.
CA Punit Gupta.
28
Rates of Interest – Section 75
Period
Rate of Interest
01.07.1994 to 15.07.2001
1.5% p.m. and part thereof
16.07.2001 to 15.08.2002
24% p.a.
16.08.2002 to 09.09.2004
15% p.a.
10.09.2004 to 31.03.2011
13% p.a.
01.04.2011 to 30-9-2014
18% p.a.
15% p.a. ( if Service provided by a Service provider is upto
value of Rs. 60 Lakhs in current FY – If SCN is issued )/
else - previous FY – continued as on date )
CA Punit Gupta.
29
Rates of Interest – Section 75
Period - only on or after 1st October, 2014 till date.
In an illustration as clarified by CBEC TRU unit in its DOF no 334/2014 dtd 10-7-2014 at para 3.1,
assume a case where service tax became due, say, on the 6th of July, 2012 and the assessee
pays the dues on 6th of December, 2014. In such a case, the interest to be charged would be
as below:
•
•
(i) 18% simple interest upto September, 30th, 2014.
(ii) For the period from 1st October, 2014 to 6th December, 2014, the rate of interest will be
30% since the period of delay is beyond one year.
CA Punit Gupta.
30
Penalty for Failure to Pay Service Tax and Suppressing Value of
Service Tax
Sec.
Nature of default
Amount of penalty
76
Failure to pay Service Tax –
w.e.f 14-5-2015
Non evasion case – if tax+ interest is paid w/i
30 days of
- receipt of SCN – no penalty
- receipt of Order - 25% of Tax -fixed
If Tax & interest paid after 30 days of SCN but
before receipt of Order – 10% of TAX – Fixed
78
Penalty for suppressing value
of taxable service -w.e.f
14-5-2015
If Tax & interest paid after 30 days of SCN but
before receipt of Order –
50% of tax amount (if records captured are
true till 14-5-2015)**
100% of tax amount (if not recorded in
books)**
** further mitigation if tax & interest is paid within 30 days of ;
(a) Receipt of SCN - penalty 15% of the Tax
(b) 25% of tax if all dues paid within 30 days of getting order under Sec 73(2).
CA Punit Gupta.
31
Returns [Section 70 & Rule 7]
Returns have to be filed in Form ST-3 in triplicate on half yearly basis by the
25th of the month following the particular half-year[Rule 7(2)].
• DUE DATES FOR FILING OF SERVICE TAX RETURN
For the half year
To be filed by
1st April to 30th September
25th October
1st October to 31st March
25th April
• DATES FOR FILING OF ISD RETURN
[Rule 9(10) of CENVAT Credit Rules, 2004]
For the half year
To be filed by
1st April to 30th September
31st October
1st October to 31st March
30th April
• Every assessee shall submit the half-yearly return electronically.
[Rule 7(4)]
CA Punit Gupta.
32
Step Wise Online Return Submission Process
Download Return preparation utility of Form ST-3 from the site
Fill the form ST-3 Return in preparation utility
Validate the utility and thereafter XML file will be generated
Logs in to the site using user Id and password
Upload the XML file generated
CA Punit Gupta.
33
Revised Return [Rule 7B]
• Assessee is allowed to rectify mistakes or omission and file revised
return including CENVAT credit return within 90 days from the date
of filing of the original return.
• We can file revised return even in case original return is filed late.
•
Time limit for issuing show cause notice under Section 73 - starts
from date of filing of
– Revised ST-3 if it is filed– Original ST-3 – if not revised.
•
if none is filed – from the last date ST-3 should have been filed in law.
CA Punit Gupta.
34
Late Fee for Delay in Filing of Return [Section 70] [Rule
7C of STR]
• The assessee is required to pay following amount of late fee
depending upon the period of delay, but not exceeding Rs. 20,000
per return.
No. of days delay from due date for filing of
service tax return
Late Fees in Rs.
From 1st day up to 15th day
500
From 16th day up to 30th day
1000
Delay beyond 30 days
100/- per day
Plus Rs 1000/-
• Any delay beyond ( 30 + 190) = 220 days from the due date,
simply pay Rs 20,000/- as penalty
CA Punit Gupta.
35
Documents and records may be demanded by audit
party
Records [Rule 5 of ST Rules]
(1) “The records including computerised data as maintained by an assessee
in accordance with the various laws in force from time to time shall be
acceptable.”
(2) “Every assessee shall furnish to the Superintendent of Central Excise at
the time of filing of return for the first time or the 31st day of January,
2008, whichever is later, a list in duplicate, of—
CA Punit Gupta.
36
Documents and records….
•
(i) all the records prepared or maintained by the assessee for accounting of transactions in
regard to,
(a)
providing of any service;
(b)
receipt or procurement of input services and payment for such input services;
(c)
receipt, purchase, manufacture, storage, sale, or delivery, as the case may be, in
regard of inputs and capital goods;
(d)
other activities, such as manufacture and sale of goods, if any.
(ii) all other financial records maintained by him in the normal course of business.
(3) All such records shall be preserved at least for a period of five years immediately after the
financial year to which such records pertain.
CA Punit Gupta.
37
Possible Documents and records …..
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
Invoices / Bills / Challans
Audit report u/s. 44AB of the Income Tax Act
Balance sheet and profit & loss account
Trial balance
Print out of books of accounts(primary books and ledgers)
Purchase bills for input, input service and capital goods
Credit notes and debit notes
Bank statements of all bank accounts
Agreements/contracts in respect of providing of services
Copy of ST1 and ST2 i.e. application and registration certificate
Copy of returns in form ST3 for the period covered by audit
Copies of service tax challans
VAT returns and records
CA Punit Gupta.
38
Documents and records may be demanded by
audit party
• Rule 5A(2) of ST Rules provides every assessee shall, on demand,
make available to the officer authorised under sub-rule (1) or the
audit party deputed by the Commissioner or the C & AG, within a
reasonable time not exceeding fifteen working days from the day
when such demand is made, or such further period as may be
allowed by such officer or the audit party, as the case may be,—
(i) the records as mentioned in sub-rule (2) of rule 5;
(ii) trial balance or its equivalent; and
(iii) the income-tax audit report, if any, under section 44AB of the
Income-tax Act, 1961 (43 of 1961), for the scrutiny of the officer or
audit party, as the case may be.]
CA Punit Gupta.
39
Working sheets may be kept ready to safe guard own interest
1. Working sheet of date wise invoices along with total of
taxable value, service tax collected and service tax paid
along with challan details.
2. Reconciliation of income shown in financial statement with
details of income/receipt as per ST3.
3. Reconciliation of opening balance of debtors plus bill raised
minus receipt from debtors equal to closing balance of
debtors segregating for taxable services and others and
effect of TDS and other deductions.
CA Punit Gupta.
40
???????????
please
Thank you ALL for
patient listening
punit@punitgupta.in
C A P u n i
t G u p t a
41
Namaskaar
CA Punit Gupta
42