BASIC CONCEPTS - Taxmann · BASIC CONCEPTS 1 OVERVIEW OF THE NEW SCHEME OF TAXATION 1.1...

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I-11

Acknowledgement I-5

Chapter-heads I-7

PART A

BASIC CONCEPTS

1

OVERVIEW OF THE NEWSCHEME OF TAXATION

1.1 Introduction 3

1.2 Negative list - The concept 4

1.3 Overview of the new legislative scheme 5

1.3-1 New provisions under Chapter V of the Act 6

1.3-2 Introduction of Place of Provision of ServicesRules, 2012 7

1.3-3 Amendments in the existing rules 7

1.3-4 Exemption notifications 7

1.3-5 Rebate/refund notification 8

1.3-6 Discontinuation of the earlier statutory provisionsand rules 8

1.3-7 Withdrawal of earlier notifications and circulars 9

Annex 1.1 : Service tax proposals in Finance Minister�s BudgetSpeech for Financial year 2012-13 10

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CONTENTS I-12

2

SERVICE - DEFINITION, INCLUSIONSAND EXCLUSIONS

2.1 Introduction 13

2.2 The statutory provision 13

2.3 Framework of section 65B(44) 14

2.4 Activity 15

2.5 Consideration 15

2.5-1 Consideration need not flow from the servicereceiver 16

2.5-2 Consideration may be monetary or non-monetary 16

2.5-3 Concept of consideration under the EU VAT laws 19

2.5-4 Some key ECJ decisions on the concept ofconsideration under the EU VAT laws 19

2.6 The activity must be carried out by one person for another 25

2.6-1 Meaning of person 25

2.6-2 Exceptions to the general rule �the activity mustbe carried out by one person for another� 25

2.7 Services include declared services 26

2.8 Specific exclusions 27

2.8-1 Transfer of title in goods or in immovable property 27

2.8-2 Deemed sales 31

2.8-3 Transactions only in money 32

2.8-4 Actionable claims 32

2.8-5 Services of employees 33

2.8-6 Fee taken in a Court or a tribunal 34

2.8-7 Sovereign Government functions 35

Annex 2.1 : Whether �donation� is �consideration� for a charitablefoundation imparting free training to the poor 37

Annex 2.2 : Whether market/licence fee is consideration forservices provided by the Agricultural ProduceMarketing Committee (APMC)/board 38

DECLARED SERVICES

3.1 Introduction 40

3.2 The statutory provisions 40

3.3 Framework of section 65B(22) 40

3.4 Declared service - The concept 41

3.5 Activities covered under the list of declared services[Section 66E] 41

3.5-1 Renting of immovable property 41

3.5-2 Construction activities 41

3.5-3 Intellectual property services 42

3.5-4 Information technology software services 42

3.5-5 Passive actions 42

3.5-6 Hiring of goods 42

3.5-7 Delivery of goods on hire purchase or any systemof payment by instalments 43

3.5-8 Works contract services 43

3.5-9 Restaurant and other catering services 43

4

TAXABLE TERRITORY

4.1 Introduction 44

4.2 Definitions of taxable territory and non-taxable territory 44

4.3 Chapter V of the Act applies to the whole of India exceptJammu and Kashmir 44

4.4 Definition of India 44

4.5 Territory of the Union of India 45

4.6 Territorial waters of India 45

4.7 Continental shelf of India 46

4.8 Exclusive economic zone of India 46

4.9 Installation, structures and vessel 46

4.10 Applicability of Chapter V of Finance Act under the erstwhilepositive list regime 47

I-13 CONTENTS

REVERSE CHARGE (TAX SHIFT)

5.1 Introduction 48

5.2 Specific services liable to tax under reverse chargemechanism 48

5.3 Extent of service tax payable by service receiver andservice provider 50

5.3-1 Service receiver in case of services of a goodstransport agency 51

5.3-2 Receiver of works contract services may choosethe method of valuation independently 51

6

METHODS FOR VALUATION OF SERVICES

6.1 Introduction 52


6.2-1 Framework of sections 67 and 67A 53

6.2-2 Valuation of taxable service where considerationis in money [Section 67(1)(i)] 54

6.2-3 Valuation of taxable service where considerationis not wholly or partly in money [Section 67(1)(ii)] 55

6.2-4 Valuation of taxable service where considerationnot ascertainable [Section 67(1)(iii)] 55

6.2-5 Valuation of taxable service where gross amountcharged is cum-service tax [Section 67(2)] 56

6.2-6 Time of receipt (or payment) of consideration isirrelevant for valuation purposes [Section 67(3)] 56

6.2-7 Powers of Central Government to frame rules[Section 67(4)] 56

6.3 The scheme of the Service Tax (Determination of Value)Rules, 2006 57

6.4 Determination of value of services involved in executionof works contract [Rule 2A] 57

6.4-1 The statutory provision 57

6.4-2 Framework of Rule 2A 59

6.4-3 Actual deduction method [Rule 2A(i)] 59

CONTENTS I-14

4-4 Abatement/deemed deduction method [Rule 2A(ii)] 61

6.4-5 Bar on availing CENVAT Credit on goods 62

6.5 Determination of value of services in relation to moneychanging [Rule 2B] 63

6.5-1 The statutory provisions 63

6.5-2 Framework of the relevant rules 64

6.5-3 Currency exchanged from/to INR 65

6.5-4 Where neither of the currencies exchanged is INR 66

6.5-5 Composition scheme for money changing services 67

6.6 Determination of value of taxable involved in supply of foodand drinks in a restaurant or as outdoor catering [Rule 2C] 68


6.6-2 Framework of Rule 2C 69

6.6-3 Restaurant services 69

6.6-4 Outdoor catering services 69

6.6-5 Meaning of total amount 69

6.6-6 Bar on availing CENVAT Credit on goods meantfor human consumption 70

6.7 Determination of value of a taxable service where conside-ration for such service is unascertainable [Rule 3] 71


6.7-2 Framework of Rule 3 71

6.7-3 Determination of value of taxable service is theservice provider�s prerogative 71

6.7-4 Where value of similar services is available[Rule 3(a)] 72

6.7-5 Where value of similar services is not available[Rule 3(b)] 74

6.8 Power of Central Excise Officer to reject value [Rule 4] 75

6.9 Deductibility of expenses [Rule 5] 75



6.9-3 The general rule [Rule 5(1)] 78

6.9-4 Exclusion of expenses incurred as pure agent[Rule 5(2)] 79

6.9-5 Meaning of pure agent 79

6.9-6 Conditions for exclusion of expenses 80

I-15 CONTENTS

9-7 Examples of costs and expenses to be excludedfrom value of a taxable service 81

6.9-8 Deductibility of out of pocket expenses - Positionprior to 18-4-2006 81

6.10 Service specific inclusions/exclusions [Rule 6] 86



6.10-3 Specific inclusions [Rule 6(1)] 87

6.10-4 Specific exclusions [Rule 6(2)] 91

6.11 Compounding schemes for determination of value underthe Service Tax Rules, 1994 93

Annex 6.1 : Departmental clarifications on valuation rules 95

Annex 6.2 : Departmental clarifications on valuation of services 98

Annex 6.3 : Clarifications regarding service tax on authorisedservice station for service, repair, reconditioning orrestoration of motor cars and two-wheeled motorvehicles 101

Annex 6.4 : Departmental clarifications on Valuation Rules 102

7

SERVICES UNDER THE NEGATIVE LIST

7.1 Introduction 103


7.3 Negative list - The concept 103

7.4 List of activities covered under the negative list[Section 66D] 104

7.4-1 Services by Government or a local authority 104

7.4-2 Services by the Reserve Bank of India 105

7.4-3 Services by a foreign diplomatic mission locatedin India 105

7.4-4 Agricultural services 105

7.4-5 Trading of goods 106

7.4-6 Process amounting to manufacture or productionof goods 106

7.4-7 Selling of space or time slots for advertisements 106

7.4-8 Services by way of access to a road or a bridgeon payment of toll charges 107

CONTENTS I-16

4-9 Betting, gambling or lottery 107

7.4-10 Admission to entertainment events or access toamusement facilities 107

7.4-11 Transmission or distribution of electricity 107

7.4-12 Education services 107

7.4-13 Services by way of renting of residential dwellingfor use as residence 108

7.4-14 Specified financial transactions 108

7.4-15 Transportation of passengers 108

7.4-16 Transportation of goods 109

7.4-17 Cremation services 109

8

GENERAL EXEMPTIONS


8.2 Small scale exemption 110

8.2-1 Meaning of aggregate value 110

8.2-2 CENVAT credit restrictions on service providersclaiming small scale exemption 112

8.2-3 Persons not eligible to claim small scale exemption 112

8.2-4 Small scale exemption is optional 113

8.3 Exemption on services to SEZ 113

8.4 Exemption to the extent of R&D cess paid 113

8.5 Exemption on services to foreign diplomatic missions 114

8.6 Exemption on services by TBI and STEP 114

8.7 Exemption from education cess and secondary and highereducation cess 114

Annex 8.1 : Exemption from Education Cess and Secondary andHigher Education Cess 116

9

MEGA EXEMPTION NOTIFICATION


9.2 Categorization of exemptions under Mega ExemptionNotification 117

I-17 CONTENTS

3 Exemptions on services in the public interest 118

9.3-1 Medical and health care services 118

9.3-2 Services in relation to charitable activities 125

9.3-3 Services in relation to religious activities 128

9.3-4 Legal services 128

9.3-5 Services ancillary to education services 130

9.3-6 General insurance services under specified schemes 130

9.3-7 Employee State Insurance Corporation�s Services 131

9.3-8 Specified services rendered to Government or localauthority or governmental authority 131

9.3-9 Public facilities 132

9.4 Exemptions on services related to arts, culture or sports 132

9.5 Exemptions on construction services 134

9.5-1 Specified services provided to the Government orlocal authority or Governmental authority 135

9.5-2 Construction, maintenance, repairs etc. ofspecified public infrastructure/utilities 135

9.5-3 Erection or construction of specified original works 136

9.6 Exemptions on hospitality services 137

9.6-1 Renting of hotel, inn, guest house etc. 137


9.7 Exemptions on transport related services 137

9.7-1 Inland transport of specified goods by rail orvessel 138

9.7-2 Specified services provided by goods transportagency 138

9.7-3 Specified services of giving means of transporton hire 139

9.7-4 Specified services of transport of passengers 139

9.7-5 Motor vehicle parking services 140

9.8 Exemptions on intermediary services 141

9.9 Exemptions on intermediate production processes 143

9.10 Exemptions on international transactions 144

9.10-1 Business exhibitions held outside India 144

9.10-2 Services by service providers located in anon-taxable territory 144

9.11 Other exemptions 145

CONTENTS I-18

11-1 Services provided to the United Nations or aspecified international organization 145

9.11-2 Copyright services 146

9.11-3 Services by an independent journalist/specifiednews agencies 147

9.11-4 Services by an incubatee upto a total businessturnover of INR fifty lakh 147

9.11-5 Services by an unincorporated body or aregistered society 148

9.11-6 Slaughtering of bovine animals 151

9.11-7 Transfer of a going concern 151

9.11-8 Services by Governmental authority 151

10

SERVICE TAX ABATEMENTS


10.2 Categorization of services eligible for abatement underAbatement Notification 153

10.3 Abatement on financial leasing including hire purchase 154

10.3-1 Meaning of amount charged for application ofabatement 154

10.4 Abatements on goods transportation services 154

10.4-1 Abatement on transport of goods by rail 154

10.4-2 Abatement on transport of goods by road bygoods transport agency 155

10.4-3 Abatement on transport of goods in a vesselfrom one port in India to another 155

10.5 Abatement on passenger transportation services 155

10.5-1 Abatement on transport of passengers by rail 155

10.5-2 Abatement on transport of passengers by air 155

10.6 Abatements on renting activities 156

10.6-1 Abatement on renting of hotel, inns, guesthouses etc. 156

10.6-2 Abatement on renting of any motor vehicledesigned to carry passengers 156

10.7 Abatement on catering services 156

10.7-1 Meaning of amount charged for catering services 157

I-19 CONTENTS

8 Abatement to services related to chit 157

10.8-1 Meaning of chit 157

10.9 Abatements on tour operator�s services 158

10.9-1 Meaning of a tour operator 158

10.9-2 Services in relation to a package tour 158

10.9-3 Services solely by way of arranging or bookingaccommodation 158

10.9-4 Other services in relation to a tour 159

10.10 Abatement on construction activities 159

11

RULES OF INTERPRETATION



11.3 Framework of section 66F 162

11.4 Reference to a service does not cover reference to a serviceused for providing such service [Section 66F(1)] 162

11.4-1 Exceptions to the rule that reference to a servicedoes not cover reference to service used forproviding such service 163

11.5 Specific description prevails over general description[Section 66F(2)] 164

11.6 Taxability of bundled services [Section 66F(3)] 166

11.6-1 Where various elements of service are naturallybundled [Section 66F(3)(i)] 167

11.6-2 Where various elements of service are notnaturally bundled [Section 66F(3)(ii)] 169

11.7 Some key ECJ decisions on classification of services 169

PART B

POINT OF TAXATION RULES

12

POINT OF TAXATION RULES - AN INTRODUCTION


12.2 The statutory provisions under the Act 175

CONTENTS I-20

3 Point of Taxation Rules, 2011 176

12.4 The scheme of the Point of Taxation Rules, 2011 176

12.5 Power of Central Excise Officer to determine point oftaxation [Rule 8A] 176

12.6 Applicability, saving and transition provisions [Rules 1 and 9] 177

13

POINT OF TAXATION - THE DEFAULTRULE [RULE 3]



13.3 The relevant basic concepts 179

13.4 Statutory time limit for issuance of invoice 179

13.4-1 Meaning of invoice 179

13.5 Date of payment/receipt of payment 179

13.6 Date of completion of service 181

13.6-1 Date of completion of service in case ofcontinuous supply of service 181

13.7 Framework of Rule 3 182

13.8 Where the invoice is issued within the statutory time limit 183

13.9 Where the invoice is not issued within the statutory time limit 183

13.10 Point of taxation of advance receipts 184

13.10-1 Exception - Point of taxation of advances uptoINR 1000 184

13.11 In summary 185

Annex 13.1 : Completion of service 186

14

POINT OF TAXATION - CHANGE IN EFFECTIVETAX RATE [RULE 4]




14.4 Meaning of change in effective rate of tax 188

14.4-1 History 188

14.5 Date of payment/receipt of payment 189

I-21 CONTENTS

6 Framework of Rule 4 190

14.7 Where the taxable service has been provided before thechange in effective rate of tax 190

14.7-1 Invoice issued and payment received after thechange in effective rate of tax 190

14.7-2 Invoice issued prior to but payment receivedafter the change in effective rate of tax 191

14.7-3 Payment received prior to but invoice issuedafter the change in effective rate of tax 191

14.8 Where the taxable service has been provided after thechange in effective rate of tax 191

14.8-1 Invoice issued prior to but payment receivedafter the change in effective rate of tax 192

14.8-2 Invoice issued and payment received prior tothe change in effective rate of tax 192

14.8-3 Payment received prior to but invoice issuedafter the change in effective rate of tax 193

14.9 Clarification issued on determination of point of taxationin relation to air travel tickets 193

14.10 In summary 193

Annex 14.1 : Clarification regarding amendments in Point ofTaxation Rules, 2011 and other related provisions 195

Annex 14.2 : Clarification on Point of Taxation Rules in relation toair lines 199

15

POINT OF TAXATION OF NEW SERVICE [RULE 5]



15.3 Point of taxation on taxation of a service for the first time[Rule 5] 200

15.4 Illustration 201

Annex 15.1 : Clarifications on changes made with effect from1-4-2012 in Point of Taxation Rules 202

16

POINT OF REVERSE CHARGE TAXATION [RULE 7]


CONTENTS I-22

2 The statutory provision 204


16.4 Persons liable to pay service tax under reverse chargemechanism 205

16.5 Date of payment 207

16.6 Meaning of associated enterprise 208


16.8 Where the payment is made within a period of six monthsfrom the date of invoice 209

16.9 Where the payment is made beyond the period of sixmonths from the date of invoice 209

16.10 Point of taxation of service received from associatedenterprise located outside India 209

Annex 16.1 : Definition of associated enterprise under section92A of Income-tax Act, 1961 211

Annex 16.2 : Clarification on rate of tax 213

17

POINT OF TAXATION OF INTELLECTUALPROPERTY SERVICES [RULE 8]



17.3 Point of taxation as per Rule 8 214

17.4 Illustration 215

PART C

PLACE OF PROVISION OF SERVICES RULES

18

PLACE OF PROVISION OF SERVICES RULES,2012 - AN INTRODUCTION



18.3 Powers of Central Government 220

I-23 CONTENTS

3-1 Power to frame rules to determine place ofprovision of services 220

18.3-2 Powers to notify description of services orcircumstances for certain purposes [Rule 13] 221

18.4 Determination of taxability of a service 221

18.5 Scheme of the Place of Provision of Services Rules, 2012 222

18.6 Order of application of the rules [Rule 14] 223

18.7 Overview of the place of supply of services under theEU VAT laws 224

18.7-1 Overview of the place of supply of servicesunder the UK VAT laws 225

18.7-2 Relevance of EU VAT and UK VAT place ofsupply of services rules for Indian Place ofProvision of Services Rules, 2012 226

19

LOCATION OF SERVICE PROVIDER ANDSERVICE RECEIVER


19.2 Relevance of location of the service provider/service receiver 228

19.3 Location of service provider [Rule 2(h)] 229

19.3-1 Who is a service provider? 229

19.3-2 Location of service provider [Rule 2(h)] 230

19.4 Location of service receiver [Rule 2(i)] 230

19.4-1 Who is a service receiver? 230

19.4-2 Definition of location of service receiver [Rule 2(i)] 231

19.5 Meaning of business establishment 232

19.5-1 Definition of the term business establishmentunder the EU VAT laws 232

19.5-2 Definition of the term business establishmentunder the UK VAT laws 232

19.6 Meaning of fixed establishment 233

19.6-1 Definition of the term fixed establishmentunder the EU VAT laws 234

19.6-2 Definition of the term business establishmentunder the UK VAT laws 235

19.7 Establishment most directly concerned with provision oruse of service 235

CONTENTS I-24

7-1 Establishment most directly concerned withsupply for the purpose of UK place of supply rules 236

19.8 Usual place of residence 237

19.8-1 Definition of the term usual place of residenceunder EU VAT laws 237

19.8-2 Definition of the term usual place of residenceunder UK VAT Laws 238

19.9 Case studies on location of service provider/servicereceiver under the Indian Place of Provision of ServicesRules, 2012 238

19.10 Some key European court decisions on the concept ofestablishment 239

Annex 19.1 : Location of service provider/service receiver - Flowdiagram 244

Annex 19.2 : Meaning of fixed extablishment 245

20

PLACE OF PROVISION - THE DEFAULTRULE [RULE 3]


20.2 The statutory provision [Rule 3] 246


20.4 The default rule - Location of service receiver[Rule 3 - Main Rule] 247

20.5 Exception to the main rule - Location of service provider[Proviso to Rule 3] 248

20.6 Illustrative list of services covered under the default ruleunder Rule 3 248

20.7 Determination of place of provision of services underRule 3 - Case Studies 249

20.7-1 Main rule - Location of the service receiver 249

20.7-2 Exception to the main rule - Location of theservice provider 250

20.8 Relevant comparative provision(s) under the EU VAT laws 250

20.8-1 The general rule for B2B supply of services -Location of service receiver 251

20.8-2 The general rule for B2C supply of services -Location of service provider 251

I-25 CONTENTS

9 Relevant comparative provision(s) under the UK VAT laws 251

20.9-1 The general rule for B2B supply of services 252

20.9-2 The general rule for B2C supply of services 252

21

PLACE OF PROVISION OF PERFORMANCE BASEDSERVICES [RULE 4]




21.3-1 Order of application 254

21.4 Services in respect of goods [Rule 4(a)] 254

21.4-1 Illustrative list of services covered underRule 4(a) - Main rule 256

21.4-2 Exception - Services provided remotely throughelectronic means [Proviso to Rule 4(a)] 256

21.4-3 Relevant comparative provision(s) under theEU VAT laws 257

21.4-4 Comparative rule under the UK VAT laws 257

21.5 Services requiring service receiver�s or its agent�spresence [Rule 4(b)] 258

21.5-1 Illustrative list of services covered under Rule 4(b) 260


21.5-3 Comparative rule under the UK VAT laws 260

21.6 Some key ECJ decisions on performance based rule 261

21.7 Determination of place of provision of performance basedservices under rule 4 - Case studies 263

21.7-1 General rule [Rule 4(a) & (b)] 263

21.7-2 Exception to the general rule [Proviso to Rule 4(a)] 264

22

PLACE OF PROVISION OF IMMOVABLE PROPERTYSERVICES [RULE 5]



CONTENTS I-26

3 Framework of Rule 5 266


22.4 Meaning of �immovable property� 266

22.5 Services directly relating to immovable property 267

22.5-1 Illustrative list of services directly in relation toimmovable property 269

22.6 Service may be in relation to an existing or a futureimmovable property 270

22.7 Specific inclusions 270

22.8 Determination of place of provision of services underrule 5 - Case study 270


22.10 Relevant comparative provision(s) under the UK VAT laws 271

22.10-1 Meaning of �land� 271

22.10-2 Services directly related to land or property 272

22.10-3 Land related services 272

22.11 Some key ECJ decisions on immovable property relatedservices 273

23

PLACE OF PROVISION OF SERVICES RELATINGTO EVENTS [RULE 6]





23.4 Services by way of admission to an event or ancillary toadmission or by way of organization of an event 277

23.4-1 Services by way of admission to an event 277

23.4-2 Services ancillary to admission to an event 278

23.4-3 Services by way of organization of an event 278

23.5 Determination of place of provision of services underrule 6 - Case Study 279



23.7-1 Anciliary services 281

I-27 CONTENTS

8 Some key European court decisions on the concept ofevents/services relating to events 281

24

PLACE OF PROVISION OF SERVICES PROVIDEDAT MULTIPLE LOCATIONS [RULE 7]




24.4 Service provided at multiple locations, including a locationin the taxable territory 285

24.5 Place of provision of service - Location in the taxable territorywhere greatest proportion of the service is provided 285


25

PLACE OF PROVISION WHERE SERVICE PROVIDERAND RECEIVER IN TAXABLE TERRITORY [RULE 8]




25.4 Service provider and service receiver located in taxableterritory 289

25.5 Place of provision of service - Location of service receiver 289

25.6 Determination of place of provision of services underRule 8 - Case Study 289

26

PLACE OF PROVISION OF SPECIFIED SERVICES [RULE 9]



26.3 Framework of rule 9 292

26.4 Services provided by banking company, or financialinstitution, or non-banking financial company, toaccount holders 292

CONTENTS I-28

4-1 Meaning of a banking company, financialinstitution and non-banking financial company 292

26.4-2 Meaning of the account holder 294


26.4-4 Relevant comparative provision(s) under theUK VAT laws 296

26.5 Online information and database access or retrieval services 297

26.5-1 Meaning of data 297

26.5-2 Meaning of information 298

26.5-3 Meaning of electronic form 298

26.5-4 Meaning of computer network 298

26.5-5 Scope of online information and databaseaccess or retrieval services 298



26.6 Intermediary services 302

26.6-1 Meaning of intermediary 302



26.7 Service consisting of hiring of means of transport, uptoa period of one month 305

26.7-1 Meaning of hiring 305

26.7-2 Meaning of means of transport 305

26.7-3 Upto a period of one month 306



26.8 Place of provision of specified services - Location of serviceprovider 309

26.9 Determination of place of provision of services underrule 9 - Case Study 310

I-29 CONTENTS

PAGE

Annex 26.1 : Indicative list of the electronically supplied servicesreferred to in Article 58 and point (k) of the firstparagraph of Article 59 311

27

PLACE OF PROVISION OF GOODS TRANSPORTSERVICES [RULE 10]




27.4 Meaning of goods 314

27.5 Means of transport 314

27.5-1 Exception - Transportation of goods by mail orcourier 314

27.6 Place of provision of service - Destination of goods 314

27.6-1 Determination of place of provision of servicesrelating to transport of goods under rule 10 - Case Study 315

27.7 Exception - Transportation of goods by goods transportagency 315

27.7-1 Meaning of goods transport agency 315

27.7-2 Person liable to pay service tax 316

27.7-3 Place of provision of service - Location ofperson liable to pay tax 316

27.7-4 Determination of place of provision of servicesof goods transport agency under rule 10(proviso) - Case Study 317


27.8-1 B2B supply of goods transport services 317

27.8-2 B2C supply of goods transport services 317

27.8-3 Meaning of intra-community transport of goods 318

27.8-4 Meaning of place of departure 318


27.9-1 Meaning of freight transport 318

27.9-2 Meaning of freight 318

27.9-3 Determination of place of supply of servicesrelating to transport of goods 319

CONTENTS I-30

PLACE OF PROVISION OF PASSENGER TRANSPORTSERVICES [RULE 11]




28.4 Transportation of passengers 321

28.5 Means of transport 321

28.6 Place of provision of service - Place where the passengerembarks on the conveyance for a continuous journey 321

28.7 Determination of place of provision of passenger transportservices under rule 11 - Case Studies 323

28.7-1 Continuous journey 323

28.7-2 Non-continuous journey 323



28.9-1 Meaning of passenger transport 324

28.9-2 Exclusions 324

28.9-3 Inclusions �incidental services� 324

28.9-4 Place of supply of passenger transport service 325

Annex 28.1 : Illustrations on passenger transport services 326

29

PLACE OF PROVISION OF ON BOARDSERVICES [RULE 12]




29.4 Services provided on board a conveyance 330

29.4-1 Services provided on board a conveyance mustbe separately charged 330

29.5 Place of provision of service - First scheduled point ofdeparture of the conveyance for the journey 330

29.6 Determination of place of provision of services providedon-board a conveyance - Case Study 331

I-31 CONTENTS

7 Relevant comparative provision(s) under the EU VAT laws 331


PART D

TAXABILITY OF SPECIFIED SERVICES

30

RENTING OF IMMOVABLE PROPERTY


30.2 Constitutional validity 335

30.3 Renting of immovable property - As declared service 338

30.4 Scope of renting of immovable property as a declared service 338

30.5 Meaning of renting 338

30.5-1 Whether or not control and possession ofimmovable property is transferred is immaterial 339

30.5-2 Renting includes letting, leasing, licensing or othersimilar arrangements 339

30.5-3 Duration of renting is immaterial 341

30.6 Meaning of immovable property 341

30.6-1 Judicial precedents - �Immovable property� 342

30.7 Place of provision of renting of immovable property as adeclared service 347

30.8 Point of taxation of renting of immovable property as adeclared service 347

30.9 Valuation of renting of immovable property as a declaredservice 348

30.10 Reverse charge liability 348

30.11 Specific activities of renting of immovable propertycovered under the negative list 348

30.12 Renting of residential dwelling for use as residence 348


30.12-2 Meaning of residential dwelling 349

30.12-3 Accommodations not qualifying as residentialdwelling 350

30.12-4 Renting of residential dwelling must be for useas residence 352

CONTENTS I-32

12-5 Taxability of bundled services involvingrenting of residential dwelling 352

30.12-6 Coverage of activity renting of residential dwellingunder negative list under various scenarios 353

30.13 Other relevant services covered under the negative list ofservices 353

30.14 General exemptions 354

30.15 Specific exemptions 354

30.15-1 Renting of immovable property for religiouspurposes 354

30.15-2 Renting of hotel, inn, guest house etc. with roomtariff upto INR 1000 354

30.15-3 Exemption to the extent the gross amountcharged represents property tax 354

30.15-4 Abatement on renting of hotel, inns, guesthouses etc. 355

Annex 30.1 : Departmental clarification on scope of renting ofimmovable property under the erstwhile positivelist regime 356

31

CONSTRUCTION ACTIVITIES



31.3 Construction activities - A declared service 359

31.4 Scope of the construction activities covered under thelist of declared services 359

31.5 Meaning of construction 360

31.5-1 Meaning of addition 360

31.5-2 Meaning of alteration 360

31.5-3 Meaning of replacement 361

31.5-4 Meaning of remodelling 361

31.6 Complex, building or civil structure 361

31.6-1 Meaning of complex 361

31.6-2 Meaning of building 361

31.6-3 Meaning of civil structure 362

31.7 Complex or building intended for sale 362

I-33 CONTENTS

7-1 Authority competent to issue completion certificate 362

31.8 Possible arrangements in terms of which constructionactivities may be undertaken 363

31.8-1 Tripartite Business Model 363

31.8-2 Re-development including slum rehabilitationprojects 364

31.8-3 Investment model 365

31.8-4 Conversion Model 366

31.8-5 Build - Operate - Transfer (BOT) Projects 366

31.8-6 Joint Development Agreement Model 368

31.9 Place of provision of construction activities as a declaredservice 369

31.10 Point of taxation of construction activities as a declaredservice 369

31.11 Valuation of construction activities as a declared service 369




31.14-1 Specified services provided to the Government�local authority or Governmental Authority 370



31.14-4 Abatement on construction activities 373

Annex 31.1 : Clarifications on taxability of construction servicesunder different business models 374

Annex 31.2 : Departmental clarifications on taxability of revenuesharing arrangements 379

32

INTELLECTUAL PROPERTY SERVICES


32.2 Scope of intellectual property service as a declared service 382

32.3 Meaning of intellectual property 383

32.3-1 Meaning of copyright 385

32.3-2 Types of copyrights 386

CONTENTS I-34

3-3 Meaning of patent 387

32.3-4 Meaning of trademark 387

32.3-5 Meaning of design 388

32.3-6 Other intellectual properties 388

32.4 Temporary transfer or permitting the use or enjoyment 389

32.5 Whether or not the intellectual property right is registeredunder Indian laws is immaterial 389

32.6 Place of provision of intellectual property service as adeclared service 390

32.7 Point of taxation of intellectual property service as adeclared service 390

32.8 Valuation of intellectual property service as a declaredservice 390



32.11 Specific exemptions on intellectual property services 391

32.11-1 Exemption on specified copyright services 391

32.11-2 Exemption to the extent of R&D cess paid 391

33

INFORMATION TECHNOLOGYSOFTWARE SERVICES



33.3 Scope of IT software service as a declared service 394

33.4 Meaning of IT software 395

33.4-1 Essential features of �IT software� 395

33.5 Meaning of development of IT software 395

33.6 Meaning of design of IT software 396

33.7 Meaning of programming of IT software 396

33.8 Meaning of customization of IT software 397

33.9 Meaning of adaptation of IT software 397

33.10 Meaning of upgradation of IT software 397

33.11 Meaning of enhancement of IT software 397

33.12 Meaning of implementation of IT software 398

33.13 Taxability of packaged/canned software 398

I-35 CONTENTS

14 Classification of IT software transactions under the EU VAT laws 398

33.15 Place of provision of IT software service as a declared service 399

33.16 Point of taxation of IT software service as a declared service 399

33.17 Valuation of IT software service as a declared service 399



33.20 Exemption to the extent of R&D cess paid 400

Annex 33.1 : Definition of information technology softwareservice (prior to 1-7-2012) 401

34

PASSIVE ACTIONS


34.2 Scope of passive action as a declared service 402

34.2-1 Non-compete clauses are included 402

34.3 Place of provision of passive action as a declared service 403

34.4 Point of taxation of passive action as a declared service 403

34.5 Valuation of passive action as a declared service 403


34.7 Relevant comparative provision(s) under the EU VAT Laws 403

34.7-1 Rule with respect to place of supply for passiveactions under the UK VAT law 404

34.7-2 Relevant ECJ case law 404

Annex 34.1 : VATPOSS13100 - Other services to non-EUcustomers (B2C): Law 406

35

HIRING, LEASING, LICENSING GOODS WITHOUTTRANSFER OF RIGHT TO USE SUCH GOODS


35.2 Scope of hiring, leasing, licensing of goods as a declaredservice 407

35.3 Transfer of goods 408

35.3-1 Meaning of transfer 408

35.3-2 Meaning of goods 408

CONTENTS I-36

4 Mode of transfer of goods 409

35.4-1 Meaning of hiring 409

35.4-2 Meaning of leasing 409

35.4-3 Meaning of licensing 410

35.5 Transfer of goods without transfer of right to use suchgoods 410

35.6 Judicial precedents - �Transfer of effective control andpossession� 412

35.7 Place of provision of hiring, leasing, licensing of goodswithout transfer of right to use goods as a declared service 414

35.8 Point of taxation of hiring, leasing, licensing of goodswithout transfer of right to use goods as a declared service 414

35.9 Valuation of hiring, leasing, licensing of goods withouttransfer of right to use goods as a declared service 414


35.11 Hiring, leasing, licensing of goods covered under thenegative list 415


Annex 35.1 : Illustrations on transfer of right to use goods 416

Annex 35.2 : Departmental clarification on supply of tangiblegoods service under the erstwhile positive list regime 418

Annex 35.3 : Service Tax on chartering of Aircrafts - Departmentalclarification under the erstwhile positive list regime 419

36

HIRE PURCHASE OR SALE BY INSTALMENTRELATED SERVICES



36.3 Scope of hire purchase or sale by instalment related servicesas a declared service 422

36.4 Delivery of goods 423

36.4-1 Meaning of delivery 423

36.4-2 Meaning of goods 423

36.5 Hire purchase or any system of payment by instalment 424

36.5-1 Meaning of hire purchase 424

36.5-2 Types of hire purchase arrangements 427

36.5-3 Any other system of payment by instalment 429

I-37 CONTENTS

5-4 Comparative analysis of hire purchase, financelease and sale by instalment 429

36.6 Scope of the taxable transaction 430

36.7 Place of provision in relation to delivery of goods on hirepurchase and sale by instalment related services as adeclared service 431

36.8 Point of taxation in relation to hire purchase and sale byinstalment related services as a declared service 431

36.9 Valuation of activities in relation to hire purchase and saleby instalment related services as a declared service 432


36.11 Relevant services covered under the negative list 432



Annex 36.1 : Definition of financial leasing under the erstwhilepositive list regime 434

Annex 36.2 : Clarification on scope of financial leasing servicesunder the erstwhile positive list regime 435

37

WORKS CONTRACT SERVICE


37.2 Scope of works contract service as a declared service 437

37.3 Meaning of works contract 438

37.3-1 Meaning of construction 438

37.3-2 Meaning of erection 438

37.3-3 Meaning of commissioning 439

37.3-4 Meaning of installation 439

37.3-5 Meaning of completion 439

37.3-6 Meaning of fitting out 439

37.3-7 Meaning of repair 440

37.3-8 Meaning of maintenance 440

37.3-9 Meaning of renovation 440

37.3-10 Meaning of alteration 441

37.3-11 Meaning of movable property 441

37.3-12 Meaning of immovable property 441

CONTENTS I-38

3-13 Goods portion of the works contract must beleviable to tax as sale of goods 442

37.4 Service element in execution of works contract 442

37.4-1 Coverage of works contract 442

37.4-2 Pure labour contracts are excluded 442

37.4-3 Activity done for self is not works contract 443

37.5 Distinction between contract of sale and works contract 443

37.6 Place of provision in relation to works contract serviceas a declared service 444

37.7 Point of taxation in relation to works contract service asa declared service 444

37.8 Valuation of service element under works contract servicesas a declared service 445


37.8-2 Framework of Rule 2A 447

37.8-3 Actual deduction method [Rule 2A(i)] 447

37.8-4 Abatement/deemed deduction method [Rule 2A(ii)] 449

37.8-5 Bar on availing CENVAT Credit on goods 450


37.9-1 Reverse charge liability on works contract services 450

37.9-2 Reverse charge liability on services renderedby service providers located outside the taxableterritory 450



37.11-1 Specified services provided to the Government,local authority or Governmental Authority 451



37.11-4 Abatement on construction activities 453

38

RESTAURANT AND OTHERCATERING ACTIVITIES


38.2 Scope of catering service as a declared service 455

38.3 Meaning of catering 456

I-39 CONTENTS

4 Specified goods 457

38.4-1 Meaning of food 457

38.4-2 Meaning of articles of human consumption 458

38.4-3 Meaning of drink 458

38.5 Place of provision of catering service as a declared service 458

38.6 Point of taxation of catering service as a declared service 458

38.7 Valuation catering service as a declared service 458


38.7-2 Framework of rule 2C 460


38.7-4 Outdoor catering services 460

38.7-5 Meaning of total amount 460

38.7-6 Bar on availing CENVAT Credit on goods meantfor human consumption 461



38.10 Specific exemptions on catering services 462

38.10-1 Catering services to educational institutions 462

38.10-2 Exemption to specified category of restaurants,eating joints and messes 462

38.10-3 30 per cent abatement on catering servicesrendered at specified premises 463

39

SERVICES PROVIDED BY GOVERNMENT OR LOCAL AUTHORITY



39.3 Scope of the services by Government and local authoritiescovered under the negative list 464

39.4 What is �Government�? 465

39.4-1 Definition of Government under the GeneralClauses Act, 1897 465

39.5 What is �local authority�? 467

39.6 Exclusions for services by Government or local authorityfrom negative list 467

39.6-1 Specified services by the department of posts 468

CONTENTS I-40

6-2 Services in relation to an aircraft or a vesselrendered by Government or local authority 469

39.6-3 Transport of goods or passengers by Governmentor local authority 470

39.6-4 Support services provided to business entities byGovernment or local authority 470

39.6-5 Meaning of �to the extent to covered elsewhere� 472

39.7 Exemption on services provided by governmental authority 472

40

SERVICES BY RESERVE BANK OF INDIA



40.3 Scope of the services by Reserve Bank of India coveredunder the negative list 474

40.4 What is �Reserve Bank of India� 474

40.5 Principal activities of RBI 475

40.5-1 Formulation and execution of monetary policy 476

40.5-2 Issuer of currency 476

40.5-3 Banker and debt manager to government 476

40.5-4 Banker to banks 477

40.5-5 Regulator of the banking system 477

40.5-6 Manager of foreign exchange 478

40.5-7 Regulator and supervisor of the payment andsettlement systems 478

40.5-8 Developmental role 478

40.5-9 Miscellaneous functions 479

40.6 Businesses which the RBI may/may not transact 479

Annex 40.1 : Business which the RBI may transact 480

Annex 40.2 : Section 19 of the Reserve Bank of India Act, 1934 489

41

SERVICES BY FOREIGN DIPLOMATIC MISSIONS



I-41 CONTENTS

3 Scope of the services by foreign diplomatic missionslocated in India covered under the negative list 490

41.4 List of foreign diplomatic missions located in India 492

41.5 Exemption on services to foreign diplomatic missions 492

Annex 41.1 : List of the foreign diplomatic missionslocated in India 493

42

AGRICULTURAL SERVICES



42.3 Scope of services relating to agriculture 500

42.4 Agricultural operations directly related to production ofagricultural produce 500

42.4-1 Meaning of relevant terms/expressions 501

42.5 Supply of farm labour 503

42.6 Processes carried out on agricultural farm 504

42.7 Renting of agro machinery or vacant land 504

42.7-1 Renting of agricultural machinery 504

42.7-2 Renting of vacant land with or without a structureincidental to its use 504

42.8 Loading, unloading, storage and warehousing services 504

42.8-1 Meaning of relevant terms/expressions 505

42.9 Agricultural extension services 506

42.9-1 Meaning of agricultural extension services 506

42.10 Services by Agricultural Produce Marketing Committee orCommission agents 507

42.10-1 Meaning of Agricultural Produce MarketingCommittee or Board 507

42.10-2 Services provided by a commission agent 508

42.11 Exemptions on services relating to agriculture oragricultural produce 508

42.11-1 Construction activities 508



CONTENTS I-42

11-4 General insurance services under specifiedschemes 509

42.11-5 Exemptions on intermediate production processes 510

Annex 42.1 : Departmental clarification issued under the erstwhilepositive list regime regarding levy of service tax onServices provided by the Agricultural ProduceMarketing Committee (APMC) Board 511

43

TRADING OF GOODS



43.3 Meaning of trading 513

43.4 Meaning of goods 514

43.4-1 Meaning of securities 514

43.4-2 Meaning of actionable claim 515

43.4-3 Meaning of money 516

43.5 Exclusion towards sale of goods under definition of �service� 516

43.6 Trading does not include commission agent�s service 516

43.7 Commodity trading transactions 517

44

PROCESS AMOUNTING TO MANUFACTUREOR PRODUCTION OF GOODS



44.3 What is a �process�? 518

44.4 Meaning of manufacture 519

44.4-1 Judicial precedents - Manufacture 520

44.4-2 Incidental or ancillary process 521

44.4-3 Process specified in relation to any goods inSection or Chapter Notes 522

44.4-4 Select activities in relation to goods specifiedunder Third Schedule of CETA 522

44.5 Meaning of production 522

I-43 CONTENTS

6 Meaning of process amounting to manufacture orproduction of goods 523

44.6-1 Central or state excise duty must be leviable onthe process 523

44.6-2 Processes not amounting to manufacture orproduction of goods liable to service tax 523

44.6-3 Manufacturing activity carried out by the jobworker 524

44.7 Exemptions on intermediate production processes 524

Annex 44.1 : Central Excise Tariff Act, 1985 - Third Schedule 526

Annex 44.2 : Processes liable to central excise - Section 3 ofCentral Excise Act, 1944 533

45

SELLING OF SPACE OR TIME SLOTSFOR ADVERTISEMENTS



45.3 Meaning of advertisement 535

45.4 Scope of the activities of selling of space or time slots for advertisements covered under the negative list 536

45.5 Sale of space or time slots under various forms ofadvertising and their coverage under the negative list 537

45.5-1 Advertising through print media 537

45.5-2 Outdoor advertising 537

45.5-3 Broadcast advertising 537

45.5-4 Infomercials 538

45.5-5 Covert advertising 538

45.5-6 Surrogate advertising 538

45.5-7 Public service advertising 538

45.5-8 Celebrity endorsements 539

46

ACCESS TO ROAD OR BRIDGE ONPAYMENT OF TOLL



CONTENTS I-44

3 Services related to access to road or bridge on paymenton toll 540

46.3-1 Meaning of road 541

46.3-2 Meaning of bridge 541

46.3-3 Meaning of toll 541

46.4 Difference between tax, toll, cess, fee and duty 542

46.5 Incidental services by toll collecting agencies 542

46.6 Some key ECJ decisions 543

Annex 46.1 : Departmental clarification issued under the erstwhilepositive list regime regarding Levy of service tax ontoll fee paid by user for using roads 545

47

BETTING, GAMBLING OR LOTTERY



47.3 Meaning and scope of betting or gambling 546

47.3-1 Legality of betting or gambling activities in India 547

47.4 Meaning of lottery 547

47.4-1 Legality of lottery in India 548

47.5 Ancillary services to betting, gambling or lottery areexcluded from the negative list 549

47.5-1 Exemption to lottery distributor or selling agent 549

47.5-2 Composition scheme for services of promotion,marketing, organizing of lottery 549

47.6 Some key ECJ decisions on the EU VAT exemption onbetting, gambling or lottery 550

47.6-1 Relevant Article(s) of the Sixth EU VAT Directive 550

47.6-2 Fischer v. Finanzamt Donaueschingen(Case C-283/95) [1998] All ER (D) 264 551

47.6-3 United Utilities v. HMRC (C-89/05) [ECJ.89105[2006] STC 1423] 552

47.6-4 Etat Belge v. Pierre Henfling, Raphael Davinand Koenraad Tanghe (Case C-464/10) 553

Annex 47.1 : Scope of services relating to promoting, marketingor organizing of games of chance, including lotteryExplained under the erstwhile positive list regime 554

I-45 CONTENTS

ADMISSION TO ENTERTAINMENT EVENTSOR ACCESS TO AMUSEMENT FACILITIES



48.3 Meaning of entertainment events 555

48.4 Meaning of amusement facilities 556

48.5 Scope of activities by way admission to entertainmentevents or amusement facilities covered under thenegative list 556

48.6 Place of provision of event related services 557

49

TRANSMISSION OR DISTRIBUTIONOF ELECTRICITY



49.3 Meaning of electricity 558

49.4 Meaning of transmission of electricity 559

49.5 Meaning of distribution of electricity 559

49.6 Meaning of electricity transmission or distribution utility 559

49.6-1 Central Electricity Authority 560

49.6-2 State Electricity Board 560

49.6-3 Central Transmission Utility 560

49.6-4 State Transmission Utility 561

49.6-5 Transmission licensee 561

49.6-6 Distribution licensee 561

49.7 Scope of the specified services of transmission ordistribution of electricity 561

49.8 Position under the erstwhile service tax regime 562

Annex 49.1 : Exemption to transmission of electricity under theerstwhile positive list regime 563

Annex 49.2 : Earlier departmental clarification on Electricitymeter installed in consumers� premises and hirecharges collected, whether covered under exemptionfor transmission and distribution of electricity 564

Annex 49.3 : Exemption from service tax for distribution ofelectricity under the erstwhile positive list regime 565

CONTENTS I-46

EDUCATION SERVICES



50.3 Pre-school education or education upto higher secondaryschool or equivalent 566

50.3-1 Meaning of pre-school education 567

50.3-2 Meaning of education upto higher secondaryschool or equivalent 567

50.4 Education as a part of curriculum for obtainingqualification recognized by law 568

50.4-1 Scope the term qualification recognized by law 568

50.5 Vocational education course 568

50.5-1 Vocational training institute/industrial trainingcentre affiliated to NCVT 569

50.5-2 Modular Employable Skill Course approved byNCVT 569

50.5-3 Courses run by institutes affiliated to NSDC 569

50.6 Scope of the education services covered under the negative list 570

50.6-1 Services provided by boarding schools 570

50.6-2 Services provided to educational institutions 570

50.6-3 Private tuitions 571

50.6-4 Courses leading to dual qualification only one ofwhich is recognized by Indian law 571

50.6-5 Placement services provided to educationalinstitutions 572

50.6-6 Entrance tests for admission to colleges 572

50.6-7 Service by educational institute for campusrecruitments 572

50.7 Exemptions under Mega Exemption Notification onservices ancillary to education 572

Annex 50.1 : Departmental clarification on Leviability of ServiceTax on Flying Training School & Aircraft MaintenanceEngineering Institutes issued under the erstwhilepositive list regime 574

Annex 50.2 : Departmental clarification on Levy of service taxon educational institutions issued under theerstwhile positive list regime 577

I-47 CONTENTS

PAGE

Annex 50.3 : List of Trades designated under the ApprenticesAct, 1961 582

Annex 50.4 : List of Approved Modular Employable Skill (MES)courses 590

51

BANKING, FINANCIAL ANDINSURANCE SERVICES


51.2 Meaning of relevant terms 600

51.2-1 Meaning of bank 601

51.2-2 Meaning of interest 602

51.2-3 Meaning of authorized dealer 602

51.3 Coverage under the negative list 603


51.3-2 Activity of extending loans or deposits where theconsideration is in the form of interest or discount 603

51.3-3 Services by way of sale or purchase of foreigncurrency 605


51.4-1 Exemptions under the Mega Exemption Notification 606

51.4-2 Abatement from taxable value on financialleasing transactions 608

51.5 Place of provision of banking, financial or insurance services 609

51.5-1 Place of provision of services provided by abanking company, or a financial institution, ora non-banking financial company, to accountholders 609

51.5-2 Place of provision of other banking financialservices or insurance services 612

51.6 Valuation of banking, financial or insurance services 612



52

PASSENGER TRANSPORT SERVICES



CONTENTS I-48

3 Scope of passenger transport services 616

52.4 Transportation of passenger 616

52.5 Modes of transportation 617

52.5-1 Stage carriage 617

52.5-2 Railways 617

52.5-3 Metro, monorail or tramway 618

52.5-4 Inland waterways 618

52.5-5 Public transport in vessel 620

52.5-6 Metered cabs, radio taxis or auto rickshaws 621


52.6-1 Passenger transportation in specified locations orthrough contract carriage 622

52.6-2 Services by way of giving on hire means oftransport 622

52.6-3 Motor vehicle parking services 623

52.6-4 Abatement on passenger transport services 623

52.7 Place of provision of passenger transportation services 624

52.8 Valuation of passenger transport services 624



52.9 Composition scheme on services provided by an air travelagent 625

53

GOODS TRANSPORT SERVICES



53.3 Scope of goods transport services 627

53.4 Transportation of goods 627

53.4-1 Meaning of transport vehicle 627

53.5 Modes of transportation 627

53.5-1 Goods transport agency 628

53.5-2 Courier agency 629

53.5-3 Transportation of goods by an aircraft or vesselfrom a place outside India upto the customsstation of clearance 630

I-49 CONTENTS

PAGE

CONTENTS I-50

53.5-4 Transportation of goods by inland waterways 630

53.5-5 Coverage of goods transport services under thenegative list 632

53.5-6 Services provided by agents for transport ofgoods by inland waterways 633

53.6 Reverse charge liability on transportation of goods bygoods transport agency 633




53.7-3 Specified services of giving means of transporton hire 635

53.7-4 Abatement on transport of goods services 635

53.8 Place of provision of goods transportation services 636

54

CREMATION SERVICES



54.3 Scope of cremation services covered under the negative list 637

54.4 Related/similar exemptions 638

54.4-1 Construction, maintenance etc. of electriccrematorium 638

54.4-2 Slaughtering of bovine animals 638

54.5 Experience under the UK VAT 638

Annex 54.1 : Clarification on scope of exemption on cremationservices under the UK VAT 639

55

MEDICAL AND HEALTH CARE SERVICES


55.2 Exemptions on medical and health care services 649

55.3 Meaning of health care services 650

55.3-1 Meaning of recognized system of medicine 650

PAGE

I-51 CONTENTS

55.3-2 Meaning of clinical establishment 650

55.3-3 Meaning of authorized medical practitioner 651

55.3-4 Meaning of paramedics 651

55.3-5 Some key ECJ decisions on EU VAT exemption onmedical/health care services 651

56

CHARITABLE AND RELIGIOUS SERVICES


56.2 Scope of exemptions 658

56.3 Services in relation to charitable activities 658

56.3-1 Some key ECJ decisions on EU VAT exemptionon services of organizations devoted to socialwell being 659

56.4 Services in relation to religious activities 661

PART E

CENVAT CREDIT FOR SERVICEPROVIDERS

57

SCHEME OF CENVAT CREDIT FORSERVICE PROVIDERS


57.2 Historical background 665

57.3 Eligibility of CENVAT credit to service providers [Rule 3] 666

57.3-1 Specific duties and taxes available as CENVATcredit to service providers 666

57.3-2 Meaning of provider of taxable service 667

57.3-3 Meaning of input 670

57.3-4 Meaning of capital goods 671

57.3-5 Meaning of input service 672

57.3-6 Date and place of receipt inputs/capital goodsand quantum of CENVAT credit 674

57.3-7 Utilization of CENVAT credit 674

57.3-8 Removal of inputs or capital goods as such 675

PAGE

CONTENTS I-52

57.3-9 Removable of inputs or capital goods afterbeing used 676

57.3-10 CENVAT credit, if the value is written off in thebooks of account 677

57.4 Conditions for claiming CENVAT credit [Rule 4] 677

57.4-1 CENVAT credit on inputs 677

57.4-2 CENVAT credit on capital goods 678

57.4-3 CENVAT credit on input services 679

57.5 Refund of CENVAT credit [Rule 5] 680

57.5-1 Meaning of Export service 683

57.5-2 Safeguards, conditions and limitations forclaiming refund 683

57.5-3 Procedure for filing the refund claim 684

57.5-4 Documents to be enclosed with the refundapplication 685

57.6 Obligation of the provider of output service [Rule 6] 685

57.6-1 Meaning of exempted service 685

57.6-2 No CENVAT credit on inputs, input services andcapital goods used exclusively for exempt service 686

57.6-3 CENVAT credit eligibility to provider of taxableand exempt services 686

57.6-4 Options where separate accounts in terms ofRule 6(2) are not maintained 686

57.6-5 Conditions common to options available underRule 6(3) 687

57.6-6 Provisional payment of duty [Rule 6(3A)] 688

57.6-7 CENVAT credit eligibility for banking and otherfinancial services 692

57.6-8 Meaning of value 692

57.6-9 Rule 6 restrictions not applicable to exportedservices and services provided to SEZ withoutpayment of service tax 693

57.7 Input credit distribution [Rules 7 & 7A] 693

57.7-1 Input credit distribution - The concept 693

57.7-2 Meaning of input credit distributor 693

57.7-3 Main constituents of the process of input servicedistribution 693

7-4 Manner of distribution of credit on input servicesby input service distributor 694

57.8 CENVAT credit restrictions for specified category of services 695

57.9 Documents and accounts [Rule 9] 697

57.9-1 Documents necessary for claiming CENVAT credit 697

57.9-2 Credit document must contain prescribedparticulars 698

57.9-3 CENVAT credit records to be maintained byservice provider 699

57.9-4 Submission of CENVAT credit returns 699

57.10 Transfer of CENVAT credit [Rule10] 699

57.11 Transitional provisions [Rule 11] 701

57.12 Recovery of CENVAT Credit wrongly utilized [Rule 14] 701

57.13 Confiscation and penalty [Rule 15] 701

57.14 Residuary penalty [Rule 15A] 702

Annex 57.1 : Procedure, safeguards, conditions and limitationsfor claiming refund under Rule 5 of CENVATCredit Rules, 2004 703

Annex 57.2 : Notification No. 39/2012-ST, dated 20-6-2012 708

APPENDIX

� Service Tax : Statutory Provisions 715

� Validation Provisions 809

� Service Tax Rules, 1994 817

� CENVAT Credit Rules, 2004 867

� Point of Taxation Rules, 2011 921

� Service Tax (Determination of Value) Rules, 2006 926

� Service Tax (Registration of Special Category of Persons)Rules, 2005 933

� Service Tax (Advance Rulings) Rules, 2003 939

� Authority for Advance Rulings (Central Excise, Customs andService Tax) Procedure Regulations, 2005 944

� Indirect Tax Ombudsman Guidelines, 2011 954

� Service Tax (Publication of Names) Rules, 2008 961

I-53 CONTENTS

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� Service Tax (Provisional Attachment of Property) Rules, 2008 963

� Service Tax Return Preparer Scheme, 2009 966

� Service Tax (Settlement of Cases) Rules, 2012 971

� Service Tax (Compounding of Offences) Rules, 2012 977

� Service Tax (Removal of Difficulty) Order, 2012 982

� Place of Provision of Services Rules, 2012 983

� Chronological compendium of notifications as in forcefrom 1-7-2012 988

� CBEC�s Guidance Notes 1073

LIST OF NOTIFICATIONS i

LIST OF CIRCULARS/LETTERS/ORDERS/TRADE NOTICES iii

CONTENTS I-54

BASIC CONCEPTS - Taxmann · BASIC CONCEPTS 1 OVERVIEW OF THE NEW SCHEME OF TAXATION 1.1...

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