Distribution of work amongst various section. of CBEC regarding

Indian Service Tax

General Exemptions

The following exemptions are applicable to all services.

• Exemption to UNO or International Organisation.

• Special Economic Zones-Notification No. 17/2002-ST, dt. 21/11/2002&4/2004-ST, dt. 31/3/2004.

• Cost of goods and materials (barring few exceptions like beauty parlour) -Notification No. 12/2003-ST, dt. 20/6/2003.

• Export of services-Cir No. 56/5/2003-ST, dt. 25/4/2004.

• Payment received in non-repartriable freely convertible foreign exchange. -Notification No. 6/98-ST, dt.9/4/99 &21/2003-ST, dt. 20/11/2003.

• Services rendered abroad.

• Old services rendered prior to 10/9/2004- Notification No. 18/2004 ST, dt. 10/9/2004.

• New Services rendered prior to 10/9/2004-Notification No. 18/2004­ ST, dt. 10/9/2004.

F.No. B2/8/2004-TRU

Date 10/9/2004

Restriction on availment of credits and exemptions towards goods sold, in cases where abatements are allowed:

In cases of specified services, like tour operators, rent-a-cab, mandap­keeper providing catering services, erection, commissioning and installation etc., abatements are allowed to neutralize the cost of materials/goods supplied or used during the course of provision of service. These abatements were allowed when cross credit of excise duty and service tax was not available. Service tax like Cenvat is basically a value added tax which is operated through credit mechanism. It is being provided that in all such cases, the abatement would be conditional, subject to non-availment of input goods and capital goods credit under the new Cenvat Credit Rule, 2004 and also non-availment of benefit under Notification No. 12/2003-S.T. (Refer Notification No. l2/2004-S.T, dated 10/9/2004). The credit of input services would, however, be available.

Exemption No. 12/2003-S.T. provides that the value of goods and materials sold by the service provider during the course of providing service shall remain excluded from value of taxable service subject to production of documentary proof value of such sale. It is being provided that benefit of abatement would not be available to any service provider availing this concession. Also, this concession would be subject to condition that either no CENVAT credit has been availed on such goods or if already availed, it is reversed prior to the sale of such goods. (Refer Notification No. l2/2004-S.T, dated 10/9/2004).

Notification Nos. 18 and 25/2004-S.T., dated 10/9/2004 have been issued so as to exempt the payments received by the service provider before 10th Septenlber, 2004 in respect of new services and expanded services.

[Para 5 of Cir.No. 62/11/2003-ST, dt. 21/8/2003]

Cir.N o. 62/11/2003-ST

Date: 21/8/2003

Service rendered free of charge

In the context of certain services, a doubt has been raised as to whether service tax will be payable if the service is provided free. of charge.

As per charging section viz. Section 66 of the Act, service tax is chargeable at the rate of 8% of the value of taxable service, Thus if the value is zero the tax will also be zero even though the service is taxable.

Presently, there is no exemption from Service Tax, in respect of any taxable services rendered to Central/ State Govt. Organisation for Public Sector Undertakings except Banking and Financial Services. The Service Tax would therefore correctly be payable by the assessees in cases the service is being provided to the Central Government/ State Government Organisation and Institutions. Similar is the case where the service provider is the Central Government or the State Government undertaking or organisation or institution. The only exemption available relates to certain services provided to United Nations, International Organisations or specified Diplomatic Missions. In view of the above, none of the service providers can claim immunity from paying the tax on the services provided by them and none of the service receiver can claim immunity from making provisions for payment of tax on the services, through the concerned providers. This has been clarified by the Ministry of Finance to all the administrative ministries of the Government of India as well as of the state Governments and Union Territories.

Since the sub-agent is receiving the value of taxable services rendered by him in Indian currency, he would be liable to pay service tax on the services rendered by him, eventhough in such a case main agent shall be exempted.

At present there is no such general exemption available for small scale service providers.

Service Tax is not leviable for the services rendered before the date of Notification of service. Therefore, the payment received for services rendered before the notified date in respect of that service, is not to be taxed.

Distribution of work

Cir.No 69/18/2003-ST

Date 15/12/2003

Sub:- Distribution of work amongst various section. of CBEC regarding.

Please refer to Circular No.661/5212002-CX,dated 11/09/2002 issued under File No. 137/8/2001-CX-4 on the subject mentioned above.

2. It has been decided by the Board that the work relating to "Service Tax exemptions under Section 93 of the Finance Act, 1994" being handled by the CX-4 Section shall henceforth be handled by the TRU.