In supersession of earlier Trade Notice No. 191/67/96, dated 31-10-1996, the details of relevant provisions of the Finance Act, 1994 (32 of 1994), as amended by the Finance (No. 2) Act, 1996, the Service Tax Rules and the procedures to be followed for Registration, payment of service tax, filing of returns, etc. by assessees required to pay service tax, are given as follows :
Applicability
Service Tax on the stockbrokers, telephone services, and the General Insurance, providing taxable services to any person was introduced with effect from 1-7-1994. The scope of service tax is extended to the service tax on pagers, advertising agencies and the courier agencies has also been imposed from 1st November, 1996, vide Notification No. 6/96-ST, dt. 31-10-1996.
Levy of service tax
In terms of section 66 of "the Finance Act, 1994 (32 of 1994) as amended by the Finance (No. 2) Act, 1996" (hereinafter called 'the Act'), service tax at the rate of 5 per cent on the value of the taxable service, is chargeable on the aforesaid agencies responsible for collecting the service tax, under section 68 of the Act.
Important definitions
In terms of section 65 of the Act
(a) Telegraph Authority has the meaning assigned to it in clause (6) of section 3 of the Indian Telegraph Act, 1885; and includes a person who has been granted a licence under the first proviso to sub-section (1) of section 4 of that Act;
(b) Stockbroker means a stockbroker who has either made an application for registration or is registered as a stockbroker in accordance with the rules and regulations made under the Securities and Exchange Board of India;
(c) Insurer means any person carrying on the general insurance business in India;
(d) Advertisement includes any notice, circular, label, wrapper, document, hoarding or any other audio or visual representation made by means of light, sound, smoke or gas;
(e) Advertising agency means any commercial concern engaged in providing any service connected with the making, preparation display or exhibition of advertisement and includes an advertising consultant;
(f) Courier agency means a commercial concern engaged in the door-to-door transportation of time-sensitive documents, good or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles;
(g) Pager means an instrument, apparatus or appliance which is a non-speech, one way personal calling system with alert and has the capability of receiving, storing and displaying numeric or alphanumeric messages.
Registration
Every person responsible for collecting the service tax is required to make an application for registration to the Central Excise Officer in terms of section 69 of the Act. If such person provides taxable service from more than one premises or offices, he shall make separate applications for registration in respect of each such premises or office. Every person who ceases to provide taxable service shall surrender his certificate of registration immediately to the Central Excise Officer.
In terms of rule 4 of the Service Tax Rules, 1994 (hereinafter called the rules), the application for registration shall be made in Form ST-1. The Central Excise Officer shall after satisfying himself that the application form is in conformity with the provisions of the Act and the rules, grant a certificate of registration in Form ST-2 within seven 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 a registered assessee transfer his business to another person, the transferee shall obtain a fresh certificate of registration.
Agencies/persons responsible for collecting service tax
(i) In relation to a telephone connections or pagers the Director General of Mahanagar Telephones Nigam Ltd., Delhi or any other person who has been granted a licence by the Central Government under the first proviso to sub-section (1) of section 4 of the Indian Telegraph Act, 1885.
(ii) In relation to general insurance business —
(a) the Chairman-cum-Managing Director of the National Insurance Company Ltd., Calcutta; or
(b) the Chairman of the General Insurance Corporation of India, Bombay; or
(c) the Chairman-cum-Managing Director of the New India Assurance Company Ltd., Bombay; or
(d) the Chairman-cum-Managing Director of the United India Insurance Company Ltd., Madras; or
(e) any other person carrying on general insurance business and who has obtained a certificate of registration under section 3 of the Insurance Act, 1938 (4 of 1938); and
(iii) every stockbroker, involved in the sale and purchase of securities listed on a recognised stock exchange;
(iv) every advertising agency, which raises the bill for services rendered to a client by such agency;
(v) every courier agency, which raises the bill for services rendered to a customer by such agency.
Valuation of taxable services for charging service tax
In terms of section 67 of the Act and Service Tax Rules, the value of taxable services for charging, service tax,—
(a) in case of stockbroker, shall be the aggregate of the commission or brokerage charged by him on the sale or purchase of securities from the investors and includes the commission or brokerage paid by the stockbroker to any sub-broker;
(b) in relation to telephone connection or pager provided to the subscribers, shall be the gross total amount (including adjustments made by the telegraph authority from any deposits made by the subscribers at the time of applications for telephone connections or pager) received by the telegraph authority or any person responsible for collecting the service tax from the subscribers.
Explanation.—For the removal of doubts it is hereby declared that the value of taxable service in this clause shall not include the initial deposits made by the subscribers at the time of applications for telephone connections;
(c) in relation to services of general insurance business provided to the policy holders, shall be the total amount of the premium received by the insurer from the policy holders.
(d) in relation to service provided by an advertising agency to a client shall be the gross amount charged by such agency from the client for services in relation to advertisement.
(e) in relation to services provided by the courier agency to a customer shall be the gross amount charged by such agency from the customer for services in relation to door-to-door transportation of time-sensitive documents, goods and articles.
Payment of service tax
In terms of rule 6 of the rules, the person collecting service tax, as mentioned in para 6 shall deposit the service tax collected by him in Form TR-6, by the 15th of the following month. In this regard it is further stated that yellow coloured TR-6 challans shall be adopted for depositing service tax under major head of account "0044-Service Tax", with effect from 1st December, 1996. Provided that where an assessee is, for any reason, unable to correctly estimate, on the date of deposit, the actual amount collected for any particular month or period, the assessee may make a request in writing to the Central Excise Officer to make a provisional assessment of the tax on the basis of the amount deposited and the Central Excise Officer, on receipt of such request shall order provisional assessment of tax and where the Central Excise Officer makes a provisional assessment, the provisions of Central Excise Rules, 1944 relating to provisional assessment, except so far as it relates to execution of bond, shall so far as may be, apply to such assessment.
Records
In terms of rule 5 of the rules, the records (including computerised data) as maintained by an assessee in accordance with the various laws enforced from time to time shall be acceptable.
Person responsible for collecting service tax to furnish prescribed return
1. In terms of section 70 of the Act and rule 7 of the rules every person responsible for collecting the service tax, shall furnish a quarterly return in Form ST-3 in triplicate, within 15 days of the end of the preceding quarter, showing —
(a) the aggregate of payments received in respect of the value of taxable services;
(b) the amount of service tax collected;
(c) the amount of service tax paid to the credit of the Central Government; and
(d) such other particulars as may be prescribed.
Following documents are also required to be submitted with the said return :
(A) a copy each of the Form TR-6 submitted for the months covered in the quarter, and
(B) a memorandum in Form ST-3A giving full details of the difference between the amount of service tax collected during a month and the actual amount deposited.
Every assessees furnishing quarterly return for the first time should also furnish a list of all accounts maintained by him in relation to the service tax including the memorandum received from his branch office.
2. Any person responsible for collecting the service tax who has not furnished the return within the time allowed, or having furnished a return discovers any omission or wrong statement therein, may furnish a return or a revised return, as the case may be, at any time before the assessment is made.
3. The Central Excise Officer shall thereupon, assess the service tax payable including interest, if any payable thereon and complete the assessment memorandum. A copy of the return so assessed shall be sent to the assessee.
4. The service tax determined and paid by the assessee shall be adjusted against the service tax determined by the Central Excise Officer and where the service tax so assessed is more than the service tax determined and paid by the assessee, the assessee shall pay the deficiency, along with amount of interest determined thereon within ten days of receipt of the copy of the Return Form from the Central Excise Officer and where such service tax is less the assessee may apply for refund in accordance with the provisions of section 11B of the Central Excises and Salt Act, 1944 (1 of 1944).
Interest of delayed payment of service tax
In terms of section 75 of the Act, every person responsible for collecting service tax and paying it to the credit of the Central Government, who fails to credit the tax or any part thereof to the account of the Central Government within the period specified in that section, shall pay simple interest at the rate of one and one half per cent, for every month or part of a month by which such crediting of the tax or any part thereof is delayed.
Penalty
In terms of section 76 of the Act, if any person responsible for collecting service tax (a) fails to collect service tax or (b) having collected the service tax, fails to pay such tax to the credit of the Central Government shall pay:—
(i) in the case referred to in clause (a) in addition to paying the tax and interest by way of penalty, a sum equal to the amount of service tax that he failed to collect; and
(ii) in the case referred to in clause (b) in addition to paying the tax and interest 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 during which the failure continues, however the penalty under this clause shall not exceed the amount of service tax that he failed to pay.
In terms of section 77 of the Act, if a person fails to furnish, in due time, the return which he is required to furnish or by notice given, 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 during which the failure continues.
In terms of section 78 of the Act, if the Central Excise Officer in the course and any proceedings under this provisions is satisfied that any person has, with intent to evade payment of service tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay by way of penalty, in addition to service tax and interest, of any payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of service tax sought to be evaded by reason of suppression of concealment of value of taxable service or the furnishing of inaccurate value of such taxable service.
In terms of section 79 of the Act, if the Central Excise Officer in the course of any proceeding is satisfied that any person has failed to comply with the notice under sub-section (1) of section 71, he may direct that such person shall pay by way of penalty, in addition to any service tax and interest, if any, payable by him, a sum which shall not be less than ten per cent but which shall not exceed fifty per cent of the amount of the service tax, if any, which would have been avoided if the value of taxable service stated in the return by such person had been accpeted as the correct value of the taxable service.
In terms of section 81, when an offence is committed by a company, i.e., any body corporate and includes a firm or other association of individuals every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly, unless it is proved that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission of such offence.
Where an offence has been committed by a company and it is proved that the offence has been committed with the consent or connivance of or is attributable to any neglect on the part of any Director, (in relation to a firm a partner in the firm), Manager, Secretary or other officer of the company such Director, Manager, Secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Prosecution
In terms of section 87 of the Act, if a person wilfully attempts in any manner whatsoever to evade collection or payment of any service tax, interest or penalty chargeable or imposable under this provision or to suppress or conceal the total value of taxable services, he shall, without prejudice to any penalty that may be imposable on him under any other provisions, be punishable with imprisonment for a term which may extend to seven years and with fine.
Explanation below section 87
In terms of section 88 of the Act, if a person fails to furnish the return which he is required to furnish by a notice given under sub-section (2) of section 70, he shall without prejudice to any penalty that may be imposable on him under any other provision, be punishable with imprisonment for a term which may extend to three years and with fine.
In terms of section 89 of the Act—if a person makes a statement, or delivers an account or statement, which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with imprisonment for a term which may extend to three years with fine.
Appeal before Commissioner (Appeals)
In terms of section 85 of the Act and rule 8 of the rules, any person aggrieved by any assessment order passed by the Central Excise Officer by an order levying interest or penalty under this Chapter may appeal to the Commissioner of Central Excise (Appeals) in Form ST-4 filed in duplicate, accompanied by a copy of order appealed against.
An appeal shall be presented within three months from the date of receipt of the decision or order of the Central Excise Officer relating to the service tax, interest, or penalty unless, the Commissioner of Central Excise (Appeals) is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months. The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and pass such orders as he thinks fit. Such orders may include on order enhancing the service tax, interest or penalty.
Appeal before CEGAT
Similar remedy in cases of an order passed by a Commissioner of Central Excise or an order passed by a Commissioner of Central Excise (Appeals) lies with the Appellate Tribunal in terms of section 86 of the Act.
In terms of rule 9 of the rules, such appeal shall be made in Form ST-5 in quadruplicate and shall be filed within three months from receipt of the order to be appealed against and shall be accompanied by—
(a) a memorandum of cross objections under sub-section (4) of section 86 of the Act made in Form ST-6; and
(b) a copy of order appealed against (one of which shall be a certified copy).
Application of certain provisions of Central Excise Act to Service Tax
In terms of section 83 of the Act, the following provisions of the Central Excises and Salt Act, 1944 would ipso facto apply in case of service tax—
18. All trade associations, chambers of commerce and Members, RAC are requested to bring the contents of this notice to the knowledge of their member constituent.