Service Tax Procedural Aspects

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Service TaxProcedural Aspects

• By Surender Gupta, FCA
• 9810476895
• 22451509, 20008128
• Email sarrca_at_rediffmail.com
• e-book - www.taxmanagementindia.com

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Registration RequirementsGeneral Provisions

• Section 69 and Rule 4
• Every Person who is liable to pay service tax
• Application shall be filing to Superintendent of
  Central Excise
• Form of Application is ST-1
• Within 30 days
• Registration shall be issued within 7 days in
  form ST-2
• Know Your Location - logon to
• www.exciseandservicetax.nic.in
• Document to be Submitted - -
• Cont.

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Registration RequirementsDocuments to be
submitted with ST-1

• As per Hyderabad-IV, Trade Notice No. 76/2003,
  dated 6-11-2003
• (a) Proof of address of the premises office
  sought to be registered
• (b) PAN number of the assessee
• (c) List of Branches offices or premises of the
  assessee
• (d) Brief note on accounting system adopted by
  the assessee
• (e) Branch-wise series of invoices maintained
  along with a sample copy thereof
• (f) Previous years audited balance sheet along
  with gross trial balance of different branches
• (g) Details of records accounts maintained at
  different branches and Central Office
• (h) Bank account numbers of the Branches and
  Central Office through which the receipts are
  deposited transacted.

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Registration RequirementsCentralizsed
Registration

• If the assessee does not want to apply for
  separate registration for each premises and like
  to have single centralised registration instead
• He may apply for centralised registration on the
  basis of centralised billing or accounting basis
• In such case the registration shall be granted by
  the
• Commissioner or Chief Commissioner of Central
  Excise
• or
• Director General of Service Tax
• Registration granted earlier shall be valid
  F.No. 341/20/2005

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Registration Requirements Special Categories

• Input Service Distributor
• A person who is availing exemption on the basis
  of value of services provided i.e. upto Rs. 4
  lakh Not. 6/2005
• He has to file an application for registration
  when aggregate value of taxable service exceeds
  three lakh rupees.
• Notification No. 26/2005 and 27/2005 ST dated
  07-06-2005

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Registration Requirements Surrender / Penalties

• As per rule 4(7) Every registered assessee, who
  ceases to provide the taxable service for which
  he is registered, shall surrender his
  registration certificate immediately.
• No Specific Penalty for failure to obtain
  registration or surrender the same (Since Section
  75A has been omitted)
• However, in accordance with Section 77 A
  penalty of Rs. 1,000 may be imposed on such
  failure.

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Registration Requirements FAQs

• Where more than one service is provided?
• Registration applied but registration certificate
  not received?
• Deposit of Service Tax before applying for
  Registration.
• Whether penalty is mandatory?
• What happened when premises is changed?
• A sole proprietor is maintaining two business in
  two different names
• What is service tax code

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Classification of Services vs. Service Tax Code

• Item no. 4 of the ST-1 form requires details in
  respect of Category of Servcie
• Category of Service must be determined after
  applying the provisions of Classification as
  prescribed in Section 65A
• Classification according to the terms of clause
  65(105)
• Specific description is preferred over more
  general description
• Composite Service Which gives them essential
  character
• Have equal merits Which occurs first is better

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Important Dates Payment of Service Tax

• In case of Individual / Proprietary Firm or
  Partnership firms (except quarter ending March) -
  Quarterly
• by the 5th of the month immediately following
  the said quarter.
• In other cases (Except month ending March)
• By the 5th of the month immediately following
  the said calendar month.
• In the both the above cases for the month of
  March or Quarter ending March
• By the 31st day of March of the calendar year.

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Important Dates Filing of Returns

• Return of Service Tax to be filed Half Yearly
  ST-3
• For 1st April to 30th September
• Due Date - 25th October
• For 1st October to 31st March
• Due Date - 25th April
• Input Service Distributor
• For 1st April to 30th September
• Due Date - 30th October
• For 1st October to 31st March
• Due Date - 30th April

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Payment of Service Tax TR-6 Challan

• Service Tax can be paid either by TR-6 challans
  or by utilizing Cenvat Credit
• If paid through TR-6 Challan
• Duty should be rounded of to nearest Rupee
• Payment Shall be made in respect of payment
  received
• Accounting Codes must be used correctly
• Uniform code for Education Cess 00440297
• Payment should be deposited in the designated
  banks only.
• For the list of designated banks you may logon
  to
• www.exciseandservicetax.nic.in

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Payment of Service Tax Cenvat Credit

• Cenvat credit available at the end of month or
  quarter as the case may be, can be utilized for
  payment of service tax for that relevant month or
  qurter.
• If there is shortfall in Cenvat Credit, the
  balance amount can be paid through TR-6 challans.
• Cenvat credit can not be utilised to pay interest
  and penalties. These can be paid through TR-6
  Challan only

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Payment of Service TaxInterest and Penalty

• Rate of Interest for Late Payment of Tax Sec.
  75
• 13 p.a. on the outstanding amount
• Penalty for Late / Non payment of Tax Sec.76
• Minimum Rs. 100 per day
• Maxmium Rs. 200 per day during which the failure
  continues or amount of Service Tax in default.
• Reasonable Cause Sec. 80
• No penalty is imposable if assessee proves that
  there was reasonable cause for the failure

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Payment of Service TaxInterest and Penalty

• Penalty for suppressing value of taxable service
  Sec. 78
• Amount of Penalty
• Minimum Penalty - equal to amount of such service
  tax
• Maximum Penalty - twice the amount of such
  service tax
• Penalty is reduced to 25 of service tax if paid
  with in 30 days.
• When the penalty under section 78 is imposed
• Penalty under section is imposed, where any
  service tax has not been levied or paid or has
  been short-levied or short-paid or erroneously
  refunded, by reason of
• (a) fraud (b) collusion (c) wilful
  mis-statement (d) suppression of facts or(e)
  contravention of any of the provisions of this
  Chapter or of the rules made thereunder
• with intent to evade payment of service tax

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Payment of Service Tax FAQs

• What will happen if an assessee uses the wrong
  code on the Challan?
• Whether single challan is sufficient for more
  than one services?
• Whether single challan is sufficient for more
  than one premises?
• What will happen when the service tax has been
  deposited with the non-designated bank?
• What will happen where the service tax paid in
  advance? Is it available for adjustment in
  future?
• Effect on Due date when payment is made by
  account payee cheque.
• Mention of Service Tax code is mandatory or not
  as some times required by designated bank.

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Records and ReturnsAccounts and ST-3

• No specific requirement to maintain special
  records
• Rule 5(1) A list of accounts maintained by the
  assessee shall be filed alongwith the first
  return
• Form of the Return ST-3
• Enclosures to the return
• ST- 3A
• TR- 6 Challan

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Records and ReturnsInvoice

• Though no records have been provided, but the
  some elements to be shown on the invoice have
  been provided by the rule 4A. According to rule
  4A the following particulars are required to be
  mentioned on the invoice
• Invoices should be serial numbered
• Name, address and the registration number of such
  person
• Name, address of the person receiving taxable
  services
• Description, classification and value of taxable
  service provided or to be provided and
• Service Tax Payable Thereon
• It is worthwhile to note here that Invoice
  includes any bill or challan issued by the
  provider of services for the services rendered by
  him.

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Records and ReturnsInvoice of Input Service
Distributor

• Every input service distributor shall issue an
  invoice, a bill or, as the case may be, a challan
  for each of the recipient
• It should be serially numbered
• Particulars of Provider of Input Services
• Name
• Address
• Registration
• Serial number and date of invoice, bill, or as
  the case may be, challan issued under sub-rule
  (1)
• Cont..

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Records and ReturnsInvoice of Input Service
Distributor

• Particulars of Input Service Distributor
• Name
• Address and
• Registration number
• Particulars of Recipient of credit distributed
• Name
• Address
• Value
• the amount of the credit distributed

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Records and ReturnsCenvat Credit

• For Inputs and Capital Goods -
• The provider of output service shall maintain
  proper records containing the following details
• Receipt
• Disposal
• Consumption
• Inventory of Input and Capital Goods
• Value of input / capital goods
• Duty paid
• Cenvat Credit Taken
• Cenvat Credit Utilized and
• Particulars of Suppler of input or capital goods.

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Records and ReturnsCenvat Credit

• For Input Services -
• The provider of output service shall maintain
  proper records containing the following details
• Receipt of input services
• Consumption of input services
• Value of input services
• Tax Paid
• Cenvat Credit Taken
• Cenvat Credit Utilized and
• Particulars of provider of service

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Records and ReturnsCenvat Credit

• Documents for availing Cenvat Credit
• Excise Duty / CVD
• An invoice of the manufacturer
• An invoice of the importer
• An invoice of the First / Second Stage Dealer
• A supplementary Invoice
• A bill of entry
• A certificate issued by an appraiser of customs
  in case of goods imported through post office
• Service Tax
• Invoice / bill / challan of the service provider
• Invoice / bill / challan of the input service
  distributor
• Where the specified persons are liable to pay
  Service Tax on the basis of challan

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Records and ReturnsFAQs

• Is there any time limit for issue of invoice /
  bill or challan
• Whether single return is sufficient for more than
  one services?
• Can service tax return be filed by post?
• How to rectify an error in ST-3 submitted
  earlier?
• What is e-filing of service tax return?
• When no services are provided in the relevant
  half year, return is to be filed?
• While availing Cenvat Credit original copy of
  document has been lost, what should be done?
• What is the penalty for late filing of return?

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• Thanks
• My e-book on Service Tax is
• www.taxmanagementindia.com
• My e-mail
• sarrca_at_rediffmail.com