F.No.354/28/2007-TRU Government of India Ministry of

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F.No.354/28/2007-TRU Government of India Ministry of Finance

Department of Revenue (Tax Research Unit)

New Delhi ** ** **

8th March, 2007

New Delhi

NOTICE

T.R. Rustagi Report on Review of circulars, instructions and clarifications of issues relating to service tax

Taxation of services was introduced in 1994. Since then, a number of circulars/instructions/ clarifications have been issued from time to time by CBEC on various aspects of service tax. 2. Government decided to undertake review of all such circulars, instructions and clarifications issued on matters relating to levy and collection of service tax, keeping in view the changes in service tax law, the Court pronouncements and other material considerations. For this purpose, Government has asked Shri T.R. Rustagi, Chief Commissioner (Retd.) to undertake the aforesaid review and to make recommendations in this behalf to the Government. 3. Shri T.R. Rustagi has submitted his report to the Government on 22.2.2007. As per his report, circulars, instructions and clarifications are segregated into the following three categories: (i) To be withdrawn (Annexure A) (To view, click on Annexures) (ii) To be modified (Annexure B) (iii) To be retained (Annexure C) 4. Views, comments and suggestions from the trade and industry associations, departmental officers and from all others concerned are solicited on the recommendations made in the report. Suggestions in respect of circulars or instructions which could not be covered by this report are also invited. The views, comments, and suggestions may kindly be sent before 31st March, 2007 to the undersigned at the following address: Room No. 146 H, Tax Research Unit, North Block, New Delhi-110002 (E-mail: [email protected])

Sd/- (K. Balamurugan)

OSD - TRU

�/2

Annexure A

Review of service tax circulars / instructions / clarifications T.R.Rustagi Committee recommendations

1.Circulars / instructions / clarifications to be withdrawn: Sl.No.

Circular No. Date Issue

1 F. No. 149/8/95-CX4 (7/1/96-ST)

29.2.1996 Pager services shall not fall within ‘telephone service’. However, cellular telephone services would be taxable.

2 F. No. 148/5/95 – CX 4 (16/10/96-ST)

15.10.1996 Decision on certain procedural issues relating to payment of service tax on telephone service.

(a) ST may be paid on the amount of bills for which payment is actually received and not on the amount of bill raised.

(b) Date of payment is the date on which the book transfer is made in the cash section of the secondary switching area (SSA).

3 F. No. 149/1/97 –

CX4(22/2/97) 3.9.1997 In the case of plastic roaming facility, the home operator (home network) i.e. where the

subscriber belongs to, and who arranges roaming facility in other metro cities through arrangements with the service operator (visiting network) should collect and pay the service tax.

4 F. No. 149/1/96 – CX4(23/3/97)

13.10.1997 (a) Cellular operators pay service tax on charges including rent and across charges collected from the all subscriber. As such no service tax is chargeable on rent and across charges paid to DOT by the cellular phone operators became it would amount to double taxation.

(b) The amount received by the cellular telephone company from subscriber towards

SIM cards will form part of the taxable value for levy of service tax.

(c) Cellular companies cannot adjust the excess service tax, if any, paid. They have to file a refund claim.

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(d) In certain cases, cellular telephone operators provide service to a category of

persons called “friendly users”, and only recover “land line charges”. No service tax is payable on the calls made as no amounts recovered by the telegraph authority.

(e) Companies give discount on their airtime charges. It is clarified that in such cases

the tax is payable only on the reduced amount.

5 28/2/99 (F. No. 149/6/97-CX4)

4.7.1999 The clarification issued for plastic roaming facility vide Circular No. 22/2/97 dated 3.9.1997 would apply mutatis mutandis to automatic roaming facility including International Automatic/plastic roaming facility provided by cellular phone operators.

6 33/1/2001 (F. No. 149/1/99 – CX4)

29.01.2001 Earlier, in Circular No. 5/5/94 dated 10.11.1994 it was classified that DOT can pay service tax by Book adjustment. Now that it has been corporatised into BSNL, with effect from 1.11.2000, service tax has to be paid in cash.

7 46/9/2002-ST (F. No. 149/2/2002-CX4)

8.8.2002 References have been received from the Cellular Operators Association of India, New Delhi, and the Department of Telecom (DOT). The services relating to which doubts have been raised are the following :

(i) ‘Inter-connection link charges’: These are charges relating to interconnectivity provided between the basic/cellular telephone providers and the BSNL/MTNL exchanges. This enables the private basic telephone operators or the mobile service providers to access BSNL telephone lines and vice-versa. This interconnection can be through a cable owned by the BSNL; in which case a monthly/annual rent is charged. If the cable has been laid/ provided by the private basic/cellular telephone service provider no rental is charged by BSNL.

(ii) ‘Rentals for junction links’: These relate to charges for using junction links of the BSNL/MTNL from one exchange to another.

(iii) ‘Port charges’: These are something like entry charges for allowing access into the BSNL network.

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(iv) ‘Infrastructure charges’: Sometimes the basic as well as cellular telephone service providers need space to keep their own equipments to facilitate the interconnectivity. This space, when provided by the DOT, a rental is covered from them by the DOT.

It is clarified that in respect of services listed at (ii), (iii) and (iv) above no service tax is presently leviable. However, So far as ‘inter-connectivity linked charges’ are concerned these are nothing but charges for providing ‘leased circuits’. This service (leased circuits) has been brought under the coverage of service tax w.e.f. 16-7-2001. While issuing Board’s clarification dt. 14-3-2001 it was inter alia intimated that this service was not taxable. However, since ‘leased circuits’ have become taxable. However, since ‘leased circuits’ have become taxable w.e.f. 16-7-2001 only, Board’s clarification dated 14-3-2001 stands modified accordingly.

8 F. No. 150/1/94 – CX4 (3/3/94-ST)

28.07.1994 It is clarified that Kerala State Insurance Department (KSID) and all such other agencies are required to pay service tax as they provide taxable service in relation to general insurance.

9 F. No. 150/1/94 – CX4 (6/1/95-ST)

02.05.1995 Asking for information from the commissioners on the practice of adjustment of excess tax by United General Insurance Co. and similar other insurance companies.

10 F. No. 137/11/96 – CX4 21/1/97-ST

27.01.1997 Instruction on revised procedure for registration/collection of service tax from courier agencies.

11 64/13/2003-ST (F. No. 168/1/2003-CX4)

28.10.2003 It is clarified that if the canvassing is limited to space selling then such services would not be liable to any service tax. However, if canvassing is involving receiving the text of advertisement, estimating the space that such advertisement would occupy in the newspaper/periodical/magazine, negotiating the price, forming the general layout of the advertisement that would finally appear in the newspaper then such activity would be liable to service tax under the category of Advertising Agency Services.

12 F. No. 241/1/2004 – CX4 (78/8/2004-ST)

23.03.2004 It is clarified that selling the free commercial time (FCT) to a producer does not fall within the purview of ‘advertisement service’.

13 F. No. 354/128/97 – TRU

18.12.1997 Service rendered by architects would not fall within the scope of engineering consultancy service. Architects and engineers are governed by separate technical and statutory authorities. However if an engineer provides service as an engineering service as also an architectural service and he charges a lump sum amount, the lump sum amount shall be

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the value, unless separate break up is given in the bill. 14 34/2/2001-CX 30.4.2001 Consulting engineer will not include those qualified engineers who act as insurance

surveyors and loss assessors within its scope hence not liable to service tax. The services provided by any qualified engineer in the area of insurance survey or loss assessment are not in the nature of services in an engineering discipline. Even as per the WTO classification of services, insurance survey and loss assessment is categorized as insurance auxiliary services and not as “consulting engineering services”

15 F. No. 177/5/2004 – CX

26.02.2002 Third party inspections and certifications carried out by certifying agencies in respect of marine as well non-marine equipment do not fall within the scope engineering consultancy. Such work is not in the category of advice, consultancy or technical assistance. If, however, a shipping company gets the ship surveyed or inspected by another agency before taking it for certification or by an authorize agency, only then can it be said that the first agency is providing some technical service.

16 F. No. 137/38/2003–CX4

13.05.2004 Charges for erection, installation and commissioning are not covered under the category of Consulting Engineering Service. In circular No. 137/13/2001–CX4 dated 18.12.2002 it was clarified that erection and commissioning charges are taxable because this service is in the nature of “technical assistance” to buyer of plant / machinery. This position does not hold good in any case after service tax was levied separately on erection and commissioning with effect from 1.7.2003.

17 B43/1/97 – TRU 06.06.1997 Payments made by CHA on behalf of the client such as statutory levies (cess, custom duties, port dues, etc.) and various others reimbursable expenses incurred are not to be included in the value for service tax.

18 B43/1/97 – TRU 06.06.1997 Where CHA undertakes “turnkey” imports and exports and where as lump sum amount is charged from the client for undertaking various service the lump sum amounts covers not only the “agency commission” fee but also other expenses and no separate breakup is available. In such cases the value of taxable service is to be taken as 15% of the lump sum amount charged from the client.

19 B43/1/97-TRU 6.6.1997 Sub-contracting of CHA will not be required to pay service tax on the bills raised by him on the main CHA.

20 B43/1/97 – TRU 06.06.1997 No service tax is leviable on payment received by CHA from shipping lines for canvassing of import/export cargo.

21 B43/1/97 – TRU 06.06.1997 It is clarified that in relation to steamer agent, the service charges will constitute the

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husbandry fee as well as agency commission on import/export cargo. Steamer agents incur various others expenses on behalf of the shipping line such as pilotage and berth hire charges, Indian Coast light dues paid to the port authorities, cargo expenses paid to port authorities and transporters such as CONCOR/railways, brokerage paid on export cargo, ship handling expenses paid to stevedoring agents. It is clarified that all such “other expenses” incurred by the Steamer Agent on behalf of the shipping line shall not form part of taxable value.

22 F. No. B.43/7/1997- TRU

11.07.1997 Person engaging/appointing a clearing and forwarding agent is liable to pay tax.

23 F. No. B43/7/97 – TRU 11.07.1997 Value shall be the gross amount of remuneration or commission (by whatever name called) paid to such agent by the client engaging such agent (Notification No. 27/97-ST refers)

24 F. No. B43/7/97 – TRU 11.07.1997 Commission or remuneration paid to C&F agent constitutes minimum commission on a flat or turnover basis and variable commission based on performance.

25 F. No. 137/2/202 – CX4

20.02.2002 It is clarified that ICD/CFS cannot be considered as C & F agents. There is no agreement or contract between service provider (ICD/CFS) and service receives (importer/exporter). Also ICD/CFS functions under the authority of Government of India and not for any principal or owner (importer/exporter).

26 2/1/2002-ST (F. No. 137/4/2002 – CX4)

24.04.2002 The service of storage facility and charging rent for storage of liquid cargo in tanks cannot be considered as service relating to C & F agent. It would fall under “storage and warehousing service” introduced in 2002.

27 F, No. 159/5/2002 – CX4

Foodgrain Commission Agents (Adhat Vyaparies or Adhatiyas) do not fall within C & F Agent service if the commission is paid by the buyer and not by the farmer.

28 F. No. 73/3/2004-ST (159/3/2003 – CX4)

05.01.2004 Foodgrain commission agents are covered as “Commission agents” under Business Auxiliary service.

29 F. No. 176/3/2001- CX4

29.04.2002 Renting out of premises (like Jehangir Art Gallery) by art galleries for exhibition of art and artifacts does not attract service tax as mandap keeper. It is not a “social function”.

30 37/5/2001-ST (F.No.354/183/2001 TRU)

27.12.2001 The collection center collects exposed film from photography studio who does not have processing facility/photographers, and gets such rolls processed from a colour lab and

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hands over the prints to the photography studio/photographer.

For rendering this service they normally receive commission/handling charges from the processing labs and in some cases they may recover handling charges from the customers also. They act merely as a courier/commission agent. Therefore, the services provided by the collection center is not taxable in the category of photography service

31 232/2/2003-CX4 3.3.2006 It is clarified that in case, the goods are consumed during the provisions of service and are not available for sale, the provisions of the notification (No. 12/2003) would not be applicable. Therefore, in super- session of clarification to the contrary (issued by field officers), it is clarified that goods consumed during the provisions of service, that are not available for sale, by the service provider would not be entitled to benefit under Notification No. 12/2003-S.T., dated 20.06.2003.

32 F. No. 241/1/2004 – CX4

23.03.2004 In the case of FCT (Free Commercial Time) selling the time allotted to a producer does not fall within the preview of “advertisement service” since this activity is not connected to making, preparation, display or exhibition of advertisement. This is akin to providing space in a newspaper and magazine for publishing and advertisement and has nothing to do with actual presentation of the advertisement.

33 699/15/2003-CX (F. No. 248/1/2002 – CX4)

05.03.2003 Service of motor vehicles of any other make is not liable to service tax.

34 F. No. 341/43/2001-TRU

18.10.2001 Doubts have been raised as to whether the "value of taxable service" in respect of broadcasting services will include the commission paid by the broadcasting agency to the advertising agency or not. The Value of taxable service is the amount received by the broadcaster for providing the broadcasting service. Therefore, Service Tax is leviable only on the amount received by the broadcaster for the services rendered. Since the amount received by the broadcaster is net of the commission or discount paid to the advertising agency, service tax will be payable on this amount. However, such abatement towards commission/discount shall be allowed only when the same is clearly indicated in the invoice/bill raised by the broadcasting agency on the advertising agency.

35 F. No. 165/2/2003-CX4 27.3.2003 Prasar Bharati is not liable to pay service tax.

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36 F. No. 228/1/2003-CX4 28.11.2003 Persons undertaking activities of organizing “Trade Fairs” and Exhibition are not liable to pay service tax. There has to be a sponsor whose behest an event is organized and an event manager who organizes such service.

37 F. No. 356/9/2003-Cx4 17.12.2003 Maintenance of software is not chargeable to service tax.

38 74/4/2004-ST (F. No. 256/10/2003-CX4)

23.1.2004 Maintenance and repair of ATMs does not fall under exemption notification No. 20/2003-ST dated 21.8.2003.

39 79/9/2004-ST (F. No. 137/38/2003-CX4)

13.5.2004 Charges for erection, installation & commissioning are not covered under the category of Consulting Engineer Services. Commissioning or Installation service will be separately taxable under relevant entry and are not chargeable under Consulting Engineer Services. Accordingly, the clarification issued vide the Circular No. 49/11/2002-S.T. dated 18-12-2002 stands modified to this extent.

40 F. No. 159/3/2003-CX4 5.1.2001 Adhatiyas are not covered under Clearing and Forwarding agent’s services whether they are in Rajasthan or by any other states. Gram agents are Commission agents and thus exempt by Notification No. 13/2003-ST dated 20.6.2003.

41 70/19/2003-ST (F.No.256/9/2003-CX4)

17.12.2003 It is to clarify that maintenance of Software is not chargeable to Service Tax.

42 10/4/96 - F. No. 148/1/94 – CX4(Pt)

17.4.1996 Buying/selling of securities by a member of one stock exchange through a member of another stock exchange on behalf of an investor.

43 14/8/96 - F.No. 148/1/194 – CX4 (Pt)

30.9.1996 Changing of commission/brokerage. Service tax is to be collected on the commission/brokerage at the time of raising the bill. In case of an incomplete brokerage no brokerage or commission’s charged by the stockbroker and, therefore, the value of taxable service in such cases would be nil.

44 15.9.96- F. No. 148/3/96-CX4

4.10.1996 Stock brokers should prominently show the service tax on the bill relating to sale or purchase of service tax/

45 18.12.96 – F. No. 4.11.1996 Registration of members/dealers of over the counter exchange of India.

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148/5/96-CX4 46 19/13/93 F. No.

137/8/94-CX4 21.11.1996 Visits of Central Excise Offices to premises of assesses for conducting Audit.

47 20/14/96 (F. No.

148/1/94-CX4(Pt)) 31.12.1996 When the transaction is on principal to principal basis between brokers, no investor is

involved and as such no taxable service is provided and therefore, no service tax is chargeable.

Where a broker enters into a transaction on his own account with an investor who is a non-member of the stock exchange the service provided will be taxable service and subject to service tax.

In case of arbitrage transaction i.e. the transaction between two brokers of different stock exchanges, the service is provided by a broker i.e. the member of a stock exchange to a non-member of that stock exchange even though the investor may be a member of another stock exchange. Their being an investor involved in the transaction, the service so provided to the investor will be a taxable service subject to service tax.

48 148/3/97 – CX4 9.9.1997 When a member enters into a transaction with another member, it is jobbing and thus not liable to service tax.

49 51/13/2002-ST 7.1.2003 Guidelines on classification of services

50 57/6/2003-ST

(F.No.254/1/2003-CX4)

20.5.2003 Clarification on export of services, including on secondary services consumed in export services.

51 57/6/2003-ST (F.No.254/1/2003-CX4)

20.5.2003 If the bill is raised after the rate increase comes into force and even if the service was provided earlier, the increased rate would apply.

52 No. 77/07/2004 (F. No. 137/04/2004-CX-4)

10.3.2004 It is to clarify that where an assessee does not maintain separate accounts, input service tax credit can be utilized only to the extent of 35% of the total service tax payable on all the taxable output services.

53 36/4/2001 (F. No. 8.10.2001 Chapter V of the Finance Act which governs the levy of Service Tax has not extended to

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137/2/2000-CX4) the levy to designated areas in the Continental Shelf and the Exclusive Economic Zone of India (as has been done in case of Central Excise vide Notification No. 166/87-C.E., dated 11-6-87 and in case of Customs by Notification Nos. 11/87-Cus., Dated 14-1-87 & 64/97-Cus., dated 1-12-97). It is, therefore, clarified that the services provided beyond the territorial waters of India are not liable to Service Tax as provisions of Service tax have not been extended to such areas so far.

54 57/6/2003-ST 20.5.2003 It has come to the notice of the Board that service providers have started collecting service tax @ 8% immediately after the budget i.e. 1-3-2003. However, this rate will come into effect from 14th May, 2003 on which the Finance Bill, 2003 received the assent of the President. In this connection it is stated that if any amount has been collected as service tax but the same is not deposited with the Government in terms of provisions of Section 83 of Finance Act, 1994, read with Section 11D of Central Excise Act, 1944 same becomes recoverable.

55 Service Tax is destination based consumption tax and it is not applicable on export of services. Export of services would continue to remain tax free even after withdrawal of Notification No. 6/99, dated 9-4-99. Further it is clarified that service consumed/provided in India in the manufacture of goods which are ultimately exported, no credit of service tax paid can be availed or reimbursed at present as inter-sectoral tax credit between services and goods are not allowed.

56 53/2/2003-ST (137/11/2003-CX4)

27.3.2003 The amount of service tax, interest, penalty, fine or any other sum payable and the amount of refund or any other sum due, under the provisions shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored.

57 137/1/94 – CX 4 26.09.1994 Registration Of DG P & T and Chairman-cum Managing Director of MTNL

Annexure B


2.Circulars / instructions / clarifications to be modified:

Sl.No. Circular No. Date Issue Comments

1 B3/7/2003-TRU 20.6.2003 In regard to credit of service tax on telephone connection, queries have been raised as to whether service tax credit would be admissible on telephone sets installed only in the business premises. The answer is in the affirmative, and credit will be allowed only on telephone sets installed in the business premises. Mobile phones are not covered.

The tribunal and the Courts may not buy this argument. Cenvat Rules do not make an exception. Some solution has to be found to resolve this controversy. Either it be disallowed legally, or be allowed legally—say a specific proportion of the tax paid on mobile phones in the name of the company.

2 F. No. 137/1/94 – CX4 (1/1/94)

29.06.1994 It is clarified that branches and divisions of the insurance companies will not pay the service tax and it’s their head office, which have been made responsible for payment of service tax.

Clarification no longer needed in view of comprehensive rules on registration.

3 F. NO. 341/43/96 – TRU

31.10.1996 It is a Budget Circular covering different service including courier service.

(a) Transporters undertaking door to door services (like “Express Cargo Service”) are covered by the definition of “Courier”.

(b) Department of Post is not a

“Commercial concern”. Hence speed post is not taxable are courier service.

(c) Co-loaders are not covered in the

definition of courier service. They are

May be retained. No longer valid now. The words ‘commercial concern’ have been replaced by ‘person’. May be abolished. This may be withdrawn. The words “commercial concern” has been replaced by

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not required to pay service tax.

(d) Any document received in India from abroad and for which no charge is made to the recipient is not liable to service tax as “courier agency”.

(e) It is clarified that courier agency is liable to pay service tax on the amount charged in India from the customer even if the documents, goods or articles are delivered abroad.

(f) If any facilities like warehousing, packing, inventory management, etc is provided by a courier agency the charges for same are includible in value as they are relatable to door to door transportation.

“person” in the definition of courier service. Business Auxiliary Service is very wide in scope, covering such activities. Also Cenvat credit is admissible. Thus, co-loaders are legally liable to pay service tax. Continues to be valid. Continues to be valid. Comprehensive valuation rules take care of it now. No longer needed.

4 F. No. 341/43/96 – TRU

31.10.1996 It is clarified that the amount paid, excluding their own commission, by the advertising agency for space and time in getting the advertisement published in the print media or electronic media will not be includible with value of taxable service.

May be withdrawn. The position has changed now on account of the fact that the display of advertisements through electronic media is covered by a separate taxable service (Broadcasting service) and Cenvat credit rules have come in.

5 F. No. 341/43/96 – TRU

31.10.1996 It is clarified that expenses incurred by the advertising agency on account of travel, transportation and stay in hotels, etc. are to be included in value.

No longer needed. Now, comprehensive valuation rules are to be followed for determining value of a taxable service.

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6 F. No. 341/43/96 – TRU

31.10.1996 It is clarified that if market research conducted by an advertising agency relates to advertisement, then its charges form part of value.

No longer needed. Now, comprehensive valuation rules are to be followed for determining value of a taxable service.

7 F. No. 341/43/96 – TRU

31.10.1996 A film producer engaged by an advertising agency for making a documentary or film in relation to an advertisement is not liable to pay service tax where the advertiser includes film producer’s charges into his value to the client.

Clarification no longer valid now, after the words “commercial concern” have been replaced by “person” and the Cenvat rules have came. May be withdrawn.

8 F. No. 341/43/96 – TRU

31.10.1996 DAVP not being a commercial concern is not liable to pay service tax as an advertising agency.

Clarification no longer valid now. May be withdrawn.

9 F. No. B43/5/97 – TRU

02.07.1997 The levy does not fall on the sub-consultant, associate consultant or another consulting engineer. It falls only on to prime consultant or main consulting engineer who raises a bill on his client (which includes the charge for services rendered by the sub-consultant).

The clarification no longer holds good now. Sub-contractors are liable to pay tax.

10 F. No. B43/5/97 – TRU

02.07.1997 Expenses incurred by the consulting engineer as reimbursable expenses on behalf of the client and for which the documentary evidence is available do not form part of taxable value.

Clarification is not relevant after valuation rules have come in. Now, whether any such expenses are excludable or not is to be determined by application of these rules to a given situation.

11 F. No. B43/5/97 – TRU

02.07.1997 Service tax on manpower recruitment agencies shall be on the gross amount charged to the client for services rendered in relation to the recruitment of manpower excluding the amount incurred by the manpower recruitment agency on behalf of the client towards expenses, which are reimbursed on actual basis.

Instructions may be withdrawn. After the Valuation Rules have come into effect, the value is to be determined as per these rules.

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12 F. No. B43/3197 – TRU

26.06.1997 Option to pay service tax at the rate of 0.25% of the basis fare in the case of domestic tickets and 0.5% of the basic fare in the case of international tickets.

May be deleted. Percentages have been revised. No need of issuing any Circular on this aspect.

13 B43/3/97 – TRU 26.06.1997 Service tax is to be paid not only on the hire charges for the mandap but also on charges for electricity, whether on actual basis or otherwise, charged to the customers. It is immaterial that bills are issued separately. Also charges for providing furniture, fixtures, lighting fittings, etc. to be included.

May be omitted. Now that the Valuation Rules have come into effect, value of any taxable service is to be determined as per these rules.

14 F. No. B43/3/97 – TRU

26.06.1997 If booking for mandap is cancelled no service tax is payable as no service has been rendered.

It is not needed. It is so obvious.

15 F. No. B43/3197 – TRU

26.06.1997 Even if mandap is located or situated in the premises of any public place of worship such as temple, church, etc. service tax’s payable.

May be withdrawn. Since then exemption has been provided by notification No. 14/2003-ST dated 20.6.2003, effective from 1.7.2003.

16 F. No. B43/3197 – TRU

26.06.1997 In case Mandap keeper provides catering service also, the tax is payable on 60% of the total charges, by virtue of notification No. 21/97-ST.

Now the exemption is contained in notification No. 1/2006-ST

17 F. No. 332/82/97 – TRU

24.09.1997 In case no charges/rental is paid i.e. the premises are given out free of cost to hold such functions, there would be no service tax liability.

May be omitted now.

18 F. No. B43/10/97 – TRU

22.08.1997 State Roadways Corporations who ply passengers in neighbouring State will not be covered by the levy as they do not require a tourist permit but operate on the strength of

It appears that in the wake of several show cause notices issued, the issue had been kept in abeyance for a decision vide Board’s letter F. No. 354/15/2004-TRU dated 30.1.2004. The

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agreements between the concerned State authorities.

issue needs to be clarified. It is not justified to charge service tax on such routine journeys. If need be, it may be exempted.

19 F. No. B43/10/97 – TRU

22.08.1997 In the case of a composite tour which combines tour within India and also outside India, service tax would be leviable only on services rendered for tours within India provided separate billing has been done by the tour operator for services provided in respect of tours within India.

It seems to lack legality. The scope of tour operator service has been widened in 2004. Exports of Service Rules have also come in. The clarification requires to be re-examined in the light of changes. These instructions were issued when service tax was yet to ‘settle’. Prima facie, in this case, tax would fall on the full value.

20 F. No. B43/7/97 – TRU

11.07.1997 Service tax will not be payable in case where a bill has been raised on a Rent-a-Cab Scheme operator by another such operator who has sub-let the motor cab to the latter operator provided he pays service tax on the amount billed to his client for renting out the motor cab so obtained by him.

The clarification does not seem to be legally correct. This clarification was in the context of service tax system when Cenvat credit scheme was not applicable. With Cenvat scheme now applicable to service tax the instruction may be withdrawn.

21 F. No. B11/1/98 – TRU

07.10.1998 If an architect sub-contracts the work to another architect no service tax is payable by the sub-contractor provided the principal architect pays the service tax.

The clarification is not legally correct. This clarification was given when Cenvat credit scheme was not applicable. The instruction may be withdrawn.

22 F. No. B11/1/98 – TRU

07.10.1998 Service tax is not leviable on supply of materials, items of furniture or decoration, per se, but on service rendered in any manner concerning planning, design or beautification of spaces. Also the service rendered by Art directors of films and others who render services of design etc. for setting up temporary structures/ setting for shooting etc. do not attract the service tax levy as such interior decoration

Instruction may be withdrawn. Some services may now come within the scope of Business Auxiliary Service, depending upon the facts.

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has no permanency and is only of a temporary nature.

23 F, No. B11/1/98 – TRU

07.10.1998 If architect sub-contracts the work to another architect no service tax is payable by the sub-contractor provided the principal architect pays the service tax.

The clarification is not legally correct. This clarification was given when Cenvat credit scheme was not applicable. The instruction may be withdrawn.

24 B11/1/98 – TRU 07.10.1998 Services in respect of sale/purchase/leasing of real estate, evaluation of a proposal real estate scheme/project by conducting techno-economic studies, providing feasibility reports and even helping in marketing real estate projects are all covered in the service tax. However, it is clarified that activity of actual construction of building, carried out by builders/developers does not attract service tax.

Latter part no longer valid. Service tax is now applicable to construction of building also.

25 F. No. B11/1/98 – TRU

7.10.1998 It is clarified that no abatement in respect of Salary to the employee, employee’s EST and EFP contribution, income tax deduction at source, payment towards professional tax and labour welfare fund and other non-statutory charges such as bonus, leave, uniforms, incidental expenses and other administrative and miscellaneous expenses is allowed from value of taxable service, except an account of statutory levies and taxes provided the same has direct relation with the services rendered to the client and is specifically billed to the client and is reimbursable by the client on actual basis. EPF, ESI contributions are also not admissible. These contributions are generally applicable and not confined to security agency alone.

Clarification may be withdrawn. Now that Comprehensive Valuation Rules have come into existence, value of a taxable service is to be determined by applying these rules.

7

26 F. No. B11/1/98 – TRU

07.10.1998 Service of providing safe deposit lockers or security/safe vaults either by the banks or by others is taxable but exempt by notification No. 56/98-ST dated 7.10.1998

No longer valid now. Notification No. 56/98 was rescinded on 9.7.2004.

27 F. No. B11/1/98 – TRU

7.10.1998 Information and advisory services, if any, rendered by credit rating agencies would not attract service tax for the reason that “taxable service” in respect of a credit rating agency means services provided to a client only in relation to credit rating of any financial obligation, instrument or security. Similar is the case of services of research and information such as analysis of industries in specific sectors, of financial and business out look of the company etc.

May be withdrawn. It is now covered under Banking and Other Financial Services.

28 F.No.B11/1/98-TRU 7.10.1998 A sub-contractor of a market research agency is not required to pay service tax.

The clarification is no longer valid now. Sub-contractor has to pay the tax and the main contractor can take the credit.

29 F. No. B11/1/98-TRU

7.10.1998 Services rendered by a market research agency to a person abroad shall not attract service tax as service tax levy extends only to services provided within India.

May be withdrawn. Now whether it attracts the tax has to be decided in the context of Export of Service Rules.

30 F. No. B11/1/98-TRU

7.10.1998 The fee of the rating agency is generally expressed as a percentage of the amount of debt sought to be raised. The fees on any assignment are usually paid at the time of entering with an agreement are usually paid at the time of entering into an agreement i.e. in advance. Such amounts are kept as advance against rating fee and is recognized as income only when the rating is assigned. After the rating is given it is

Instruction was issued to explain the nature of activity when the tax was introduced.

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communicated to the client. The rating of any instrument remains under surveillance until the entire debt is repaid. The surveillance is a mandatory exercise for rating agencies. After surveillance the client is billed as per the agreed fee structure. Service tax is payable both on the fees received for credit rating of the debt instrument and the surveillance fees.

31 F. NoB11/1/98-TRU 7.10.1998 Reimbursable out-of-pocket expenses charged to the client on actual basis, such as traveling, boarding and lodging expenses, are not to be included in the value of taxable service.

Clarification may be omitted. Value of taxable service is now governed by application of Valuation Rules.

32 F. No/ B11/1/2001 – TRU

09.07.2001 If scientific or technical consultancy is provided to government departments or public sector undertakings for which consultant fees are received, then service tax has to be paid on such service.

Not needed. It is obvious.

33 F. No. B11/1/2001 – TRU

09.07.2001 The cost of unexposed photography film sold to customer is to be excluded from value if the cost is shown separately in the invoice along with description and value of film.

Not needed. Valuation is governed by detailed provisions now.

34 F. No. B11/1/2001 – TRU

09.07.2001 Individual professional photographers and others providing photographic service but who do not have fixed place of business will not be liable to pay service tax.

May be omitted. This was valid when notification No. 6/2001 was in force. Now they have to pay tax subject to exemption under notification No. 20/2005 dated 7.6.2005.

35 F. No. B11/1/2001 – TRU

09.07.2001 No service tax is applicable to convention held by the Chambers of Commerce and Industry for the reason that Chambers of Commerce and Industry are not commercial concerns.

The clarification is no longer relevant now. The words “commercial concern” have been replaced by “person”. It may be withdrawn.

36 F. No. B11/1/2001 – TRU

09.07.2001 Service tax is not be payable in respect of facsimile services where service charges are

The clarification is based on the consideration that telephone calls are already covered under

9

based on the number of telephone calls consumed. Private Fax operators are providing this kind of service and, therefore, they are not liable to service tax again.

service tax. However, there is no good logic for not levying service tax on private Fax operators. They charge more than charges for telephone calls. If need be the definition of “taxable services” may be modified and the taxability in respect of fax service need not be confined to service provided by a “telegraph authorities”. However, it may also be seen whether this service has any revenue potential. If not, it may be better to withdraw tax on this service.

37 F. No. B11/1/2001 – TRU

09.07.2001 ISPs are liable to pay service tax. Paid websites are also liable to pay service tax. It is clarified that in e-commerce transactions no service of online information and data base access/retrieval is involved. Therefore e-commerce transactions will not ordinarily be covered under the service tax net.

Continues to be valid.

38 F. No. B11/1/2001 – TRU

09.07.2001 Cyber cafes are not liable to pay service tax. Clarification is no longer valid now. Service tax has been imposed on Cyber cafes.

39 F. No. B11/1/2001 – TRU

09.07.2001 Interconnection charges paid by one ISP to another are not liable to service tax.

This clarification lacks legality. Now that Cenvat credit rules are in existence, this may be withdrawn.

40 54/3/2003-ST (F. No. 149/9/2002 – CX4)

21.04.2003 Internet telephony service falls in the category of on line information and data base access and/or retrieval service.

No longer valid. Now it falls under separately defined service.

41 F. No. B11/1/2001 – TRU

09.07.2001 The scope of taxable service covers any service in relation to videotape production in any manner. Thus facilitation activities such as providing studios, others facilities as light, gadgets, instruments, devices, providing technical person for operating the recording devices or for any other activity in relation to


10

video tape production are taxable. Similarly editing, colouring, dubbing, printing titles and special effects, film processing etc. by a video production agency will come within the scope of this service.

42 F. No. B11/1/2001 – TRU

09.07.2001 It is clarified that reproduction of original master to make further copies of a video tape will not be taxable.

May not be valid now. Definition of taxable service now covers any post-production service also.

43 F. No. B11/1/2001 – TRU

09.07.2001 Services provided by individual photographers do not attract service tax. Tax is payable by studios, shops, and other establishments carrying on business of rendering services in the field of videography.

Individuals are also liable to pay service tax now, subject to exemption limit vide notification No. 20/2005 dated 7.6.2005.

44 F. No. B11/1/2001 – TRU

09.07.2001 The activities which fall under this category of service are providing the facility of studio, technical persons, musical instrument and other devices or any other facility or all the facilities in a consolidated manner, required for recording sound, editing thereof, providing different kinds of sounds from the sound library for use in theater film and radio, etc. services of mixing of sounds etc.

Explains the scope of taxable service. May be retained.

45 F. No. B11/1/2001 – TRU

09.07.2001 It is clarified that reproduction of original master to make further copies of the audio tape or CDs etc. will not come within the preview of service tax.

Requires examination. Any audio post-production activity is now covered by the definition of “taxable service”.

46 F. No. B11/1/2001 – TRU

09.07.2001 It may be emphasized that only such services are taxable which are in relation to general insurance business such as motor vehicle insurance, insurance of buildings and other properties, marine insurance, fire insurance and other miscellaneous insurance. Services

Not valid now. Since then service provided in relation to life insurance has become taxable as a separate service.

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provided in relation to life insurance are not taxable.

47 F. No. B11/1/2001 – TRU

09.07.2001 The service providers are insurance agents, insurance surveyors and loss adjusters, actuaries and insurance consultants. They are liable to pay service tax in respect of the service provided to the insurance companies (insurer). However, in the case of insurance agents, the tax is to be paid by the insurance company.


48 F. No. B11/1/2001 – TRU

09.07.2001 It is clarified that the amount billed to the client on account of out of pocket expenses which are reimbursable on actual basis such as traveling, boarding and lodging expenses, are not subject to service tax.

May be omitted. Such cases are now to be considered in the light of Valuation Rules.

49 F. No. 160/3/2002 – CX4

01.07.2003 Ship chandlers engaged in supply of “Ship stores” to the used or undertaking minor repair work to clear technical snag of the vessel through their locally arranged resources as work ship etc. are liable to pay service tax. These are services rendered in relation to the vessel under authorization form port authorities.

To be examined.

50 F. No. B11/1/2001 – TRU

09.07.2001 Cost of parts and accessories supplied during course of repair and servicing of which will not be includible in the taxable value. Such cost should be shown separately in the bill/invoice.

May be withdrawn. Value depends on facts of the case. They get consumed in the service provided. Thus, arguably, their value should form part of the value of the service provided. Cenvat credit is also admissible.

51 F. No. 281/1/2002 – CX4

05.03.2003 Cost of engine oil, gear oil, coolants is not be to be included in value. However paints used for painting body, etc. during the course of providing service forms an intrinsic part and

Instruction needs revision. Now that Cenvat Credit Scheme is applicable, there is no logic for excluding value of lubricating oils, paints, etc. from the value of taxable service.

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parcel of service and it is not distinctly and separately identifiable. Therefore value of such terms which form intrinsic part of service is to be included in value.

52 F. No. B11/1/2002-TRU

1.8.2002 It has been provided in the Service Tax Rules that in the case of an insurance agent for life insurance, the person liable to pay service tax will be the concerned insurance company who has appointed the agent. Notification No. 12/2002 – ST refers.

Not needed. It is mentioned in the Rules.

53 F. No. B11/1/2002-TRU

1.8.2002 As a result of notification No. 9/2002, no service tax is payable on the service provided by an insurer to a policy holder in relation to life insurance business.

No longer valid. It is now taxable.

54 F. No. B11/1/2002-TRU

1.8.2002 The service tax is applicable to services provided on or after 16.8.2002 and any payment made for the services provided prior to this date will not be liable to tax though payment is made on or after 16.8.2002.

May be withdrawn. No longer needed now.

55 F. No. B11/1/2002-TRU

1.8.2002 If lump sum amount is charged for both transportation and cargo handling, the tax will be payable on the entire amount, unless the bill indicates the amounts separately on actual basis (verifiable by documentary evidence).

May be omitted. Valuation provisions are quite elaborate now.

56 F. No. B11/1/2002-TRU (Para 6)

1.8.2002

It is clarified that service provided in relation to any cargo which is meant for export, would not be taxable irrespective of the fact that it reaches the place of export after transshipment. However, relevant documents should show that the goods are for export.

May be retained. However, if the cargo is handled within the port area, it would attract tax as a port service, even if it is an export cargo.

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57 F. No. B11/1/2002-TRU (Para 8)

1.8.2002

It is clarified that unaccompanied baggage of a passenger will not be leviable to service tax.

Not needed. It follows from the definition of ‘taxable service’ in this case.

58 F. No. B11/1/2002-TRU (Para 11)

18.2.2002

Where the CFS offers a total package rate, which includes transportation and handling in respect of imported laden containers from port to CFS, if the cost of transportations is claimed on actual basis, then it will not be includible in taxable value of cargo handling service.

May be omitted. Valuation provisions are elaborate now.

59 F. No. B/11/1/2002-TRU (Para 13)

1.8.2005

Marketing or canvassing for cargo for airlines does not come within the ambit of cargo handling service.

May be withdrawn. It may come in Business Auxiliary Service.

60 F. No. N11/1/2002-TRU (Para 15)

1.8.2002

If someone hires labour/labourer for loading or unloading of goods in his individual capacity, it will not come under the preview of service tax as a cargo handling agency.

Not needed. It is so obvious.

61 F. No. B11/1/2002-TRU (Para 5)

1.8.2002 Mere renting of space cannot be said to be in the nature of service provided for storage of warehousing of goods. Essential test is whether the storage keeper provides security of goods, stacking, loading/ unloading of goods in the storage are.

Arguably, it may not be correct. Rent could be payment in lieu of storage charges.

62 F. No. B11/1/2002-TRU (Para 6)

1.8.2002 Service provided by Airport Authority of India (AAI) for cold storage of perishable goods at cargo complexes is not taxable because Cold Storage has been specifically excluded from the tax net.

Not needed. It follows from the definition itself

63 F. No. B11/1/2002-TRU (Para 11)

1.8.2002

Terminal charges charged by Airport Authority of India (AAI) as facilitation charges for providing a terminal does not involve any

May be omitted now. Value is to be determined as per valuation provisions

14

service but as per notification No. Cargo/13519/PEI dated 4.6.1993 of the Airport Authority of India, “Storage and processing charges” specifically include terminal charges also. Hence terminal charges are to be included in the value.

64 F. No. B11/1/2002-TRU (Para 8)

1.8.2002

Cloak room service for passenger baggage in railway stations, bus stations, etc. is incidental to rail transport or road transport. They do not come within the preview of “storage and warehousing” service.

Arguably, it seems to lack legality. Storage of goods may be for short period or longer period. In both cases it is storage.

65 F. No. B11/1/2002-TRU (Para 10)

1.8.2002

CWC engages handling and transport contractors (H & T Contractors). H & T contractors have to pay service tax on cargo handling service and charge it to CWC. CWC adds supervision charges and raises the bill to the customers. For warehousing they raise a separate bill. The question is whether CWC is liable to pay service tax on cargo handling services and if so whether they can take credit of the tax paid on cargo handling services by the H&T contractor. Similar situation may exist in respect of storage and warehouse keepers. It is clarified that if the storage and warehouse keeper undertakes cargo handling services also and raises its own bill to the customer for such service, then he would be liable to pay service tax under the category of cargo handling services also. However, he would be eligible to take credit of service tax paid on cargo handling services rendered by the H&T contractors and

Credit Scheme has become liberal now. Credit can be taken across services. Such clarification is not really needed now.

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adjust the same against his service tax liability on cargo handling services provided he raises a separate bill for the same to his client. In other words, he can not adjust the credit against storage and warehousing service charges.

66 F. No. B11/1/2002-CX4

10.7.2003 Handling/Storage and warehousing of empty containers would be covered within the scope of storage and warehousing service. Clarification issued vide F. No. B11/1/2002-TRU dated 1.8.2002 regarding empty containers not to be considered as cargo for cargo handling service has no relevance in this case.

Does not seem to be convincing. There is apparently contradiction in the approach in the two Circulars.

67 F. No. B11/1/2002-TRU (Para 4)

1.8.2002

Charges paid by the event manager to the photographer, videographer, sound recording studio, advertising agency, mandap keeper, security agency etc. will be included in the value of service.

This clarification is saying the obvious. It follows from the definition of value itself. Not needed now.

68 F. No. B11/1/2002-TRU (Para 5)

1.8.2002

In a case where the event is organized / managed by the Sponsor himself, no service tax is payable as “event management”.

Not needed. Too trivial a clarification.

69 F. No. B11/1/2002-TRU (Para 5)

1.8.2002

It is clarified that service tax under the category of event management is not leviable on the sale proceeds of tickets or revenue generated from the sale of space.

May be retained. However, whether sale of tickets would attract service tax as Business Auxiliary Service requires to be looked into.

70 B11/1/2002-TRU 1.8.2002 Service tax is payable whether the rail travel agent is registered with railways or not.

Not needed. Too trivial a clarification.

71 F. No. B11/1/2002-TRU (Para 4)

1.8.2002

No abatement towards cost of material used is allowed. Tax is to be computed on the gross amount charged by beauty parlour.

Not needed now. The law relating to valuation is comprehensive.

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72 B11/1/2002-TRU (Para 3)

1.8.2002

Hair cutting and shaving is not taxable.

Not valid now. Hair cutting is now specifically included in the definition. Shaving also should fall in beauty treatment.

73 F. No. B11/1/2002-TRU (Para 4)

1.8.2002

Tailor is involved only in stitching of clothes. He is not liable to pay service tax. Similarly, jweller essentially makes jwellery and sells it. He is also not liable to pay service tax.

May be retained.

74 F. No. B11/1/2002-TRU (Para 6)

1.8.2002

At times fashion designer provides stitching service also if the bill shows the design charges separately, service tax is payable on the designing charges alone.

Not needed now. The law relating to valuation is comprehensive.

75 F. No. B11/1/2002-TRU (Para 5)

1.8.2002

Entertainment tax collected and paid for the government will not be includable in the value of taxable service provided the cable operator clearly indicates the entertainment tax element in his bill to the customer.

May be retained. Although why such clarification only for cable operator service? There should be general clarification regarding status of other taxes vis a vis value of taxable service, including advance tax.

76 F. No. B11/1/2002-TRU

1.8.2002 Service tax is not applicable to wet cleaning / washing provided the dry cleaner clearly mentions it in the bill. If details are not mentioned in the bill, it would normally be understood that cloth have been dry cleaned and in such situation service tax is liable to be paid.

As an anti-avoidance measure, service tax should be imposed on wet cleaning done by establishments commercially known as “Dry Cleaners” and the like.

77 F. No. B11/1/2002-TRU

1.8.2002 Service tax is not applicable to job of dyeing.

As an anti-avoidance measure, service tax should be imposed on wet cleaning done by establishments commercially known as “Dry Cleaners” and the like.

78 F. No. B7/3/2003-TRU

20.7.2003 For contracts entered into prior to 1.7.2003, service tax is payable on payments received after 1.7.2003. Similar will be the situation for payments made for continuing services.

This has been modified by Circular of even number dated 21.8.2003.

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If service is provided free to the customer during the guarantee period but payment is made by the company, service tax would be payable on the payment so received irrespective of the fact that the receiver of the service is different from the person making the payment for such service.

79 F. No. B7/3/2003-TRU

21.8.2003 No service tax is payable on maintenance or repair service rendered prior to 1.7.2003 even though bill for payment was raised after 1.7.2003.

Not needed now. The clarification only states the general principle.

80 F. No. B3/7/2003-TRU

20.6.2003 Unless all the ingredient of definition of “franchise” are sales for an agreement is not a franchise. For example, the mere fact that a principal manufacturer has allowed production of goods bearing his brand name by another person under ‘License Production Agreement’ does not make the agreement a Franchise Agreement.

The Circular may be withdrawn. Definition of “Franchise” was changed in 2005 Budget.

81 F. NO. B3/7/2003-TRU

20.6.2003 In the case of turnkey project, service tax is leviable on commissioning or installation charges only and not on the initial and goods supplied. However, it is upto the service provider to show the break-up of commissioning or installation charges. In case service provider shows consolidated charges, service tax would be leviable on such consolidated amount.

There is confusion about applicability of service tax to turnkey projects. They should be covered under a separate service.

82 F. No. B3/7/2003-TRU

20.6.2003 Charges for erecting of plant are not covered by the service tax.

No longer valid now.

83 F. No. B3/7/2003-TRU

21.8.2003 Commissioning or installation service provided by an individual is exempt from service tax under notification No. 18/2003 dated 21.8.2003.

No longer valid now.

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84 F. NO. B3/7/2003-TRU

20.6.2003 Business Auxiliary services provided by call centers and medical transcription centers have been fully exempt by notification No. 8/2003-ST dated 20.6.2003.

Not valid now.

85 F. NO. B3/7/2003-TRU

20.6.2003 Services of commission agent have been exempted by notification No. 13/2003-ST dated 20.6.2003. However, services of the consignment agent are taxable under the category of Clearing and Forwarding series.

Not valid now.

86 F. No. B3/7/2003-TRU

20.6.2003 Insurance agent, C & F agents working on commission basis do not fall under this category. They are controlled by respective separately defined taxable services.

Continues to be valid. Not needed now.

87 F. No. B3/7/2003-TRU

20.6.2003 Definition does not cover information technology service.

Not needed. It is by definition.

88 B1/6/2005-TRU 27.7.2005 It has been requested that in cases where liability for tax payment is on the consignor or consignee, the procedure as to how it should be confirmed by such consignor or consignee that the goods transport agency has not availed credit or benefit of notification No. 12/2003-Service Tax may be prescribed. In such cases it is clarified that a declaration by the goods transport agency in the consignment note issued, to the effect that neither credit on inputs or capital goods used for provision of service has been taken nor the benefit of notification No. 12/2003-Service Tax has been taken by them may suffice for the purpose of availment of abatement by the person liable to pay service tax.

Abatement is now provided by notification No. 1/2006-ST dated 1.3.2006. It is cumbersome to obtain the declaration for each transaction. Some trade-friendly approach, like quarterly declaration, is needed. Also, there is lot of hue and cry on this subject. The officers have not allowed benefit to those who pay the tax as service receiver. The DGST Circular created the avoidable confusion. Now, it is understood that C&AG has also taken objection. This matter needs to be resolved—by resorting to retrospective amendment, if need be. The intention can not be to deny the benefit of exemption.

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89 137/3/2006-CX4 2.2.2006 In the case of depot sale of goods, the credit of service tax paid on the transportation of goods upto such depot would be eligible, irrespective of the fact whether the goods were chargeable to excise duty at specific rates or ad valorem rates on the basis of valuation under section 4 or 4A of the Central Excise Act.

This issue requires some serious consideration. There is significant confusion on the credit of service tax paid on transportation of goods from factories, when tax is paid by the consigner-manufacturer. Ideally, credit of service tax should be paid to whoever bears the incidence of tax.

90 80/10/2004-St 17.9.2004 In addition to the actual air freight charges, all charges collected towards storing, handling, loading / unloading (done in relation to air transportation of cargo) by an airlines are also chargeable to this levy.

Such instructions not needed now in view of comprehensive valuation rules.

91 80/10/2004-ST 17.9.2004 The service tax under this category would be limited to the services rendered in relation to survey and exploration only and not to any activity of the actual extraction after the survey and exploration is complete. The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax. Activities such as seismic survey, collection/processing/interpretation of data and drilling or testing in relation to survey and exploration would, however, fall within the ambit of taxable service.

From Circular F. No. B1/6/2005-TRU dated 27.7.2005 issued while explaining the scope of “Survey and map making” it appears from para 8.2 of that circular that the term “other prospecting services” does not cover drilling. Thus, it appears that in relation to the survey and exploration of mineral service also, it was wrong to say that it covers ‘drilling’. This requires to be examined for necessary clarification.

92 80/10/2004-ST 17.9.2004 A permanent transfer of intellectual property does not amount to rendering of service. On such transfer, the person selling their rights no longer remains a “holder of intellectual property right”, so as to come under the preview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs.

The clarification not valid now. The definition of “intellectual property service” amended in 2005 has omitted reference to ‘permanent transfer’ of intellectual property right.

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93 80/10/2004-ST 17.9.2004 If a person provides food also, he can avail of abatement of 30%. Thus, if a Pandal or Shamiana Contractor provides charges, say Rs. 50,000 for the composite service, including providing food, he has to pa the service tax on Rs. 35,000 only. See notification No. 22/2004-ST dated 10.9.2004.

No need of such clarification. The Notification is clear. Now the exemption is provided by notification No. 1/2006-ST dated 1.3.2006.

94 80/10/2004-ST 17.9.2004 If the bill of the caterer includes charges for food also, he has to pay service tax on 50% of the bill amount.

Notification relevant now is 1/2006. No circular needed to explain it.

95 80/10/2004-ST 17.9.2004 The levy would not be applicable to such premium of the existing policies which were paid before the new levy comes into force.

Not needed. It is so obvious. Notification No. 25/2004-ST provides the exemption.

96 80/10/2004-ST 17.9.2004 The insurance companies may be allowed to pay monthly service tax provisionally, based on estimates. The monthly estimated (i.e. provisional) duty payment for the entire company would be based on a provisional certificate issued by the Appointed Actuary, subject to final certification at the end of the year. At the end of the financial year, when the sum at risk is calculated and certified by the Actuary, the liabilities would be finalized and the companies would pay the balance tax or adjust the excess tax paid.

Banks have also expressed difficulty to make payment of service tax on actual basis by the 5th of the month. Perhaps they have genuine difficulty which needs to be addressed. If the due date of 5th can not be extended, provision can be made for provisional payment on the basis of actual of last payment, which can then be adjusted on the basis of actual for the current month.

97 80/10/2004-ST 17.9.2004 Normally government construction would not be taxable.

Not needed. It is obvious as no service is involved.

98 F. No. B11/1/2001-TRU (Para 2.1.1)

9.7.2001

In the case of financial leasing including equipment leasing and hire-purchase, the service is taxable if rendered by a body

Not valid now. The words “any other person” included in the definition of taxable service should cover individuals and proprietorship or

21

corporate. In other words, individuals, proprietorship or partnership firm will not come under the tax net. The leasing or hire-purchase may be of motor vehicles, machinery and equipment or other goods.

partnership firms.

99 F. No. B11/1/2001-TRU(Para 2.1.3)

9.7.2001

It is clarified that service tax in the case of financial leasing including equipment leasing and hire-purchase will be leviable only on the lease management fee/processing fee/ documentation charges (recovered at the time of entering with the agreement) and on the finance/ interest charges (recovered in equated monthly installments) and not on the principal amount.

May be omitted now. Valuations provisions are elaborate. Also see notification No. 4/2006-ST dated 1.3.2006.

100 B11/1/2001-TRU 9.7.2001 It is clarified that agreements entered into prior to 16.7.2001 will not be liable to service tax provided the property/goods has also been received by the lessee prior to 16.7.2001

There is apparently some contradiction in approach which needs to be convincingly reconciled. In Circular No. 65/14/2003 dated 5.11.2003 relating to commercial training and coaching centre, it is clarified that the service tax has to be paid on the value attributable to the relevant month/quarter on pro rata basis.

101 F. No. B11/1/2001-TRU (Para 2.2)

9.7.2001

In the case of credit card service charges like joining fee, additional card fee, annual fee, replacement card fee, etc. including interest charges are all part of value of taxable service.

In respect of interest it may be observed that in the case of telephone service no tax paid on late payment charges. In some sense, interest is akin to late payment charge.

102 F. No. B11/1/2001-TRU (Para 2.4.2)

9.7.2001

Asset management company is not liable to pay service tax (with respect to mutual funds) as such company not NBFC.

No longer valid now. The expanded definition covers them.

103 F. No. B3/7/2003-TRU (Para 4)

21.8.2003

A doubt has been raised whether all trading in foreign exchange will be chargeable service tax.

Not needed now. Also, see the comment below.

22

Prior to 1.7.2003 the service of “securities and foreign exchange (forex) broking” when provided by banking company/financial institution/body corporate was liable to service tax. Though Finance Act, 2003 “foreign exchange broking” when provided by foreign exchange brokers, other than banking company/financial institution /body corporate were also brought under the tax net w.e.f. 1.7.2003. As per the definition in law foreign exchange broker include authorize dealer of foreign exchange. Authorised dealer of foreign exchange has been assigned the meaning of “authorized person” under the FEMA, 1999. Accordingly autorised dealer/money changers, etc. which are authorized to deal in foreign exchange are covered in the definition of “foreign exchange broker” under service tax provisions. However, as explained above only the service of “foreign exchange broking” when provided by foreign exchange broker (other then banking company/financial institutions/body corporate which are already covered) has been brought under the tax net.

104 341/44/2005-TRU 6.10.2005 Service tax on foreign exchange broking services is applicable to services provided by any foreign exchange broker including banking company, financial institution, non banking finance company any body corporate, or commercial concern. Statutory provisions are the same in respect of all these entities which are engaged in the same activity. Money changers cannot go out of the purview of

There are large numbers of representations in the context of this clarification. Some Commissioners have also supported the representations. It is argued that money changers do not deal in foreign exchange broking. They may have to take license from RBI, but, it is contended, they are not ‘authorised dealers’. It is also argued that no separate amount is charged by the money

23

service tax on the plea that they are merely selling and purchasing foreign currency and not dealing or brokering on foreign exchange. Under Sale of Goods Act, Goods means every kind of moveable property but excludes money. Therefore transactions in foreign exchange do no fall under scope of sale. In view of the statutory provisions, the services provided by money changers in relation to foreign exchange is covered under Banking and financial services as defined under 65(12) of the Finance Act and leviable to service tax under Section 65(105)(zm) or Section 65(105) (zzk) of the Finance Act, 1994.

changers. Their profit is only difference on account of buying rate and selling rate. Considering the numerous representations, matter deserves to be re-examined in consultation with RBI.

105 12/6/96 -F. No. 148/5/96-CX4

16.9.1996 Registration of Stock Brokers of National Stock Exchange.

Position to be examined with reference of new registration provisions.

106 B1/6/2005-TRU 27.7.2005 This service would generally cover construction services in respect of residential complexes developed by builders, promoters or developers.

Many have represented against DGST’s Circular No. V/DGST/22/Audit/Misc/1/2004 dated 16.2.2006 in the context of Raheja judgment that the inference drawn by DGST is incorrect. This matters deserves clarification by the Board. It seems that facts are important. Prima facie construction of flats by builders is not a service.

107 64/14/2003-ST (F.No.B3/3/2003-TRU (Pt.)

5.11.2003 It has been clarified in this Circular that where the value of taxable service has been received in advance for a service which became taxable subsequently, service tax has to be paid on the value of service attributable to the relevant month/quarter which may be worked out on pro rata basis.

It seems that the Valuation rules should contain specific legal provision to deal with such situation. Also, a question arises as to how to deal with cases of life membership—like membership of clubs.

24

108 56/5/2003-ST 25.4.2003 It is clarified that date of issue of invoice would be the date for deciding the applicability of service tax.

It requires consideration. Some Chief Commissioners/Commissioners have argued that the date on which service is provided is the relevant date. In Central Excise lot of litigation had taken place on the date of levy. It is desirable that on such fundamental issues suitable and clear cut legal provision in service tax law should deal with such matter.

Annexure C


3.Circulars / instructions / clarifications to be retained:

Sl.No. Circular No. Date Issue Comments

1 F. No. 341/1/2000 – TRU (32/3/2000-ST)

20.12.2000 Service tax is not payable on the amount of surcharge charged on late payment of telephone bills.

May be retained as surcharge is not part of value of taxable service.

2 F. No. 341/16/2000-TRU

10.08.2000 Public Mobile Radio Trucking Service (PMRTS) System does not provide any service in relation to a telephone connection. Hence it is not covered within the scope of taxable service provided in relation to “a telephone connection”.

May be continued

3 334/4/2006-TRU 28.2.2006 “General insurance service” amended in 2006 Budget to include service provided to a policy holder or any person by an insurer, including a re –insurer.

Just a statement of fact.

4 F. No. 168/1/96 – CX4 10.10.1997 It is clarified that “Angadias”, who undertake to deliver the documents, goods or articles received from customers to the other end, are liable to pay service tax as “courier agency”.


5 F. No. 345/4/97-TRU 16.8.1999 In the case of persons who are printing and publishing telephone directories, yellow pages or business directories, their activities is essentially of printing a readymade advertisement from the advertisers and publishing the same in the directory. Their activities are similar to those carried out by


2

newspapers or periodicals. As such this activity shall not attract service tax. However, if the persons also undertake any activity relating to making or preparation of advertisement, such as designing, visualizing, conceptualizing etc then they will be liable to pay service tax on the charges thereon.

6 F. No. B43/5/97 – TRU 02.07.1997 Consulting engineers shall include self-employed professionally qualified engineer who may or may not have employed others to assist him or it could be an engineering firm-weather as a sole proprietorship, partnership, a private or a public limited company.

Continues to be valid. Definition is also self explanatory now.

7 334/4/2006-TRU 28.2.2006 Consulting engineer service to include engineering consultancy services provided by any firm or body corporate

It only states the change made in 2006 Budget.

8 B1/6/2005-TRU 27.7.2005 Amendments have been made (effective from 16.6.2005) to levy service tax on temporary supply of manpower by manpower recruitment or supply agencies.

Statement of fact only.

9 B1/6/2005-TRU 27.7.2005 A large number of business or industrial organizations engage the services of commercial concerns for temporary supply of manpower which is engaged for a specified period or for completion of particular projects or tasks. Services rendered by commercial concerns for supply of such manpower to clients would be covered within the purview of service tax. In these cases, the individuals are generally contractually employed by the manpower supplier. The supplier agrees for use of the services of an individual employed by him to

It only explains the effect of the changes made in 2005.

3

another person for a consideration. The terms of the individual’s employment may be laid down in a formal contract or letter of appointment or on a less formal basis. What is relevant is that the staff are not contractually employed by the recipient but come under his direction.

10 B1/6/2005-TRU 27.7.2005 Service tax is to be charged on the full amount of consideration for the supply of manpower, whether full-time or part-time. The value includes recovery of staff costs from the recipient e.g. salary and other contributions. Even if the arrangement does not involve the recipient paying these staff costs to the supplier (because the salary is paid directly to the individual or the contributions are paid to the respective authority) these amounts are still part of the consideration and hence form part of the gross amount.


11 B1/6/2005-TRU 27.7.2005

Gem and Jewellery Export Promotion Council have represented seeking clarification that hiring of skilled artisans for making jewellery does not constitute supply of manpower taxable under “manpower recruitment services”. When the artisans are hired by any organisation or business, directly, without engaging the services of any other person in any manner, in such cases, the artisans are contractually employed by the company. There is no intermediary and hence no consideration is paid to or payable to any intermediary. The service tax would be leviable only when the services of a person are engaged for recruitment or supply of artisans.


4

12 86/4/2006-ST 1.11.2006 The principal activity of institutes like IITs or IIMs is to impart education without the objective of making profit. Therefore, these institutes cannot be called a “commercial concern”, even if on some of their activities (like holding campus interviews), they charge fee. Accordingly, these institutes were not liable to pay service tax prior to 1.5.2006 under the category of “manpower recruitment or supply service”. As regards the period after 1.5.2006, decision should be taken after taking into account all material facts on case to case basis.

This is a recent Circular. This Circular gives an interpretation to the expression “commercial concern”. Incidentally, it might have implication on disputes concerning the meaning of “commercial concern” in respect of some other taxable services which also used this expression prior to 1.5.2006.

13 F. No. B43/3197 – TRU

26.06.1997 Commission is adjusted automatically on cancellation or modification of tickets. As such question of claiming separately refund of service tax may not arise.


14 F. No. B43/3197 – TRU

26.06.1997 Hotels and restaurants which let out their banquet halls, rooms, garden, etc. for holding/organizing any marriage, parties, conferences, shows, etc. are covered by the definition of mandap keeper.


15 F. No. 332/82/97-TRU 24.09.41997 The activity of mere reservation of seat in a restaurant shall not attract service tax. To attract service tax on service rendered by mandap keeper it is mandatory that the mandap keeper has let out some room, space or hall for some period of time and during such period the room, space of hall is essentially in exclusive (temporary) possession of the person to whom it has been let out.


5

16 F. No. 332/82/97 – TRU

24.09.1997 Service tax is payable as “mandap keeper” on renting out of hall etc. for the purposely holding a dance, drama or music programme or competition. These are social functions.


17 341/21/99-TRU 20.8.1999 Services provided by the ESI, PF and other industrial law practitioners are in the nature of providing secretarial assistance in filling up of various returns and forms, maintenance of records which do not involve any chance of improvement in the existing system of management of organizations. Accordingly it is clarified that such ESI, PF and other industrial law practitioners will not be covered within the scope of the term “Management Consultant”.


18 F. No. 177/2/2001 – CX4

27.06.2001 It is clarified that any services rendered in relation to merger and acquisition will be covered under the scope of taxable services provided by “management consultant”. However, certain agencies such as merchant banks who are required to play only a statutory role under any Act or Regulation such as Takeover Regulations of SEBI, and do not provide any advice or consultancy but merely verify and submit a report to the concerned authorities, in connection with merger and acquisition transaction are not treated as “management consultant”. They would be covered under “banking and other financial services”.

May be retained.

6

19 334/4/2006-TRU 28.2.2006 Management consultancy service has been amended in 2006 Budget to specifically include consultancy in different areas of management.

States only the factual position.

20 F, No. B11/1/2001 – TRU

09.07.2001 Services rendered by doctors, medical colleges, hospitals, diagnostic and pathological labs, etc are not covered by this service.

Continues to be valid though it is saying the obvious.

21 F, No. B11/1/2001 – TRU

09.07.2001 Consultation may be in the nature of an opinion/advice in regard to scientific or technical feasibility or any other scientific or technical aspect of a project, process or design, recommending an apt technology, suggestion for improvement in existing process, providing consultation on any technical problem or about technology, etc.


22 F, No. B11/1/2001 – TRU

09.07.2001 Services rendered by CSIR, ICAR, DRDO, IITS and IISc are taxable even if they are exempt from payment of income tax.


23 F. No. B11/1/2001 – TRU

09.07.2001 Testing service per se is not taxable. However, it is an integral part of consultancy, no abetment from value is allowed.

May be retained.

24 B1/6/2005-TRU 27.7.2005 Service tax is already leviable on recording of any programme, event or function on a magnetic tape and includes its editing by a video production agency. This taxable service has been expanded to include recording of any programme, event or function on any media or device such as digital recording and includes services relating thereto and video post-production services.

Only explains the scope of taxable service.

7

25 B1/6/2005-TRU 27.7.2005 Recording of sound on a magnetic storage device and its editing were already covered under the ambit of service tax. This taxable service has been expanded to include recording of sound on any media or device such as digital recording and also include services rendered in relation to recording of sound or any audio post production activity.

Only explains the change made in 2005 Budget.

26 334/4/2006-TRU 28.2.2006 By virtue of amendment made in 2006 Budget Insurance auxiliary service concerning general insurance business, to include service provided to a policy holder or any person or an insurer, including a re –insurer

States only the change made in 2006 Budget.

27 F. No. B11/1/2001 – TRU

09.07.2001 Demurrage charges would form part of taxable value. The fact that these charges apply only if the goods overstay a prescribed free period, does not detract from their being in the nature of a charge for providing a service in relation to goods.

May be retained.

28 F. No. B11/1/2001 – TRU

09.07.2001 The Dock Labour Board is liable to pay service tax on the labour charges recovered by them. However, estate rentals of the port which is charged for renting of accommodation provided to outsiders and port users lease rent a for land, etc. will not be liable to service tax as these are not services, rendered in relation to goods or vessels.

May be retained.

29 F. No. 160/2/2002-CX4 26.6.2002 Management Committee (CFH Scheme) operating as Paradeep Port is liable to pay service tax in as much as it is authorized by the port to render port service.

May be retained.

8

30 F. No. 67/16/2003 – CX4

10.11.2003 Services rendered during dry-docking and repairs to the ship are taxable. They are authorized in this behalf by the port authorities to provide such services.


31 F. No. B11/1/2001 – TRU

09.07.2001 Re-imbursement received from the manufacturer of motor vehicles for free service rendered to the customer is includible in the taxable value.

May be retained.

32 F. No. 248/1/2004 – CX4

05.03.2003 Teflon coating done at the time of sale by the dealer is not taxable for it is not a service provided by an authorized dealer.

May be retained.

33 B1/6/2005-TRU 27.7.2005 Amendments have been made (effective from 16.6.2005) to specifically include reconditioning or restoration of motor cars, two-wheeled and light motor vehicles carried out by the authorized service stations or centers under this service tax.


34 B1/6/2005-TRU 27.7.2005 Taxable services rendered by authorized service stations in relation to motor cars or two-wheeled motor vehicles was covered under clause (zo) of section 65 (105), while such taxable services performed in relation to light motor vehicles were covered under clause (zzj) of section 65 (105). Amendments have been made in clause (zo) so that taxable services rendered by authorized service stations in respect of motor cars, light motor vehicles or two-wheeled motor vehicles would now be taxable under this clause. Consequently, clause (zzj) has been omitted.


35 61/10/2003-ST (F. No. 165/2/2003-CX4)

14.7.2003 The Section 22 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 has been omitted vide Section 163 of the


9

Finance Act, 2002 with effect from 1st April, 2003. In light of the above, with effect from 1st April, 2003 the protection under Section 22 of the Prasar Bharati (Broadcasting Corporation of India) Act, 1990 is no longer available to the Prasar Bharati Corporation (Doordarshan and All India Radio) and they are liable to pay the Service Tax as the provider of the Broadcasting Services with effect from 1st April, 2003.

36 B1/6/2005-TRU 27.7.2005 MSO and cable operators are already liable to tax. In this year’s budget, the charges recovered by the broadcasting agencies from the multi-system operator for providing the signals have been specifically made liable to service tax. This completes the service tax chain from the customer to the broadcaster.


37 B1/6/2005-TRU 27.7.2005 Service tax is leviable on provision of direct to home (DTH) signals by the broadcasting agencies to the customers. The liability for payment of service tax in case of broadcasting agencies or organizations having their head office outside India would be on the branch office, subsidiary or any representative or any agent appointed by such agency or organization in India.


38 334/4/2006-TRU 28.2.2006 By virtue of the amendment made in 2006 Budget, insurance auxiliary service concerning life insurance business, to include service provided to a policy holder or any person or an insurer, including a re -insurer

Only explains the change made in 2006 Budget

10

39 F. No. B11/1/2002-TRU (Para 8)

1.8.2002

Handling of transshipment of export cargo from one international carrier to another international carrier or from a domestic carrier to an international carrier will not attract service tax.

May be retained.

40 F. No. B11/1/2002-TRU (Para 9)

1.8.2002

Transshipment of import cargo from international to domestic carrier cannot be said to be mere transportation of goods. It would be subject to service tax.

May be retained.

41 F. No. B/11/1/2002-TRU (Para 12)

1.8.2002

In the case of abandoned cargo, which is auctioned by CFS, no cargo handling service can be said to be rendered. As such no service tax is payable.

May be retained.

42 F. No. B/11/1/2002-TRU (Para 14)

1.8.2002 CFS sometimes undertake storing / washing/repairing and handling of empty containers for the shipping lines. This is not cargo handling service.

May be retained.

43 F. No. B11/1/2002-TRU (Para 4)

1.8.2002

Agricultural produce would cover all cereals, pulses, fruits, nuts and vegetables, spice, copra, sugarcane, jaggery, raw vegetable, fibers such as cotton, flax, jute, etc. indigo, manufactured tobacco, betel leaves, tender leaves, are similar products. However, manufactured products such as sugar, edible oils, processed food, etc. will not come under the preview of the term “agricultural produce”.

May be retained.

44 F. No. B11/1/2002-TRU

1.8.2002 (2) Therapeutic massage does not come in the ambit of taxable service. Therapeutic massage means a massage provided by qualified professional

There is some subtle distinction. Arguably, such service is in the nature of medical treatment. Continues to be valid. Perhaps

11

under medical supervision for curing diseases such as arthritis, chronic low back pain and sciatica etc. Ayurvedic massages, acupressure therapy, etc. given by qualified professional under medical supervision for curing diseases/disorders will come under the category of therapeutic massages. However, if the massage is preformed without any medical supervision or advice but for the general physical will being of a person, such massages do not come under the preview of therapeutic massages and they would be liable to service tax.

Naturopathy Hospitals should also be included in the clarification. If it is intended, as a policy to charge tax, the definition should be amply clear.

45 F. No. B11/1/2002-TRU

1.8.2002 Recognised Yoga Institute and centers that impart courses in yoga do not come within the preview of this service.


46 F. No. B11/1/2002-TRU

1.8.2002 Plastic surgery, cosmetic surgery done to improve appearance do not come within this taxable service as the service is medical service and not a service provided by beauty parlour.

May be retained.

47 B1/6/2005-TRU 27.7.2005 Amendments have been made in the definition of ‘beauty treatment’ so as to cover comprehensively all services provided by beauty parlours including hair cutting, hair dressing and hair dyeing within the purview of service tax.


48 F. No. B3/7/2003-TRU 20.6.2003 Vocational coaching and training services provided by typing and shorthand institutes, TV/vehicle repair training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer training centers,

The position has changed. Now, computer training centers are no longer entitled to exemption. Exemption applies to vocational training institutes and recreational training institutes.

12

hobby classes, institutes teaching martial arts, painting, dancing etc. are not taxable being exempt under notification No. 9/2003-ST.

49 F. No. B3/7/2003-TRU 20.6.2003 Service tax is applicable on postal coaching. Value shall include charges including postal charges.


50 F. No. B3/7/2003-TRU 20.6.2003 Institutes which issue a certificate, diploma or degree recognized by law are not to pay service tax even on imparting training for competitive examinations, various entrance tests, etc.


51 F. No. B/3/7/2003-TRU 20.6.2003 Individuals going to houses to impart tuition / coaching would not be chargeable to service tax, unless they do so on behalf of an institution.

May be retained.

52 F. No.B3/7/2003-TRU 20.6.2003 Free summer training/in-house training provided by employers to their employees is not taxable. However, it training is provided by hiring commercial coaching or training center, tax is payable.

May be retained.

53 B1/6/2005-TRU 27.7.2005 Circular explaining the effect of budgetary changes.


54 B1/6/2005-TRU 27.7.2005 Prior to 16/6/2005, such services covered maintenance or repair or servicing of any goods or equipment, excluding motor vehicles. However, since 16/6/2005, services relating to maintenance or management of immovable property (such as roads, airports, railways, buildings, parks, electrical installations and the like) have also been covered under the purview


13

of service tax. Such services would be taxable when provided under a contract or an agreement by any person or by a manufacturer or any person authorized by a manufacturer.

55 B1/6/2005-TRU 27.7.2005 Maintenance is to keep a machine, building etc. in a good condition by periodically checking and servicing or repairing. While repair is a one time activity, maintenance is a continuous process of which repairing may be incidental or ancillary.


56 B1/6/2005-TRU 27.7.2005 Prior to 16/6/2005, maintenance or repair carried out under a maintenance contract or agreement was covered under service tax. Repair or servicing carried out under a contract other than a maintenance contract or agreement was not covered within the purview of service tax. Maintenance or repair, including reconditioning or restoration or servicing of any goods or equipment, except motor vehicle (which is taxable under the category of authorized service station), undertaken as part of any contract or agreement (not necessarily maintenance contract or agreement) is now liable to service tax under this category of taxable service. To attract service tax under this category, the contract or agreement need not necessarily be a maintenance contract / agreement.


57 81/2/2005-ST (F. No. 354/132/2005-TRU)

7.10.2005 Maintenance of software is taxable Continues to be valid.

58 334/4/2006-TRU 28.2.2006 Maintenance or repair service, to be renamed as "management, maintenance or repair" service, and to include management of movable property;

No comments needed.

14

59 256/1/2006-CX4 7.3.2006 Service tax on maintenance, repair or servicing of software is leviable from 9-07-04, i.e. the day Notification No. 20/2003-ST was rescinded. Therefore, all efforts should be made to collect the service tax not paid by such service providers.

No comments needed.

60 B1/6/2005-TRU 27.7.2005 Effective from 16/6/2005, amendments have been made to define “franchise” as an agreement by which the franchisor grants representational rights to franchisee to sell or manufacture goods or provide service or undertake any process identified with the franchisor, by any symbol such as a trade mark, service mark, trade name or logo. No other condition is required to be fulfilled for levy of service tax.


61 B1/6/2005-TRU 27.7.2005 In view of the amended definition, License Production Agreements where principal allows production of goods bearing his brand name by another person would be covered under the purview of service tax under this category. Similarly, if rights are granted for rendering services identified with the principal on his behalf, such services by the principal to the service recipient would be taxable. Details of franchisees may be obtained from Yellow Pages, website http://franchiseindia.com/ and other advertisements.


62 334/4/2006-TRU 28.2.2006 Technical testing and analysis service amended in 2006 Budget to clarify that -

(i) it includes clinical testing of drugs and formulations; and


15

(ii) excludes testing or analysis for the purpose of determination of the nature of diseased condition, identification of a disease, prevention of any disease or any disorder in human beings or animals.

63 334/4/2006-TRU 28.2.2006 A clarificatory Explanation has been added (in 2006 Budget) to technical and testing analysis service. It is proposed to clarify that clinical testing of drugs and formulations is taxable and diagnostic testing and analysis is not taxable under this service.


64 F. No. B3/7/2003-TRU 20.6.2003 In Board Order No. 1/1/2002 dated 26.2.2002 it was clarified that certificate given under any code or statute cannot be considered as a consulting engineer service. This instruction no longer holds good after technical inspection are certificate service has been subjected to service tax.


65 F. No. B3/7/2003-TRU 21.8.2003 It is clarified that putting up a water tank, piping, electric wiring, in a residential premises, etc. is not taxable. However, installing a booster pump, air-conditions, water filter, water heater, etc. would be covered by the taxable service as all these things are machinery or equipment.

May be retained.

66 F. No. B1/6/2005-TRU 27.7.2005 The scope of this taxable service has been expanded by including specified installation services such as installation of electrical and electronic devices including their wirings and fittings, plumbing, drain laying or other


16

installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work, and sheet metal work, thermal insulation, sound insulation, fire proofing or water proofing, lift and escalator, fire escape staircases and elevators.

67 334/4/2006-TRU 28.2.2006 Erection, commissioning or installation service, to include erection, commissioning or installation of structures, whether or not pre-fabricated.


68 No. 80/10/2004-ST 17.9.2004 While event management service also relates to organizing such events but in that case the service are rendered to the organizer by an event management in relation to planning, promoting, organizing, etc. Thus, an organizer of a business exhibition is not covered under Business Exhibition service. Similarly while service rendered in relation to circular, label, documents, hoardings or any audio visual presentation of a product or service fall under “advertisement services” the services relating to actual exhibition or display of the product or service would fall in the category of “business exhibition service”.

Continues to remain valid.

69 F. No. B3/7/2003-TRU 21.8.2003 There is no contradiction between circular No. B3/7/2003-TRU dated 20.6.2003 or Circular No. 334/1/2003-TRU dated 28.2.2003 are regards meaning of IT Service. Any service of back office processing primarily in relation to operation of computer system will be covered as

May be retained.

17

IT services and not taxable. Payroll processing, accounts management, etc. even by using computer programmes, cannot be framed as activities primarily in relation to computer system. The use of computer in these services is secondary and the primary activity is that of business related work. Thus, these services will be taxable as Business Auxiliary Service. This is exactly the position that has been clarified in Circular dated 20.6.2003.

70 66/15/2003-ST (F. No. 249/4/2003-CX4)

5.11.2003 It is clarified that the services provided by distributors of mutual fund distribution are primarily in nature of the services of commission agent in relation to Clause (ii) and (iv) of the category of services mentioned in the definition of Business Auxiliary Services and hence should be leviable to service tax under this category. This activity goes not get covered under exemption Notfn. No. 13/2003-S.T. dated 20-6-2003 as this is not in relation to sale or purchase of goods. The exemption provided under Notfn. 13/2003-S.T. is applicable only for commission agents dealing in goods.


71 B1/6/2005-TRU 27.7.2005 Prior to amendment by Finance Act, 2005 under business auxiliary service was ‘production of goods on behalf of the client’. The activities that amount to manufacture within the Central Excise Act were not covered within the scope of the taxable service. Amendments have been made to define this taxable activity as ‘production or processing of goods for, or on


18

behalf of, the client’. The condition that only such activities would be liable to service tax which do not amount to manufacture under Central Excise Law would, however, continue.

72 B1/6/2005-TRU 27.7.2005 A point was raised whether ‘production of goods on behalf of the client’ covers situations where the service provider undertakes job work for the client. In view of the amendment, production or processing (not amounting to manufacture) done either for the client or on behalf of the client would be liable to service tax.


73 B1/6/2005-TRU 27.7.2005 Another taxable activity covered under business auxiliary service is ‘procurements of goods or services, which are inputs for the client’. In this case, the term ‘inputs’ had not been specifically defined in the Finance Act, 1994. The scope of the term input has been clarified by defining input ( under Explanation in section 65(19) of the Finance Act, 1994) for the purpose of this taxable activity as ‘inputs’ means all goods or services intended for use by the client. Thus, services rendered for procurement of any goods or services intended for use by the client would be taxable. This definition of input is different from the definition of input under Cenvat Credit Rules.


74 B1/6/2005-TRU 27.7.2005 Services provided by commission agents are specifically included within the scope of business auxiliary service. However, the term ‘commission agent’ was not defined in the


19

Finance Act, 1994. Definition of ‘commission agents’ has been provided in Explanation (a) in section 65 (19) of the Finance Act.

75 334/4/2006-TRU 28.2.2006 By virtue of the amendment made in 2006 Budget, Business auxiliary service, to include computerized data processing


76 334/4/2006-TRU 28.2.2006 Information technology service is explained under business auxiliary service. Presently, maintenance of computer software and computerized data processing is covered under the scope of information technology service for the purpose of classification under business auxiliary service. It is proposed to exclude the said service from the scope of information technology service under business auxiliary service. As a consequence of this change, maintenance Only explains the change made in 2005 Budget.of computer software and computerized data processing shall not be treated as information technology service under business auxiliary service.


77 341/13/2005-TRU 12.5.2005 Processes outsourced in gem and jewellery sector which amount to 'manufacture' within the scope of section 2(f) of the Central Excise Act, 1944 would not be liable to service tax. Production of goods on behalf of the client is leviable to service tax under 'business auxiliary service' only if such production activity does not amount to manufacture.


20

78 F. No. B41/18/2004-TRU (Para 5.2)

17.12.2004

Permission of goods transport agency for centralized registration under rule 4(3A) of service tax rule 1994, should not be denied unless there is substantial reason to believe that it would have to evasion of service tax.

May be retained.

79 80/10/2004-ST 17.9.2004 The implementation of service tax is kept in abeyance till such time the government comes out with the relevant rules/notifications prescribing the modalities for levy and collection.

Only of academic interest now.

80 80/10/2004-ST 17.9.2004 Opinion polls conducted to secure information on economic issues do not include market researches about specific product, service or utilities. Therefore, obtaining opinion of general public on economic issue like price rise, reaction of people to certain government or corporate policies, etc. would fall under the category of opinion poll services while information gathered in relation to specific products, services, etc. would fall under “market research agency service”.

May be retained.

81 80/10/2004-ST 17.9.2004 Intellectual property emerges from application of intellect, which may be in the form of an invention, design, product, process, technology, book, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e.IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the

Explains the scope of taxable service.

21

time being in force. As the phrase ''law for the time being in force'' implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services. A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a ''holder of intellectual property right'' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs

82 80/10/2004-ST 17.9.2004 It is clarified that pandal/shamiana services provided for pure religious ceremonies or congregation, for example, for worship of Gods/ Goddesses, are not liable to service tax. It is also clarified that in case a café, hotels, restaurants etc. delivers food to home and no charge, other than that for the cost of the foods, is charged (i.e. free home delivery) no service tax is leviable.


83 B1/6/2005-TRU 27.7.2005 Service tax is already leviable on the services provided by an outdoor caterer. Prior to 16//6/05, outdoor caterer was defined as a caterer providing catering services “at a place other than his own”. Doubts were expressed about the scope of the term “at a place other than his own” where the caterer provides catering service from a premises provided by the


22

recipient of the service, on rent. In such cases, whether the place is to be treated as the place owned by the caterer and therefore the services are not subject to service tax or the place is to be treated as not owned by the caterer and therefore subject the services to service tax. To remove the doubt, the present definition of “outdoor caterer” has been modified so as to provide that “outdoor caterer” includes caterer engaged in providing services in connection with catering at a place provided by way of tenancy or otherwise by the person receiving such services.

84 80/10/2004-ST 17.9.2004 Any programme produced (or any service rendered in connection of producing such programme) by a commercial programme producer, for telecasting/ radio transmission by a broadcaster would fall under this category of taxable service including cases where a programme is sold to the broadcaster. However, a service rendered by an employee of the service receiver (i.e. the broadcaster) or by an amateur photographer who, say, shoots a footage for himself, would not be charged to service tax.


85 80/10/2004-ST 17.9.2004 It has been provided that in the case of composite policies (risk plus saving) life insurer can at his option pay 1% of the total premium towards discharge of service tax liability. This shall not be applicable in case an insurance policy is towards risk only or where the premium gives details of risk premium and other premium separately. (refer notification No.


23

11/04-ST, dated 10.09.2004). However, those insurance companies who want to pay tax on risk premium as certified by the Appointed Actuary on a company basis can do so.

86 334/4/2006-TRU 28.2.2006 As a result of the amendment made in 2006 Budget “Life Insurance service” to include service provided to a policy holder or any person by an insurer, including a re –insurer


87 80/10/2004-ST 17.9.2004 Estate builders who construct buildings/civil structures for themselves (for their own use, renting it our or selling it subsequent) are not taxable service painless. However, of such real estate owner hire contractors / contractors, the payment made to such contractors would be subject to service tax under this head. The tax is limited only in case the service is provided by a commercial concern. This service provided by a labourer engaged directly by the property owner or a contractor who does not have a business establishment would not be subject to service tax.

May be retained.

88 80/10/2004-ST 17.9.2004 Construction which are for use of organizations or institutes being established solely by educational, religious, charitable, health, sanitation or philanthropic process and not for the purpose of profit are not taxable, being non-commercial in nature.

May be retained.

89 80/10/2004-ST 17.9.2004 In the case of multipurpose buildings such as residential-cum-commercial construction, tax

May be retained.

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would be leviable in case such immovable property is treated as a commercial property under the local/municipal laws.

90 80/10/2004-ST 17.9.2004 It is clarified that any pipeline other than those running within an industrial or commercial establishment such as a factory, refinery and similar industrial establishments are levy distance pipelines. Thus, construction of pipeline running within such an industrial and commercial establishment is within the scope of the levy.

May be retained.

91 80/10/2004-ST 17.9.2004 An abatement of 67% has been provided in case of composite contracts where the gross value charged includes the value of material cost (see Notification No. 15/2004-ST, dated 10.9.2004). This would, however, be optional subject to the condition that no credit of input goods, capital goods and no benefit (under Notification No. 12/2003-ST) of exemption towards cost of goods are availed. Notification No. 15/2004 has been amended to clarify that the gross amount charged for the purpose of abatement includes the value of goods and materials supplied or to be supplied by providing of construction of service.


92 F. No. B1/6/2005-TRU 27.7.2005 Renovation of a commercial or industrial building or civil structure has now been specifically included within the purview of service tax. Post construction completion and finishing


25

services are specifically included in the definition of commercial or industrial construction services.

93 F. No. B1/6/2005-TRU 27.7.2005 Construction of pipeline or conduit has been included within the purview of service tax. Thus, the construction of long distance pipeline which was earlier excluded from the coverage of construction services would now be liable to service tax. Repair, alteration, renovation or restoration of pipeline or conduit would now be liable to service tax. This levy would also be applicable for such activities performed on the old pipeline or conduits constructed before this levy has come into force.


94 F. No. B1/6/2005-TRU 27.7.2005 Construction of roads is not liable to service tax. However, if the contract for construction of commercial complex is a single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the value of construction of roads.

May be retained.

95 F. No. B1/6/2005-TRU 27.7.2005 When services provided under a contract consist of a number of different elements, a view has to be taken on the basis of the facts and circumstances of each case as to whether the service provider has made a single overall supply or a supply of different services which are to be treated differently.

May be retained.

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96 F. NO. B11/1/2001-TRU

9.7.2001 Taxable value is the fee charged for providing custodial services. However, service tax will not be leviable on NSDL or CSDL fees paid to the depositories and recovered from the customers on actual basis.


97 F. No. 341/56/2001-TRU

15.3.2002 It is clarified that “Banking and other Financial services” does not include Chit Fund as it is in the nature of cash management which is specifically excluded from the scope of “Banking and other Financial Services”.


98 50/11/2002-ST (F. No. 249/2/2002-CX4)

18.12.2002 In Board’s letter F. No. B11/1/2001-TRU dated 9.7.2001 it was clarified that in e-commerce transactions, no service of online information and database access/retrieval was involved and, therefore, e-commerce transactions would not, ordinarily, be covered under the service tax net. In this contact, doubt have been raised whether service tax is payable on services rendered by Central Depository Services (India) Ltd. (CDSL). CDSL is providing depository services in respect of DEMAT stocks to its customers. It has also implement “Electronic Access to Securities Information” (EASI) to enable the owner to access accounts in the first phase and transact depository business in the second phase of the project. CDSL charges certain fee such as registration fee, annual fee etc. for providing of service of EASI. It is clarified that the definition of “Banking and other Financial Series” as given in section 65 of

May be retained.

27

the Finance Act 1994 includes “provision and transfer of information and data processing”. The service of EASI provided by CDSL is a part and parcel of depository service and hence covered by the category of “Banking and other Financial Service”. They are liable to pay service tax on all depository service even if service provided through internet.

99 No. 83/1/2006-ST (F.NO.354/59/2006-TRU)

4.7.2006 The expression ‘any other person’ appearing in section 65(105) (zm) is to be read ejusdem generis with the preceding words. The expression ‘other financial services’ appearing under section 65(12)(a)(ix) is a residuary entry and includes those services which are normally rendered by banks or financial institutions. Hence, banking and other financial services provided by a banking company or a financial institution or a non-banking financial company or any other service provider similar to a bank or a financial institution are liable to service tax under section 65(105)(zm) of the Finance Act, 1994. Department of Posts is not similar to a bank or a financial institution and hence does not fall within the category of any other similar service provider. In view of the foregoing, it is clarified that services such as transfer of money through money orders, operation of savings accounts, issue of postal orders provided by the Department of Posts are not liable to service tax under section 65(105) (zm) read with section 65(12) of the Finance Act, 1994.

Recent Circular.

28

100 334/4/2006-TRU 28.2.2006 The definition of “Banking and other financial services” amended by the Finance Act 2006 to include – (i) services in relation to transfer of money

through different modes by any person; (ii) services provided as banker to an issue.


101 F. No. 341/18/2004-TRU (Pt)

17.12.2004 Explains the effect of tax introduced.

No comments needed.

102 B1/16/2005-TRU 27.7.2005 Transportation of goods, other than water, through pipeline or conduit is generally employed to transport petroleum and other petroleum products, natural gas, LPG, chemicals, coal slurry and other similar products. Such transport services are liable to service tax under sub-clause (zzz) of section 65(105) of the Finance Act, 1994. Consideration for the said transportation service provided may be payable periodically or from time to time. The service provider is required to pay service tax as and when payment is received for the services provided or to be provided.

It only explains certain aspects of the new taxable service when introduced in 2005.

103 B1/6/2005-TRU 27.7.2005 The definition of site formation and clearance, excavation and earthmoving and demolition is an inclusive definition and the activities specifically mentioned are indicative and not exhaustive. Prior to construction of buildings, factory or any civil structure, activity of mining or laying of cables or pipes, preparation services of site formation and clearance, excavation and earthmoving or leveling are normally undertaken


29

for a consideration to make the land suitable for such activities. Such services include blasting and rock removal work, clearance of undergrowth, drilling and boring, overburden removal and other development and preparation services of mineral properties and sites, and other similar excavating and earthmoving services. Demolition of structures, buildings, streets or highways is also undertaken for a consideration as a preparatory activity for subsequent construction activity or for clearing the site for any other purpose. All such activities fall within the scope of this service.

104 B1/6/2005-TRU 27.7.2005 This taxable service covers dredging which is generally undertaken for removal of material such as silt, sediments, rocks etc. of rivers, ports, harbour, backwater or estuary for providing adequate draught for ships and other vessels and to maintain shipping channels. Service tax is leviable only on dredging of river, port, harbour, backwater or estuary and dredging in any other cases does not attract service tax. The definition of dredging is an inclusive definition and the activities specified are only indicative and not exhaustive.


105 B1/6/2005-TRU 27.7.2005 This service covers geological, geophysical, geochemical and other prospecting services by studying the properties of the earth and rock formation and structures. It also includes services providing information on sub-surface earth formations by different methods such as


30

seismographic, gravimetric, magnetometric methods or other sub-surface surveying methods. Further, it covers surface surveying, services of gathering information on the shape, position or boundaries of a portion of earth’s surface by methods such as transit, photogrammetric, or hydrographic, for the purpose of preparing maps. It also includes surveying or collection of data by satellites. ‘Survey and exploration of minerals’, which is separately taxable service. This service covers other such activities excluding “survey and exploration of minerals” classifiable under sub-clause (zzv) of section 65(105) since 2004. Map making consists of preparation or revision of maps of all kinds such as topographic, hydrographic, roads, planimetric, cadastral, city maps etc. using various information sources. However, survey and map-making services rendered by an agency under the control of the Government or authorised by the Government, such as ‘Survey of India’ are specifically excluded and are outside the scope of this service.

106 B1/6/2005-TRU 27.7.2005 This taxable service includes,- (i) specialized cleaning services such as disinfecting and exterminating, sterilization of objects, etc. Such cleaning services would be


31

taxable when performed for commercial or industrial buildings and their premises, factories, plant and machinery, tank or reservoir of such buildings; (ii) Disinfecting, exterminating insects, rodents and other pests and fumigation services in respect of specified premises would be liable to service tax. In respect of multi-storeyed commercial buildings, window cleaning is a specialized service. Window cleaning services, including exterior window cleaning using swing stages would be liable to service tax; (iii) Floor cleaning and waxing, wall cleaning etc. performed on the premises of commercial or industrial buildings; (iv) Specialized cleaning services such as cleaning services for computer rooms, cleaning of machinery or plant, reservoirs and tanks of commercial or industrial buildings, furnace and chimney cleaning services and similar services. However, such cleaning services in relation to agriculture, horticulture, animal husbandry or dairying would be excluded from the purview of service tax. Further, such cleaning services in respect of non-commercial buildings and premises thereof would not be covered within the purview of service tax under this category.

107 B1/6/2005-TRU 27.7.2005 Legally, bodies which are established or constituted “under a statute” are different from bodies which are “formed and registered” under


32

a statute. Companies and Societies registered under the respective Acts are merely bodies “formed and registered” under these Acts and cannot be treated as “established or constituted” under these Acts. Therefore companies or societies would fall outside the scope of clause (25 a)(i) of Section 65 of Finance Act. In other words, any body formed and registered as a company or society which provides services, facilities or advantages for a subscription or any other amount to its members is liable to pay service tax under section 65(25a) of the Finance Act, 1994.

108 B1/6/2005-TRU 27.7.2005 Taxable services are defined as services provided to members by clubs or associations in relation to provision of services, facilities or advantages for a subscription or any other amount. Facilities or advantages are provided to members in return for a subscription or other consideration. The scope of the term any other amount is the amount paid by members, apart from membership fee or recurring subscription fee, such as amounts paid for provisions of services to the guests of a member, amount paid for get-togethers and functions charged over and above the subscription amount. This will also be liable to service tax. However, amount charged by club to its members for sale of items such as food or beverages would not be taxable provided the documents evidencing such sale are available. Any additional fee should be treated in the same


33

way as subscription. Life membership fees must be treated in the same way as subscription. In certain professions, persons cannot practice unless they are registered with a statutory body and have paid fees which are prescribed by law. In such cases, the organization is not providing any service in the course of its business and it is merely carrying statutory functions. Since no service is provided, the question of levy of service tax does not arise. However, if there is no statutory requirement, service tax is liable to be paid.

109 Circular No. 84 /2/2006-ST (F. No.137/123/2006-CX-4)

19.9.2006 Exemption under the Income Tax Act on the ground of being a public charitable institution is of no consequence to levy of service tax. Levy of service tax is entirely governed by the provisions contained in the Finance Act, 1994 and the rules made thereunder. The definition of “charity” and “charitable” as defined in Black’s Law Dictionary may be kept in mind. “Charity” is defined as “aid given to the poor, the suffering or the general community for religious, educational, economic, public safety, or medical purposes”, and “charitable” as “dedicated to a general public purpose, usually for the benefit of needy people who cannot pay for the benefits received”. The officer concerned should examine the matter on a case-by-case basis, and the decision should be made after taking into account all material facts and statutory provisions.

Recent Circular.

34

110 B1/6/2005-TRU 27.7.2005 This taxable service would cover packaging activity undertaken by a person for any other person. These kinds of packaging services may be done for pharmaceuticals (aseptic packaging), fragile goods, heavy machinery and hardware, using variety of automated or manual packaging techniques, including blister forming, and packaging, shrink or skin wrapping, form filling and sealing, pouch filling, bottling or aerosol packaging. This service also includes labeling or imprinting of the package. However, packaging activity which amounts to manufacture within the definition of section 2(f) of Central Excise Act, 1944 would not be liable to service tax. Service tax would be leviable on the gross amount charged for rendering the packaging services.


111 B1/6/2005-TRU 27.7.2005 Business establishments such as banks, insurance companies, companies listed on stock exchanges, real estate agents and other similar commercial entities engage the services of persons who compile and provide lists of names, addresses and other information from telephone directories, internet or any other source of information for the benefit of the business. Some agencies also provide services of sending documents, materials, information or any other goods by addressing, stuffing, sealing, metering or mailing the envelope or packet for or on behalf of the client. Such services are taxable under this category of service. Mail order business companies may engage the services of


35

mailing companies to dispatch goods to customers. Such mailing companies are also covered under this service.

112 B1/6/2005-TRU 27.7.2005 Residential complex constructed by an individual, which is intended for personal use as residence and is constructed by directly availing services of a construction service provider, is also not covered under the scope of the service tax and not taxable.

Trivial.

113 B1/6/2005-TRU 27.7.2005 Post construction, completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry and similar services done in relation to a residential complex, whether or not new, would be included as part of the construction activity of residential complexes for the purpose of levy of service tax.


114 B1/6/2005-TRU 27.7.2005 Service tax would be payable only on the gross amount charged by the service provider for the construction service provided and it would not include the cost of land and stamp duty paid for registration of land.


115 B1/6/2005-TRU 27.7.2005 Repair, alteration, renovation or restoration of residential complexes would also be liable to service tax. Such services provided in relation to residential complexes which are in existence before the levy has come into force and are not new would also be liable to be taxed.


116 F. No.332/35/2006-TRU

1.8.2006 If no other person is engaged for construction work and the builder / promoter / developer undertakes construction work on his own without engaging the services of any other


36

person, then in such cases in the absence of service provider and service recipient relationship, the question of providing taxable service to any person by any other person does not arise

117 334/4/2006-TRU 28.2.2006 A person engaged by a body corporate and provides various services in respect of sale or purchase of securities. These services include collection of application forms, keeping of records, and assisting in allotment of securities. The service providers are required to be registered under SEBI Rules.


118 334/4/2006-TRU 28.2.2006 A person who provides service to a body corporate. The services include maintenance of the record of holders of securities and dealing with all matters connected with transactions or redemption of securities. The service providers are required to be registered under SEBI Rules.


119 334/4/2006-TRU 28.2.2006 ATMs (Automated Teller Machines) may be owned by banks and other financial institutions who outsource a number of activities related to ATMs such as operations, maintenance or management of hardware and software, cash replenishment etc. In other cases, there is comprehensive outsourcing of entire ATM related services. Such outsourced services are taxable under this category. Some of the specific areas of outsourcing are mentioned in the definition of ATM operations, maintenance or management.


120 334/4/2006-TRU 28.2.2006 Services provided for recovery of any sums due to a commercial or business entity are covered


37

under this category. Under Securities and Reconstruction of Financial Assets and Enforcement of Security Act, 2002 and the relevant rules made there under, banks and other financial institutions appoint recovery agents.

121 334/4/2006-TRU 28.2.2006 This entry proposes to levy service tax on sale of time or space for advertisement, excluding sale of space for advertisement in print media. Sale of advertising time in television and radio by any person other than broadcasting agency or organization is also covered under this sub-clause. Some of the other modes of advertisement covered under this mode are internet advertisement, advertisement on buildings, vehicles, etc., advertisement in motion pictures, television serials, video and music albums, mobile phones, ATMs , films and television serials (known as product placement). It may be noted that advertisement in print media is excluded.


122 334/4/2006-TRU 28.2.2006 Service tax is leviable only when the sponsor is any body corporate or firm. Sponsorship of sports events is excluded from the scope of this levy. Proposal is also to collect service tax under reverse charge method from the recipient of service namely the body corporate or firm who sponsors the event. It may be noted that the organizers of events are not liable to pay service tax under sponsorship service.


123 334/4/2006-TRU 28.2.2006 Liability to pay service tax is on the aircraft operator who is the service provider. Economy class passengers are excluded from the levy of service tax under this sub-clause. Transit


38

passengers not leaving the customs area will not be covered under this sub-clause.

124 85/3/2006-ST 17.10.2006 Stopover / transfer at intermediate airports is incidental or part of the main journey. Stop over / transfer at intermediate airports outside India is of no relevance or consequence for levy of service tax under section 65(105)(zzzo) read with section 66 of the Finance Act,1994. Service tax is leviable on the total value of the ticket representing the consideration of a single composite service.

125 85/3/2006-ST 17.10.2006 Service tax is leviable on the total value of the ticket, including the domestic sector, treating the domestic sector as integral part of international journey

126 85/3/2006-ST 17.10.2006 Service tax is not leviable in cases where a passenger disembarks on an Indian airport as part of his trip.

127 85/3/2006-ST 17.10.2006 Service tax is applicable on a ticket purchased outside India for an international journey commencing from India (say Delhi–London) is leviable to service tax

128 85/3/2006-ST 17.10.2006 Service tax is leviable on the total value of the ticket in the case of round/return trip.

In the case of a round trip, it seems unfair to charge the tax on the total value. It is not a continuous journey. For the return journey, the passenger embarks from outside IndiakejnbIn fairness, the tax should be only on half of the total fare.

129 334/4/2006-TRU 28.2.2006 Service provided by Indian Railways is excluded. Suitable abatement for the amount paid by such service providers to railways for haulage services will be prescribed separately. The levy will, therefore, be restricted only to


39

that portion of the consideration received and retained by the service provider for the services provided.

130 334/4/2006-TRU 28.2.2006 These services include transaction processing, routine administration or accountancy, customer relationship management and tele-marketing. There are also business entities which provide infrastructural support such as providing instant offices along with secretarial assistance known as "Business Centre Services". It is proposed to tax all such outsourced services. If these services are provided on behalf of a person, they are already taxed under Business Auxiliary Service. Definition of support services of business or commerce gives indicative list of outsourced services.


131 334/4/2006-TRU 28.2.2006 A seller of property normally enters into an agreement with an auctioneer to conduct the auction for a consideration. However, services provided in relation to auction of property under direction or orders of a Court of Law or auction by the Government are not taxable.


132 334/4/2006-TRU 28.2.2006 Public relation agencies are engaged to provide services relating to image or communication management. These services are proposed to be taxed. The term "public relations" is defined.


133 334/4/2006-TRU 28.2.2006 Owners or operators of ships enter into an agreement with ship managers for provision of a wide range of services in respect of running and


40

operations of ships. Indicative list of services provided under this category are mentioned under the definition of "ship management service".

134 334/4/2006-TRU 28.2.2006 Presently internet telephony services are taxable under Online information and data base access

and or retrieval services". Proposal is to create a separate service under the name ‘Internet

Telephony Service’.


135 334/4/2006-TRU 28.2.2006 Services provided to any person embarking from any port in India for transport by cruise ships is proposed to be taxed.


136 334/4/2006-TRU 28.2.2006 Credit card services are presently taxable under banking and other financial services. The proposal is to tax comprehensively all services provided in respect of, or in relation to, credit card, debit card, charge card or other payment card in any manner. The major services provided in relation to such services are specifically mentioned under the definition "credit card, debit card, charge card or other payment card service".


Documents

F.No.354/28/2007-TRU Government of India Ministry of