Service Tax - Statute Update
 

Service tax on taxable service provided by Government Departments – TRU’s clarification dated 10-11-2006

The Ministry of Finance has clarified in a reply to communication bearing Letter F. No. 354/59/2006 – TRU dated 24-6-2006 that if the service provider in the definition of a taxable service is “any person”, then such person would ordinarily include the Government, unless otherwise excluded.

However, it has cautioned the field formations to examine each case carefully, taking into account all material facts. Further, if any the State or Central Government department is proposed to be invoked as service provider and service tax is to be levied on them, the same may be referred to the Board.

Failure to make mandatory E-Payments (Service Tax of Rs. 50 lakhs or more) – Circular No. 88/6/2006-ST dated 6-11-2006

In the Circular the following issues are clarified :

1. How service tax of Rs. 50 lakhs to be calculated – service tax paid by cash plus Cenvat credit taken by the assessee would be taken into account
    

2. Whether liability of all the premises to be considered – Each registered premises is a separate assessee in the eyes of the law. Therefore, criteria of Rs. 50 lakhs would apply to each registered premises of the assessee separately. However, in case of Large Taxpayer Unit (LTU), the cumulative service tax paid by all registered premises of such LTU will be taken into account for satisfying the criteria.
    

3. Whether the liability as service recipient is to be included along with the liability as service provider – Yes, both the liabilities taken together will be taken into account for arriving at Rs. 50 lakhs criteria.
    

4. There are delays on account of procedural part by bank like delay in opening of account in designated bank, issue of user ID and password, delay in passing resolution by the company to authorize a person for making E-payment, other systems failure at the end of the bank. In view of these difficulties, the field formations are advised to take a lenient view considering reasonability of the cause for failure and no penal action may be initiated. The assessees are advised to expeditiously complete the procedural formalities and comply with the requirement of mandatory E-payment.