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ANALYSIS OF AMENDMENTS MADE BY FINANCE ACT, 2012

1. INTRODUCTION OF NEGATIVE LIST APPROACH: A Negative List approach to taxation of services is being introduced vide new sections, namely, 65B, 66B, 66C, 66D, 66E and 66F proposed in Chapter V of the Finance Act, 1994. The services specified in the Negative List (section 66D) shall remain outside the tax net. All other services, except those specifically exempted (given below) shall be chargeable to service tax. Thus, all the services will be chargeable to Service Tax. Negative list approach to taxation of services shall come into effect from 1.07.2012. Following is the negative list of services which shall remain outside the tax net: 1. services by Government or a local authority excluding the following services to the extent they are not covered elsewhere (i) (ii) (iii) (iv) 2. 3. 4. services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government; services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; transport of goods or passengers; or support services, other than services covered under clauses ( i) to ( i ii ) above, provided to business entities;

services by the Reserve Bank of India; services by a foreign diplomatic mission located in India; services relating to agriculture by way of ( i) agricultural operations directly related to production of any agricultural produce including c ult iv at io n, h arv e st i ng , t h r esh i ng , p lan t p r ot e ct i on or s eed t e st i ng ; supply of farm labour;

( ii)

( ii i) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (iv) (v) (vi) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; loading, unloading, packing, storage or warehousing of agricultural produce; agricultural extension services;

(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce; 5. 6. trading of goods; any process amounting to manufacture or production of goods;

7. 8. 9. 10. 11. 12.

selling of space or time slots for advertisements other than advertisements broadcast by radio or television; service by way of access to a road or a bridge on payment of toll charges; betting, gambling or lottery; admission to entertainment events or access to amusement facilities; transmission or distribution of electricity by an electricity transmission or distribution utility; services by way of (i) (ii) (iii) pre-school education and education up to higher secondary school or equivalent; education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force; education as a part of an approved vocational education course;

13. 14.

services by way of renting of residential dwelling for use as residence; services by way of (i) ( ii) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount; int e r s e sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers; a stage carriage; railways in a class other than (A) (B) (iii) (iv) (v) (vi) first class; or an airconditioned coach;

15.

service of transportation of passengers, with or without accompanied belongings, by (i) (ii)

metro, monorail or tramway; inland waterways; public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and metered cabs, radio taxis or auto rickshaws; by road except the services of (A) (B) a goods transportation agency; or a courier agency;

16.

services by way of transportation of goods (i)

(ii) (iii) 17.

by an aircraft or a vessel from a place outside India to the first customs station of landing in India; or by inland waterways;

funeral, burial, crematorium or mortuary services including transportation of the deceased.

Outline of Finance Act, 2012


LIST OF EXEMPTED SERVICES AT A GLANCE
S.No. 1. 2. 3. 4. 5. Description Services provided to the United Nations or a specified international organization. Health care services by a clinical establishment, an authorised medical practitioner or paramedics. Services by a veterinary clinic in relation to health care of animals or birds. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities Services by a person by way of(a) (b) 6. renting of precincts of a religious place meant for general public; or conduct of any religious ceremony.

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Services provided by (a) an arbitral tribunal to(i) any person other than a business entity; or (ii) a business entity with a turnover upto rupees ten lakh in the preceding financial year; (b) an individual as an advocate or a partnership firm of advocates by way of legal services to(i) an advocate or partnership firm of advocates provding legal services; (ii) any person other than a business entity; or (iii) a business entity with a turnover upto rupees ten lakh in the preceding financial year; (c) A person represented on an arbitral tribunal to an arbitral tribunal;

7.

Services by way of technical testing or analysis of newly developed drugs, including vaccines and herbal remedies, on human participants by a clinical research organisation approved to conduct clinical trials by the Drug Controller General of India. Services by way of training or coaching in recreational activities relating to arts, culture or sports. Services provided to or by an educational institution in respect of education exempted from service tax, by way of (a) (b) auxiliary educational services; or renting of immovable property

8. 9.

10.

Services provided to a recognised sports body by(a) an individual as a player, referee, umpire, coach or manager for participation in a tournament or championship organized by a recognized sports body;

(b) another recognised sports body. 11. Services by way of sponsorship of sporting events organised(a) (b) by a national sports federation, or its affiliated federations, where the participating teams or individuals represent any district, state or zone; by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympics Committee of India, Special Olympics Bharat; by Central Civil Services Cultural and Sports Board;

(c)

S.No.

Description (d) (e) as part of national games, by Indian Olympic Association; or under Panchayat YuvaKreedaAurKhelAbhiyaan (PYKKA) Scheme.

12.

Services provided to the Government or local authority or a governmental authority by way of construction, erection , commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration, of (a) (b) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession; a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958); a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment; canal, dam or other irrigation works; pipeline, conduit or plant for (i) water supply (ii) water treatment (iii)sewerage treatment or disposal; or a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause 44 of section 65 B of the said Act;

(c) (d) (e) (f) 13.

Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration, of,(a) (b) (c) (d) (e) a road, bridge, tunnel, or terminal for road transportation for use by general public; a civil structure or any other original works pertaining to a scheme under Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yogana; building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public; a pollution control or effluent treatment plant, except located as a part of a factory; or A structure meant for funeral, burial or cremation of deceased;

14.

Services by way of construction, erection, commissioning, or installation of original works pertaining to,(a) (b) (c) an airport, port or railways including monorail or metro single residential unit otherwise as a part of a residential complex; low- cost houses up to a carpet area of 60 square meters per house in a housing project approved by competent authority empowered under the Scheme of Affordable Housing in Partnership framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India; post- harvest storage infrastructure for agricultural produce including a cold storages for such purposes; or mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages.

(d) (e) 15.

Temporary transfer or permitting the use or enjoyment of a copyright covered under clause (a) or (b) of sub-section (1) of section 13 of the Indian Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical, artistic works or cinematograph films. Services by a performing artist in folk or classical art forms of (i) music, or (ii) dance, or (iii)

16.

Outline of Finance Act, 2012


S.No. Description theatre, excluding services provided by such artist as a brand ambassador. 17. 18. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India.

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Services by way of renting of a hotel, inn, guest house, club, campsite or other commercial places meant for residential or lodging purposes, having declared tariff of a room below rupees one thousand per day or equivalent. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having (i) the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year, and (ii) a licence to serve alcoholic beverages. Services by way of transportation by rail or a vessel from one port in India to another of the following goods (a) (b) (c) (d) (e) (f) (g) (h) (i) petroleum and petroleum products falling under Chapter heading 2710 and 2711 of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; defence or military equipments; postal mail or mail bags household effects; newspaper or magazines registered with Registrar of Newspapers; railway equipments or materials; agricultural produce; foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and edible oil, excluding alcoholic beverages; or chemical fertilizer and oilcakes.

19.

20.

21.

Services provided by a goods transport agency by way of transportation of (a) (b) fruits, vegetables, eggs, milk, food grains or pulses in a goods carriage; goods where gross amount charged on a consignment transported in a single goods carriage does not exceed one thousand five hundred rupees; or

goods, where gross amount charged for transportation of all such goods for a single consignee in the goods carriage does not exceed rupees seven hundred fifty. 22. Services by way of giving on hire (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (b) to a goods transport agency, a means of transportation of goods. 23. Transport of passengers, with or without accompanied belongings, by (a) air, embarking or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Baghdogra located in West Bengal; or (b) a contract carriage for the transportation of passengers, excluding tourism, conducted tour, charter or hire.

S.No.

Description (c) Ropeway, cable car or aerial tramway

24. 25.

Services by way of motor vehicle parking to general public excluding leasing of space to an entity for providing such parking facility; Services provided to the Government or a local authority or governmental authority by way of (a) carrying out any activity in relation to any function, ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and upgradation; or (b) repair or maintenance of a vessel or an aircraft;

26.

Services of general insurance business provided under following schemes (a) Hut Insurance Scheme; (b) Cattle Insurance under Swarnajaynti Gram SwarozgarYojna (earlier known as Integrated Rural Development Programme); (c) (e) (f) (g) Scheme for Insurance of Tribals; Group Personal Accident Policy for Self-Employed Women; Agricultural Pumpset and Failed Well Insurance; premia collected on export credit insurance; (d) Janata Personal Accident Policy and Gramin Accident Policy;

(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture; (i) (j) (k) (l) Jan ArogyaBima Policy; National Agricultural Insurance Scheme (Rashtriya Krishi BimaYojana); Pilot Scheme on Seed Crop Insurance; Central Sector Scheme on Cattle Insurance;

(m) Universal Health Insurance Scheme; (n) RashtriyaSwasthyaBimaYojana; or (o) 27. Coconut Palm Insurance Scheme;

Services provided by an incubatee up to a total business turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:(a) (b) the total business turnover had not exceeded fifty lakh rupees during the preceding financial year; and a period of three years has not lapsed from the date of entering into an agreement as an incubatee;

28.

Service by an unincorporated body or a non-profit entity registered under any law for the time being in force to its own members by way of reimbursement of charges or share of contribution (a) (b) (c) as a trade union; for the provision of carrying out any activity which is exempt from the levy of service tax; or up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex.

Outline of Finance Act, 2012


S.No. 29. Description Services by the following persons in respective capacities (a) (b) (c) (d) (e) (f) (g) (h) 30. a sub-broker or an authorised person to a stock broker; an authorised person to a member of a commodity exchange; a mutual fund agent to a mutal fund or asset management company; distributor to a mutual fund or asset management company; a selling or marketing agent of lottery tickets to a distributer or a selling agent; a selling agent or a distributer of SIM cards or recharge coupon vouchers; or

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a business facilitator or a business correspondent to a banking company or an insurance company in a rural area. Sub-contractor providing services by way of works contract to another contractor providing works contract service which are exempt

Carrying out an intermediate production process as job work in relation to (a) (b) agriculture, printing or textile processing; cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986); any goods on which appropriate duty is payable by the principal manufacturer; or processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines up to an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year.

(c) (d)

31. 32.

Services by an organiser to any person in respect of a business exhibition held outside India. Services by way of making telephone calls from (a) (b) (c) departmentally run public telephones; guaranteed public telephones operating only for local calls; or free telephone at airport and hospitals where no bills are being issued.

33. 34.

Services by way of slaughtering of bovine animals. Services received from a service provider located in a non- taxable territory by (a) (b) (c) the Government, a local authority, a governmental authority or an individual in relation to any purpose other than commerce,industry or any other business or profession; or an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities. A person located in a non-taxable territory.

35. 36.

Services of public libraries by way of lending of books, publications or any other knowledgeenhancing content or material. Services by Emplyees State Insurance Corporation to persons covered under the Employees Insurance Act, 1948 (34 of 1948).

S.No. 37. 38. 39.

Description Services by way of transfer of a going concern, as a whole or an independent part thereof. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the constitution.

Following is the illustrative list (prepared by our office) of services taxable earlier but exempted w.e.f 01.07.2012. There may be some more services covered under this list.
S. No. 1. 2. 3. 4. Name of the Services Sale of Space or Time Slots for Advertisement other than Advertisement Broadcasts by Radio or Television Copyright Services Copyright in respect of original Literary, Dramatic, Musical, Artistic Works and Cinematography Films Transport of Goods through Inland Waterways Services provided by Financial Intermediaries a) sub-broker or an authorised person to a stock broker b) authorised person to a member of a commodity exchange c) mutual fund agent to a mutual fund or asset management company d) distributor to a mutual fund or asset management company e) selling or marketing agent of lottery tickets to a distributer or a selling agent f) selling agent or a distributer of SIM cards or recharge coupon vouchers. g) Business facilitator or a business correspondent to a banking company or an insurance company, in rural area.

Following is the illustrative list (prepared by our office) of services exempted earlier but taxable w.e.f 01.07.2012. There may be some more services covered under this list.
S. No. Name of the Services Services related to Construction 1. 2. Construction of Boundary Wall Construction of Parking Area

Outline of Finance Act, 2012 S. No. 3. 4. 5. 6. 7. 8. Name of the Services Cutting of Plot and Development of colonies Residential Complex of units ranging between 2-12 units (more than one unit) Private Roads

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Services provided to Non Commercial Organization in respect of buildings which are used for other than Religious Purpose. Services provided in respect of Construction of hospitals to any person other than Government or Governmental Authority or Local Authorities Services provided in respect of Construction of buildings to be used for the purpose of Education to any person other than Government or Governmental Authority or Local authorities Repair and Maintenance of Port, Railways, Airport etc. Site Formation Services in relation to Water Sheds Transportation

9. 10.

11. 12. 13. 14. 15. 16. 17. 18.

Transport of Passenger by Rail in AC class Transport of Goods by Ropeway Transport of Goods by Rail Tourism Boats Banking and Financial Services provided to the Government in relation to the collection of duties or taxes Authorised Service Station Service in respect of Three Wheelers and Truck Handling of Export Cargo Handling of Passenger Baggage Services related to Renting Renting of Immovable Property other than the following:

19.

Residential Dwelling for use as Residence Vacant Land, with or without a structure incidental to its use, relating to agriculture By Reserve Bank of India By Government or Local Authority to all non business entity.

S. No.

Name of the Services Services related to Port/ Airport

20. 21. 22.

Services provided by fire service agencies within a port/airport. Services provided by aircraft operator in relation to transport of goods for export in an aircraft within a port/ airport. Site formation and clearance, excavation and earthmoving and demolition services provided within a port/airport.

Telecommunication services 23. 24. 25. Services provided by Telecommunication Companies located outside India Local Telephone Exchange (Intercom Facilities) Hotel Telephone calls Entertainment 26. The activities by a performing artist in any form of Art (other than Folk or Classical Art Forms of music, dance, or theatre) such as western music or dance, modern theatres, performance of actors in films or television serials. Business 27. 28. 29. 30. Services provided by Non Executive directors provided there is no employeremployee relationship Non-Compete Fees Unregistered IPR Services provided by Individual Advocates to Business Entity(other than Individual Advocates or Partnership Firm of Advocates) having turnover more than 10 lacs in preceding financial year. Miscellaneous 31. 32. 33. 34. 35. Services received by RBI Private Tuitions Services provided by Individual Horse Breeding Services Services provided by Marriage Bureau/ Match Makers Services provided by Palmist/ Astrologer

Outline of Finance Act, 2012 S. No. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. Name of the Services

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Handling Charges & Transaction Charges collected from Investors under stock Broker Services. Services provided in relation to storing, keeping or maintaining medical records of an Individual. Services provided by Florists in relation to decoration. Services in respect of holding of Seminar/ Conference for a consideration. Services provided by a visa facilitator in the form of assistance to individuals. Abacus Training Auction of property under directions or orders of a Court of Law Government property auctioned by any person acting as an Auctioneer Cargo Handling services provided within Mining area Security Services provided by security forces such as CISF to private parties Foreign Language Translators Persons (other than those for whom a specific exemption has been given) such as Participants, Commentators, cheer leaders etc. associated with any sports events organized by non-recognized sports body. Visit Fees to Museum Following services provided to GTA: (i) (ii) (iii) (iv) (v) (vi) (vii) Clearing & Forwarding Agents service Manpower Recruitment or Supply Agencys service Cargo handling Services Storage and Warehousing Services Business Auxiliary services Packaging Services Business Support Services

48. 49.

50. 51. 52.

Services of Cook as an individual, .i.e. Halwai Services of designing for setting up temporary structures/ settings for shootings Underwriting fee (Commission) received by primary dealers dealing in Government securities

S. No. 53. 54.

Name of the Services Support Services provided by Government Services of General Insurance Business provided under following Schemes: (i) (ii) (iii) (iv) (v) (vi) Personal Accident Social Security Comprehensive Crop Insurance Scheme. Premium collected on insurance of export of goods from India Premium received from Re-insurance both domestic and overseas All business or which premium is booked outside India Small transactions involving premium of less than rupees fifty except motor insurance

55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70.

Wet Cleaning Services Job of Dyeing, darning etc (Rafoo) carried out by a dry cleaner even if mentioned in the invoice Services provided by amateur photographer. Service provided by incubatee in excess of Rs. 50 Lacs. Development and supply of content for use in all services apart from telecommunication, advertisement, internet or website Parking charges collected by developers for construction of parking area. Membership fees paid to institutions like Medical Council of India, Bar Council etc Tour Guide services Waste management services Ocean freight Bar tendering services Concede desk services provided to individuals for a consideration Commentator services Emcee services Escorts services Effluent Treatment Plant Services

Outline of Finance Act, 2012 S. No. 71. 72. 73. Meditation Centre Services Pet Care Services Merely Canvassing Advertisement for publishing on a commission basis Name of the Services

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2:- RATE OF SERVICE TAX (as applicable w.e.f. 01.04.2012) The rate of service tax is increased from 10% to 12% i.e. Applicable rate is 12.36%. Consequent changes have also been made in composition rates as follows: a) For life insurance: Rate 3% 1.5%

Gross Amount of Premium Charged 1st year Subsequent Years b) Money changing: Rate

Gross Amount of Currency Exchanged Upto Rs. 1,00,000 For an amount exceeding Rs. 1,00,000 and upto Rs. 10,00,000 For an amount exceeding Rs. 10,00,000 c) Distributor or selling agent of lotteries: Rate

0.12% subject to minimum of Rs. 30 Rs. 120 and 0.06% Rs. 660 and 0.012% subject to maximum of Rs. 6,000

Guaranteed Prize Payout

More than 80%

Rs. 7,000/- on every Rs. 10 Lakh (or part of Rs. 10 Lakh) of aggregate face value of lottery tickets printed by the organizing State for a draw Rs. 11,000/- on every Rs. 10 Lakh (or part of Rs. 10 Lakh) of aggregate face value of lottery tickets printed by the organizing State for a draw

Less than 80%

3:- REVERSE CHARGE PROVISIONS The coverage of services under the reverse charge mechanism is widen by the Finance Ac, 2012 by including following additional services/situations:

(i) (ii) (iii) (iv)

Legal services received by a business entity from individual advocate or partnership firm of advocates; Services received by a business entity from arbitral tribunal Specified Services received by business entity from government or local authority; Following Services received by body corporate business entity from individual, HUF, partnership firm, AOP in respect of which both the service provider and service recipient are liable to pay service tax to the extent as specified in the below table: Service Recipient Corporate) (Body Service Provider (Individual, Firm, LLP)

However, in respect of services mentioned hereinabove in point (iv), Description of Service Hiring of Motor vehicles designed to carry passenger (a)with abatement (b)without abatement Supply of manpower for any purpose Works contract service 100% 40% 75% 50% NIL 60% 25% 50%

The applicability of service tax under reverse charge in respect of services mentioned hereinabove arises where both the events i.e. provision of service and payment of such services will take place on or after 01.07.2012.
4. REBATE OF DUTY PAID ON EXCISABLE INPUTS OR THE SERVICE TAX AND CESS PAID ON ALL INPUT SERVICES USED IN PROVISION OF EXPORTED SERVICES Rule 6A of Service Tax Rules Export of Service Rules, 2005 & Taxation of Services (Provided from Outside India and Received in India) Rules, 2006 has been replaced with Place of Provision Rules, 2012. Consequently, a new Rule 6A has been inserted in Service Tax Rules, 1994 vide Notification No. 36/2012 S.T dated 20.06.2012 w.e.f. 01.07.2012, which provides the conditions, when a service is considered to be export of service. The said rule has also granted the powers to the Government to grant rebate and provides for safeguard, conditions and limitations in this regard. Under the said authority of law, Government has issued Notification No. 39/2012-ST dated 20.06.2012, wherein the benefit of rebate of Duty paid on excisable inputs and the Service Tax and Cess paid on all input services has been allowed to the service providers who are engaged in export of services in terms of newly inserted Rule 6A of Service Tax Rules, 1994. This notification provides the method, condition and limitation for availing the benefit of rebate of duty paid on excisable inputs or the Service Tax and Cess paid on input services used in provision of services to be exported. The salient features of Notification are:

Outline of Finance Act, 2012

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a) Limitation: It allows rebate on services exported to any country other than Nepal and Bhutan in terms of Rule 6A of the Service Tax Rules, 1994 b) Payment of Duty, Service Tax and Cess: The rebate shall be allowed for Duty on Inputs, Service Tax and Cess on Input Services, only after making of payment of Duty, Service Tax and Cess to supplier or provider of service as the case may be. However, where the rebate is claimed for the Service Tax paid by the person claiming rebate himself, then rebate shall be allowed only after making payment of such Service Tax and Cess to the Government. c) The rebate claim should not be less than for `1000/d) No CENVAT Credit: The person claiming rebate shall not have availed the benefit of CENVAT Credit on inputs and input services for which rebate claim has been filed e) Interest on Rebate wrongly claimed: The notification further provides that the provisions of Section 73 and Section 75 of the Finance Act, 1994 shall apply in the following cases. (i) (ii) The rebate claimed in the case where duty on inputs and service tax & cess on input services have not been paid; or Where the service for which rebate has been claimed has not been exported; or

(iii) Where the service provider availed CENVAT Credit has been availed on inputs and input services for which rebate claim has been filed, In all the aforesaid cases, rebate allowed to the service provider shall become recoverable along with interest. f) Declaration before export of Service: The service provider shall file declaration with the jurisdictional Assistant/Deputy Commissioner of Central Excise prior to the date of service specifying the details of input and inputs used actually required for providing service to be exported. The AC/DC as the case may be shall verify the correctness of declaration and if satisfied may accept the declaration filed by the service provider g) Procurement of Inputs and Input Services: The provider of service to be exported shall procure the inputs from registered factory or from a first stage or second stage dealer. The said inputs and input services shall be accompanied by invoices issued under Central Excise Rules, 2002 or Service Tax Rules, 1994 as the case may be. h) Form for Rebate Claim: The rebate claim shall be filed in Form ASTR-2 with the jurisdictional AC/DC of Central Excise along with the documents specified therein, enclosures relating to the period for which rebate claim filed and declaration from the service provider that the services for which rebate has been filed has actually been exported i) After being satisfied that the rebate is allowable to the service provider, the jurisdictional AC/DC shall pass the order sanctioning rebate either wholly or partly. Hence the procedure for claiming rebate is summarized hereunder: In order to avail the benefit of rebate under this notification, a service provider shall: a) b) File Declaration with the jurisdictional AC/DC before the export of services Shall file rebate claim with the jurisdictional AC/DC within the time limit prescribed under section 11B of Central Excise Act, 1944 i.e. within one year from the date of payment to service provider or supplier as the case may be, but before the rebate claim becomes time barred under Section 11B.

Relevant extract of the Section 11B of the Central Excise Act 1944 is reproduced hereunder for ready reference: Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such[duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence including the documents referred to in section 12A as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person. 5. Self Adjustment of Excess Tax paid: The monetary ceiling of self-adjustment of service tax has been removed. Now, an assessee can self-adjust excess service tax paid up to any amount. Now, the assessee is no longer required to intimate the details and reasons for such adjustment of excess service tax paid to the jurisdictional superintendent of Central Excise. The assessee is required to comply with one condition i.e. excess amount paid is not due to any of the following four reasons(i) interpretation of law, (ii) taxability, (iii) valuation , or (iv) applicability of any exemption notification 6:- CHANGES IN VALUATION RULES (w.e.f. 01.07.2012) a. Rule 6 of Service Tax(Determination of Value) Rules: Value of the taxable services shall include-

b.

the amount realised as demurrage or by any other name whatever called for the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service.

The value of any taxable service does not include(iv) interest on deposits and delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable; (vi) accidental damages due to unforeseen actions not relatable to the provision of service; and (vii) subsidies and grants disbursed by the Government, not directly affecting the value of service.

7:- CHANGES IN POINT OF TAXATION

Outline of Finance Act, 2012

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a) The time period for issuance of invoice is being increased from 14 days to 30 days ordinarily and 45 days for banks and financial institutions. b) The definition of continuous supply of service is being amended to capture the concept in a more wholesome manner, namely the recurrent nature of services and the obligation for payment periodically or from time-to-time. c) In case of a new levy, no tax is chargeable on services where payment has been received and invoice issued within a period of 14 days. d) As a measure of added facilitation, an option has been provided to determine the point of taxation in respect of small advances up to Rs 1000, in excess of the amount indicated in the invoice, on the basis of invoice or completion of service rather than payment. Such provision is expected to address the accounting problems faced by service providers in telecommunications, credit card businesses who regularly receive minor excess payments from their customers. A residual rule has been made by way of best judgment to handle situations where the tax-payer is unable to furnish one or more of the details needed i.e. date of payment or date of invoice or both to determine POT. 8:- CHANGES IN CENVAT CREDIT RULES (a) Credit is being allowed on motor vehicles (except those of heading nos. 8702, 8703, 8704, 8711 and their chassis). Now, Dumpers and tippers will be considered as Capital Goods and Credit in respect of them will be allowed to all service providers. (b) The Credit of Motor Vehicles designed for transportation of goods is allowed to an output service provider, if such Motor vehicles are used for transportation of Inputs and Capital Goods. (c) The Credit of Motor Vehicles designed for transportation of passengers is allowed to an output service provider, if such Motor vehicles are used for imparting Motor driving skills or for transportation of passengers. (d) As per newly inserted Rule 5B, Refund of unutilized CENVAT credit availed on inputs and input services is allowed to an output service provider providing services notified under section 68(2) of the Act i.e. person liable to make payment of service tax under Reverse Charge Mechanism. (e) Definition of Exempted Services has been amended to exclude specifically export of services in terms of rule 6A of Service Tax Rules, 1994. The dilemma in respect of nature of export of services i.e. exempted or taxable service is clarified now.
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