Service Tax

The Service Tax limit has been raised to 10 Lakhs in 2008 Budget

Service Tax Notifications
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Notification raising the limit to 8 lakhs
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Explanatory Notes: clause 105 of section 65
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SERVICE TAX :
1. Significant changes are being proposed in a number of provision of the finance Act, 1994 and Service Tax Rules, 1994. some of the existing notifications have been rescinded and new notifications issued. Notifications relating to abatements are being consolidated into a single notification and reissued. (Notification No. 1/2006-ST dated 1.03.2006)

The rate of service tax is being increased from 10% to 12%. The increase in service tax rate will be applicable from the date of enactment of Finance Bill, 2006.
Service tax is being proposed on fifteen individually specified services and the scope of certain existing services is being extended or clarified. These proposals will come into effect from a date to be notified after enactment of the Finance Bill, 2006.
Certain other changes relating to the Finance Act, 1994 will come into effect from the date of enactment of the Finance Bill, 2006.
Changes have also been proposed in Service Tax Rules, 1994. The procedural changes will come into effect from 1.03.2006.

2. Rate of Service Tax :
The rate of service tax is being increased from 10% to 12% [section 66 refers]
3. Taxable Services :
3.1 Taxable services are defined under clause (105) of section 65 of the Finance Act, 1994. Classification of taxable services is determined according to the sub-clauses of clause (105) of Section 65, Section 65A provides for principles of classification of taxable services.
3.2 Often services provided consist of more than one service. In such cases, it is important to decide, for the purpose of classification of services, whether each element of the transaction should be treated separately or as a single composite transaction, albeit, made up of two or more separate services. A composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. The decision is to be made on question of facts and law. It will not make a difference if the tax rates of the components are the same as that of the principal service. The problem may arise when some elements are taxable and others are exempt. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The method of charging does not in itself determine whether the service provided is a single service or multiple services.
8. Amendments in the Service Tax Rules, 1994 :
Rule 4(5A) makes it obligatory on the part of the assessee to intimate any change in information submitted at the time of registration within thirty days of such changes.
Rule 4(8) provides for cancellation of registration certificate where the assessee makes an application for cancellation. It may be noted that the cancellation of registration may be done when the assessee applies for cancellation on his own or surrender his certificate under Rule 4(7) and not in other cases. It may be noted that there is no statutory requirement for the assessee to make any application for cancellation in every case.
Rule 5(3) makes is obligatory for an assessee to preserve records at least for a period of five years.
Rule 5(4) makes it obligatory for an assessee to make available records maintained by him to a Central Excise Officer for the purpose of inspection or examination. However, such inspection or examination cab be undertaken only after the written approval of the jurisdictional Assistant/Deputy Commissioner. It may also be noted that the assessee is required to make available the records in his registered premises.
9. General :
9.1 Changes explained above are not exhaustive and are only for the purpose of providing guidance. Explanations are not to be treated as part of the statutory provisions and do not over ride them. The statutory provisions and the relevant notifications have to be read carefully for interpreting the law.
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SERVICE TAX Laws for India
http://www.laws4india.com/indiantaxlaws/st/stcircular.asp

Indian Service Tax Returns


12.4 Non-levy of penalty
(i) Penalty for late filing of returns of service tax
According to section 77 of the Finance Act, 1994, if a person fails to furnish in due time, the return which he is required to furnish, he shall pay by way of penalty, a sum which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day (for every week or part thereof with effect from 16 October 1998) during which such failure continues. As per Finance Act, 1999, effective from 11 May 1999, the penalty leviable may extend to an amount not exceeding two thousand rupees irrespective of the period of delay.
A check of service tax returns filed by 78 assessees, in Raipur Commissionerate of Central Excise, revealed that returns due between the period October 1994 and December 1999 were not filed within the prescribed time limit and no action was initiated for recovery of penalty which amounted to Rs.29.85 lakh.
On being pointed out (January 2000), the Ministry of Finance stated (August 2001) that show cause notices had been issued in all the cases.
(ii) Penalty for delayed payment of tax
As per section 76 of the Finance Act, 1994, any person liable to pay service tax in accordance with the provisions of section 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest, a penalty which shall not be less than rupees one hundred but which may extend to two hundred rupees for every day during which such failure continues, however, such penalty shall not exceed the amount of service tax that he failed to pay.
A check of service tax records maintained by Assistant Commissioner (S.T.) Division I, Surat Commissionerate of Central Excise, revealed that 24 assessees made payment of service tax after due dates. Though interest was levied on them but penalty under section 76 which was mandatory and leviable in addition to service tax and interest, was not levied. This resulted in non-levy of penalty amounting to Rs.8.07 lakh.
On being pointed out (January 2001), the Ministry of Finance admitted the objection and intimated (July 2001) that show cause notices amounting to Rs.10.25 lakh had been issued.

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PENALTY ON LATE FILING OF RETURNS

http://www.servicetaxefiling.nic.in/.
6.4 Delay in filing of return: The return is required to be filed by the stipulated date as mentioned at para 6.1 above. Delay in filing of return attracts late fee. The late fee presently prescribed vide rule 7C of the Rules, is (a) Rs 500 for delay upto 15 days; (b) Rs 1000 for delay between 15 days and 30 days; and (c) Rs 1000 plus Rs 100 per day beyond 30 days, till the filing of return, not exceeding Rs 2000/-. To avoid late fee, the taxpayer must ensure timely filing of return. In case of returns filed late, the appropriate late fees should be paid at the time of filing' the return, without waiting for any communication or notice from the department. Mere non-submission of evidence of payment of late fee along with the return is, however, not a ground for refusal to allow filing of the return.

6.5 Filing of revised return : Rule 78 of the Rules prescribes that an assessee can submit a revised return within 60 days of filing of original return to rectify any mistake or omission. It may be noted that in such cases where an assessee files a revised return, the limitation period for initiating any action for demanding the service tax not paid/ short paid/ not levied/short levied would be computed from the date of filing of revised return.

- from BIA TAX JOURNAL

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