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Indirect Taxes
Service Tax - Statute Update
New challans for payment of service tax
The Governments has prescribed new format for the payment of service tax viz.
challan No. GAR-7 applicable from April 2007. The old TR 6 challans will not be
accepted hereafter. This form is available on website of the Chamber for
download.
New form for service tax return :
ST-3
The Government has notified new service tax return form ST-3 vide Notification
No. 14/2007-ST dated 2-4-2007 which substitute the old ST 3 return form. The
return will now be required to be filed in the new format.
The new form is exhaustive and inter alia incorporates additional requirements
in pursuance of Service Tax (Determination of Value) Rules, 2006 and latest
amendments. This format is fully compatible to automation and e-filing. The said
form is available on website of the Chamber for download.
Issue of summons – Relief to the assessees :
As a rare gesture to the poor service tax assessees, the CBEC has come down
heavily on the issue of summons in a routine manner, just for calling of
information, documents etc. This can be more cherished in the words of the CBEC,
“It has come to the notice of the Board that on many occasions, merely for
obtaining information or documents pertaining to service tax cases/ matters,
officers of field formations or intelligence agencies resort to issuance of
summons (u/s 14 of the Central Excise Act, 1944 as is made applicable in service
tax cases u/s 83 of the Finance Act, 1994) to either service tax-payers or to
persons who are not registered with the department. From the nature of
information/documents called for, it is clear that many times such information /
documents can easily be obtained by making a telephonic request or writing a
simple letter to the person concerned. Instead summons are issued in a routine
manner, under the signature of superintendent or the senior intelligence
officers. (SIOs). The harsh and legal language of the summons not only causes
unnecessary mental stress & embarrassment and instills fear in the minds of the
receiver but may also become a source of harassment or even unethical practices.
Board has taken a serious note of this practice”.
The Board has made it clear that normally information/documents should be called
through telephonic communication or by simple letter and only when these modes
of communication becomes ineffective or likely to jeopardize the interest of the
revenue or when personal presence of the person concerned is essential to tender
evidence or record a statement in connection of evasion of service tax, the
issue of summons may be resorted to. Even in this kind of situation, prior
written permission should be obtained by the officer, not below the rank of
Deputy Commissioner and the reason of issuance of summons to be recorded in
writing.
In all cases where the summons are issued, the officer issuing summons must
submit report on proceedings that took place during the presence of tax-payer or
the person summoned and the officer authorizing issuance of summons must satisfy
himself that no harassment has been caused during the visit of the person
summoned to the office.
The instructions to the field formations further state that non observance of
these instructions would be viewed seriously.
(Source : Letter F. No. 137/39/2007-CX 4 dtd. 26-2-2007)
37B Order in case of GTA Service – Relief to the assessees at last
The Government has passed order u/s. 37B of the Central Excise Act, 1944 on 12th
March 2007 bearing No. 5/1/2007-ST, finally acknowledging that any person who is
made liable to pay service tax, while discharging service tax liability on such
service, is entitled to avail the benefit of exemption in terms of Notification
No.32/2004-ST and 1/2006-ST.
As is known, the abatement of 75% is subject to the condition that the Goods
Transport Agency has not taken the credit of duty paid on inputs or capital
goods used for providing such taxable service and also has not availed the
benefit under Notification No. 12/2003 dated 20-6-2003. The said Order therefore
stipulates that it would be sufficient if the service provider gives a
declaration on the consignment note to the effect that the conditions of the
aforesaid Notification are satisfied.
It is further stated that on the basis of above stated procedure, the demand
notices issued in this connection and all pending matters may be decided and
past instructions, circulars and orders on this issue stands suitably modified.
(Letter F. No. 166/13/2006-CX 4 dtd. 12-3-2007)
Note :
The assessees are aware that scores of show cause notices have been issued for
short payment and concealment on account of DGST instruction and CERA audit
objection that abatement under Goods Transport Agency’s Service is not allowed
to the person paying service tax, other than the Goods Transport Agency. All
such assessees will now have great relief.
No more liability of money changers under Banking and Other Financial Service
The Government has finally acknowledged that “money changing” and “foreign
exchange broking” are two distinct activities and “money changing” is an
activity of sale and purchase of foreign exchange. The service tax is therefore
not leviable on money changing.
The Department had earlier issued instructions vide Letter F. No.
341/44/2005-TRU, dated
6-10-2005 that “money changing” activity is also liable for Service Tax. This
instructions now stands superceded.
(Source : Circular No. 92/3/2007 dated 12-3-2007)
Telephone Service – Interconnection Usage Charges
Interconnection is a service provided by one telegraph authority to another, to
enable the telephone subscriber of the former to connect or have access to the
subscriber of the later telegraph authority. For this purpose, the telegraph
authority collects interconnection usages charges (IUC). The Department had
earlier issued instructions/Circular that service tax is applicable to such IUCs.
The Department has now reconsidered this issue and came to the conclusion that
under the Finance Act, 1994, “Telephone Service” means service provided to a
subscriber by the telegraph authority in relation to telephone connection.
However, in this case, service is provided by one telegraph authority to
another. Further, no service of telephone connection is provided to the
recipient telegraph authority. Under the circumstance, the service may not fall
in the category of Telephone Service. The Circular states that the Law Ministry
and Attorney General have also opined that IUC is not taxable in any of the
existing taxable service and all contrary Circulars/instructions in this respect
are withdrawn.
The Circular further states that under the new definition of Telecommunication
Service proposed in the Finance Bill, 2007, the IUC is specifically incorporated
under the definition. Further, service provided to any person (and not
restricted to the subscriber only) is made taxable.
Therefore, after these amendments comes into effect, service tax would be
applicable to IUC.
(Source : Circular No. 91/2/2007- ST, dated 12-3-2007)
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