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Frequently Asked Questions on Service Tax

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Who should be approached when an assessee is aggrieved by an order/decision of the Adjudicating Authority subordinate to the Commissioner of Central Excise in respect of Service Tax? What is the procedure for filing the Appeal?

 

An assessee aggrieved by such order/decision may file an Appeal to the Commissioner (Appeals) in Form ST-4, in duplicate.
    A copy of the order/decision appealed against should be enclosed.
    The appeal should be filed within 3 months from the date of receipt of the order/decision.
    There is no fee for filing an Appeal before the Commissioner of Central Excise (Appeals), even in respect of Service Tax matters (Section 85 of the Act and Rule 8 of the STR, 1994).
 

Can the time limit of three months for filing the appeal to the Commissioner (Appeals) be extended? If yes, under what circumstances?
 

Yes, if the Commissioner (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. The law does not provide for further extension of time (Proviso to Section 85(3) of the Act).

Can an Appeal be filed against the order/decision of the Commissioner of Central Excise or Commissioner (Appeals)? If so, what is the procedure for that?

  Yes. The law provides for filing such an Appeal. The procedure is an follows:-
    The Appeal against the order of the Commissioner of Central Excise or Commissioner (Appeals) can be filed with the Customs, Excise and Service Tax Appellate tribunal (In short, CESTAT).
    The Appeal should be filed within three months of the date of receipt of the order sought to be appealed against.
    It should be filed in the prescribed Form (ST-5) in quadruplicate.
    It should be accompanied by a certified copy of the order appealed against.
    The Appeal should be accompanied by the prescribed fee based on the amount of Service Tax and interest demanded and penalty levied. Rs.1000/- if the amount involved is Rs.5 lakhs or less, Rs.5000/- if the amount involved is more than Rs.5 lakhs but not exceeding Rs.50 lakhs and Rs.10,000/- if the amount involved is more than Rs.50 lakhs. (Section 86 of the Act and Rule 9 of the Service Tax Rules , 1994).
Who will pay Service Tax?
 

Every person, providing any of the specified taxable service is required to pay Service Tax. Service Tax being an indirect tax, its burden is to be borne by the person who receives services, but it is to be collected and paid to Government Exchequer by the service provider.

Is there any exemption to Central/State Government Departments/PSUs?
  No. There is no general exemption provided to Central/State Government Departments/PSUs. Government department whether Central or State have to pay Service Tax to the provider of the service from whom any of the specified services are received by the Government department/PSUs.
In case, I am providing any of the specified services am I required to pay Service Tax?
  yes
What is the payment scheduled for Service Tax?
  (a) Monthly Service Tax is to be paid by 5th of the month immediately following the calendar month in which the payments are received.
(b) Quarterly In case of an individual or proprietary firm or partnership firm by the 5th of the month immediately following the quarter in which payments are received.
(c) In all cases the tax payable for the month of March or quarter ending March shall be paid by 31st March of the calendar year.
Whether any other tax is to be paid with the Service Tax?
  Yes. Education cess @ 2% and higher secondary education cess @ 1% of the Service Tax levied and collected is to be paid.
Is there any separate code number for payment of education cess?
  Yes, the code number is 00440297, code no. for Higher secondary education cess is 0252. Code numbers for 104 services are mentioned against each service as shown in Annexure-I
How and where to deposit Service Tax?
  Service Tax may be deposited in any authorized branch of the designated banks through TR-6 challan.
Whether Service Tax can be paid on line?
  Yes, e-payment of Service Tax can also be made
What is the period for filing of ST-3/ST-3A return?
  The period for filing the return is 6 months. For the period April to September due date is 25th October and for the period October to March due date is 25th of April.
What are the prescribed records to be maintained by me as a service provider?
  Records (including computerized data) as maintained by you in accordance with various laws in force from time to time are acceptable. However, every service provider in terms of Rule 5(2) of Service Tax Rules, 1994 is required to furnish to the jurisdictional Superintendent of Service Tax/jurisdictional Superintendent of Central Excise, a list of all accounts maintained by the assessee in relation to Service Tax including memorandum received from his branch offices at the time of filing his return for the first time.
Whether any documents are required to be attached with ST-3/ST-3A (ST-3 A is to be filed in provisional assessment cases)?
  Following documents are required to be filed along with ST-3/ST-3A-
1. Copy of TR-6 Challans indicating payment of Service Tax.
2. In case of ST-3A return (Provisional Assessment) a memorandum indicating tax payable and tax paid every month is to be filed.
3. A sheet indicating calculation of interest in case of delayed payment of Service Tax.
Whether ST-3 return is to be filed in case, no services are provided during half-year period?
  Yes. In such cases a nil return is to be filed. However, if any outstanding value of taxable service is realized during 6 months period, it is be declared and tax thereof is to be discharged and so ST-3 return is to be filed in such cases.
What if I do not declare the value of outstanding taxable services realized during the half year period when no services are provided?
  This will amount to suppression of value of taxable service or mis-declaration and in such cases demand can be made by the department for past five years in terms of proviso one to section 73(1) of Chapter V of Finance Act, 1994, as amended and penalty under Section 78 is also leviable.
What if I do not pay my Service Tax by the due date?
  In terms of Section 76 of Chapter V of Finance Act, 1994 as amended a penalty of Rs.200/- per day for every day of delay of payment of Service Tax or @ 2% of Service Tax per month, whichever is higher, can be levied. This is subject to a maximum penalty of In addition to the penalty; interest has also to be paid for the period of delay. In terms of Section 75 of Finance Act, 1994 rate of interest are to be specified. The interest rate enforce at present is 13% per annum. Interest is payable for the period from the first day after the due date till the date of payment of such defaulted service tax amount or part thereof.
Who can avail facility of e-filing of returns?
  Any assessee who has 15 digits STP code and who has been indicating this 15 digits STP code on the TR-6 challan used by them during the period for which the returns are being filed can opt for e-filing of returns. Such assessees who have not been quoting 15 digits STP code on TR-6 challans can also opt for e-filing of ST-3 returns, but they will have to submit copies of Challans evidencing payment of Service Tax to the concerned Service Tax/Central Excise formations after indicating their 15 digits code number of each Challan. An application for permission to file ST 3 return electronically has to be made to the jurisdictional Assistant Commissioner/Deputy Commissioner (Proforma of application is given at Annexure-11).
Can the department ask more information than what assessee is submitting to it in the form ST-1 and ST-3?
Yes. If required, the department can always ask for additional information.
What should a bill or invoice issued by service provider contain?
  Invoice, Bill or Challan issued by the service provider should be serially numbered and should contain:-
1. Name, address and registration number of such person
2. Name and address of the person receiving taxable service
3. Description, classification and value of taxable service provided or to be provided; and the service tax payable thereon.
4. In case of GTA the invoice should also contain the details of the consignment note number date and gross weight of the consignment.
There is special provision for Banking & Financial services. Banking and Financial service providers need not mention all the aforementioned particulars invoice/bills/Challans.
On what amount Service Tax is to be paid?
  The gross amount charged by the service provider shall be the value of
(a) Taxable service for the purpose of computation of Service Tax.
(b) No Service Tax is leviable if service provided is free of change.
(c) Invoice should show the amount of Service Tax separately. If not shown
separately, the gross amount may be taken to be cum-tax price or inclusive of Service Tax.
(d) Cost of goods and materials sold to customer during the course of providing
service is to be excluded from the value of service. See Notification No. 12/2003-Service Tax dt. 20th June 2003
(e) This exclusion is allowed only if the sale and value of such goods is indicated
separately in the invoice. The assessee is expected to maintain documentary proof of the value of such goods.
(f) Further, the assessee cannot claim abatement specific to any service, under any
notification, if the above exclusion is claimed.
Whether Service Tax is payable after providing the service or after the receipt of service charges?
  Service Tax is payable once the amount/value of taxable service is received by the service provider for the service so provided or to be provided.
Is the Service Tax payable by the assessee even in cases where his clients do not pay for the service(s) rendered or when the client pays only a part of the bill raised in this regard?
  Service Tax is required to be paid at the rate in force (which at present 12 %) only on the value / amount 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. Along with Service Tax, an education cess @ 2% + higher secondary education cess @ 1% of the Service tax is also required to be paid in respect of all taxable services.
However, in all such cases when the amount received is less than the gross amount charged / billed to the client, the Service Tax assessee is required to amend the bills either by rectifying the existing bill or by issuing a revised bill or a credit voucher / note and by properly endorsing such change in the billed amount. In case an assessee fails to do so, his liability to pay Service Tax shall be on the amount billed by him to the client for the services rendered.
Can any adjustment of tax liability be made?
  Yes. Where an assessee has paid to the credit of the Government in respect of a taxable service, which is not so provided by him, either wholly or partially for any reason, the assessee may adjust the excess Service Tax so paid by him (calculated on a pro-rata basis) against his Service Tax liability for the subsequent period, if the assessee has refunded the value of taxable service and the Service Tax thereon to the person from whom it was received (Rule 6(3) of the Service Tax Rules, 1994). Further, assessee having centralized registration who paid excess amount of Service Tax, on account of non-receipt of details regarding the receipt of gross amount for the services at his other premises or offices, may adjust such excess amount against the Service Tax liability for the subsequent period and furnish the details of such adjustment to the Jurisdictional Superintendent of Service Tax within 15 days from the date of such adjustment (Rule 6(4A) of the Service Tax Rules, 1994 refers).
In all other cases of excess payment, refund claims have to be filed with the Department. The refund claims would be dealt as per the provisions of Section lIB of the Central Excise Act 1944, which is made applicable to Service Tax under Section 83 of the Finance Act 1994.
It is important to note that any amount of Service Tax paid in excess of the actual liability, is refundable, only if it is proved that the claimant of refund had already refunded such amount to the person from whom it was received or had not collected at all (Section 11 B of the Central Excise Act, 1944which is applicable to Service Tax matters under Section 83 of the Act).
 

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