definition of services and issues in negative list by shri shailesh sheth

8/10/2019 Definition of Services and Issues in Negative List by Shri Shailesh Sheth

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07/06/14 Adv. Shailesh Sheth

RAJKOT BRANCH OF WIRC OF ICAI

Subject:Definition of Service & issues in Negative List andExemption

Date: Saturday, 7thJune, 2014Faculty:Shailesh P. Sheth, Advocate and Senior Advisor (Ind

BDO India LLPVenue: Hotel Jayson, RajkotEmail id:[email protected]

[email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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A. Provisions relating to Negative List-based levy of Service Ta

implications

B. Definition of Service as per Section 65B (44) of the Financ

1994 as amended & its meaning and scope

C. Issues in Negative List contained in Section 66D of the Fina

1994 as amended

D. Issues in Mega Exemption Notification No.25/2012-ST dated

20.06.2012 effective from 01.07.2012

SCOPE OF PRESENTATION


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ABBREVIATIONS:

Bill Finance Bill, 2012CCR Cenvat Credit Rules, 2004ESR Export of Services Rules, 2005FA Finance Act, 1994 as amended by Finance

2012ISR Taxation of Services (Provided from Outs

and Received in India) Rules, 2006POTR Point of Taxation Rules, 2011 as amendedPPSR Place of Provision of Services Rules , 201

SP Service ProviderSR Service ReceiverSTR Service Tax Rules, 1994 as amended


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A. Provisions relating to Negative Listbased Service Tax & its implications.


5/8007/06/14 Adv. Shailesh Sheth

Evolution of Service Tax:

Chief contributor to GDP

Contribution to Revenue not commensurate with

contribution to GDP

Birth of Service Tax in 1994

Initially limited to only three services viz.

General Insurance

Stock Brokers

Telephone services

Gradual expansion of scope of levy

Presently covers 119 services

Revenue earned: Rs. 427.00 Crores (approx) in 1994

RE for 2011-12: Rs.95,000 Crores

RE for 2012-13: Rs. 1,32,697 Crores.

BE for 2013-14: Rs.1,80,141 Crores.



Positive List-based Levy & its shortcoming

Presently, levy is based on positive list (on selective approa

Shortcomings of the present tax regime:

No independent Legislation

Service is not defined

Service specified in Section 65 (105) are only taxable

Non-specified service are non-taxable

Independent definitions tend to be vague, broad and

overlapping

disputes relating to interpretation, classification andtaxability

Exemptions-raj rule



Positive List-based Levy to Negative List-base

2012-Service Tax attains the ageof majority

Expanding horizon & Budget 2012 Shift from Positive List- based levy or Selective Approach to

based levy or Comprehensive Approach

A paradigm shift


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Salient features of Negative List-based Lev

No separate Legislation, yet Term Service exhaustively defined for the first time

All services, other than those specified in Negative List, liab Introduction of Concept of Declared Services New charging Section 66B Expressions like Taxable Territory & Non-Taxable Territory

and defined Place of Provision of Service Rules, 2012 introduced

PPSR to replace ESR & ISR Exemption-raj continues: Mega Exemptions Independent exemptions Abatements


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Salient features of Negative List-based Lev

Provisions relating to the new scheme of levy effective from 0

Provisions of existing Section 65, 65A, 66 & 66A ceased to appnotified date i.e. 01.07.2012

Re-birth result of your Karma in the present life?

A definite, concrete and inevitable step towards GST

Marriage with Central Excise in offing?

Engagement already announced

Common Excise & Service Tax Registration

Common Excise & Service Tax Return


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SERVICE as defined

vide Section 65B (44)

MOLECULE OF NEGATIVE LIST- BASED LEVY STRUCTURE

NEGAT

SE[Se

CHARGING

PROVISIONS

[Sec. 66B]

DECLARED

SERVICES

[Sec. 66E]

PL

PROV

SERVIC


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Charging Provisions of Section 66B w.e.f.01.0(Not. No. 19/12-ST dt. 05.06.2012 ref

There shall be levied a tax (i.e. Service Tax)

@ 12%

on the value of all services

other than the services specified in the Negative List

provided or agreed to be provided

in the taxable territory by one person to another and

collected in such a manner as may be prescribed

CHARGING PROVISION [S i 66B]


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CHARGING PROVISION [Section 66B] Section 66B replaced old charging Section 66 w.e.f. 01.07.201 Comparison of present and old charging Sections:

Present Section 66B Old Section 66 read with Section 65(

There shall be levied a tax (Service Tax) Same

At the rate of 12% Same

Onthe value of Ofthe value of

All Services Taxable services referred to in sub-clau(zzzzw) of Section 65(105)

Other than those specified in negative list ----

Provided or agreed to be provided Provided or to be provided

In the taxable territory ----

By one person to another person To any person, client, etc. by any perso

Collected in such manner as may be prescribed Same


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TAXATION SCHEME PARADIGM SHIFT w.e.f. 01

Shift from selective approach to comprehensive approach of taxation

Selective approach (present scheme of taxation):

Term service not defined

Statute lists out taxable services [Section 65(105)]

Only listed services are taxable. Non-listed services are not taxable

Exemptions are granted through notifications

Comprehensive approach (new scheme of taxation):

Term service is defined [Section 65B(44)] Concept of declared service [Section 66E] Deemed Service

Service includes declared service [Section 65B(44)]

Statute lists out non-taxable services [negative list Section 66D]

All services (including declared services) are taxable except those sp

list


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Services provided in taxable territory would be taxable

Services provided in non-taxable territory would not be taxable

Taxable territory means whole of India (excluding Jammu & Kashmir)

read with Section 65B(52)]

Place of Provision of Services Rules, 2012 prescribes the place where

deemed to be provided

Self service not taxable: Service is a bilateral transaction

Only bilateral transactions can be taxed


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Exception to above general rule:

Transactions between unincorporated association or body

and its members

Transactions between two establishments of same person

in taxable territory and other located in non-taxable terr

Exemptions granted through notifications (mainly mega NotifiNo. 25/12-ST dt.20.06.2012)

STEPS FOR DETERMINING SERVICE TAX LIABIL


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STEPS FOR DETERMINING SERVICE TAX LIABILw.e.f. 01.07.2012

Whether activity amounts to Service as defined U/s.65B(44

Whether activity amounts to Declared service as defined U/

If answer to any of above is yes, check up whether said activiunder negative list of services U/s. 66D?

If answer to above is no, refer place of Provision of Service Ru

check up whether services are provided within taxable territo

If answer to above is yes, check up whether activity is exempMega Notification No.25/12-ST dt. 20.06.2012 or any other no

If answer to above is no, activities is liable to service tax

Determine value of taxable service considering Valuation Rule

required

STEPS FOR DETERMINING SERVICE TAX LIABIL


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STEPS FOR DETERMINING SERVICE TAX LIABILw.e.f. 01.07.2012

Apply abatement Notification, if relevant, to work out abated

to tax

Calculate service tax by applying the applicable rate

Work out service tax payable for respective month or quarter

Determine the Point of Taxation as per POTR

Pay service tax by utilisation of Cenvat credit and/ or in cash

D i i f R l f bl S


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Determination of Tax Rate, Value of Taxable ServExchange Rate [Section 67A] w.e.f. 28.05.2

Following prevailing on the date of provision of service / rece

advance will be relevant for discharging service tax liability: Tax rate

Value of taxable services

Exchange rate.

Subsequent change in any of above would not alter service talater date.

The exchange rate would mean the rate of exchange referred

Explanation to Section 14 of the Customs Act, 1962.


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Section 66B - A comprehensive provision:

nature of tax

taxable event

rate of tax

person liable to pay tax

measure of tax

situs of services i.e. Taxable Territory & Place ofProvision of Services Rules, 2012

Point of Taxation (Service provided or agreed to beprovided)

collection mechanism

Charging Provisions of Section 66B.


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Legal character of tax

Rate of tax:

Stands increased to 12% w.e.f. 01.04.2012

Value of services: Section 67 of FA Valuation Rules, 2006 Amendments to Valuation Rules, 2006 w.e.f.01.07.2012

All services (barring exceptions) are taxable: Term Service defined [S. 65B(44)] Term Taxable Service defined [Sec. 65B (51)] Comparison between Sec. 65 (105) & Sec. 65B (51)

Section 66B - various elements analyzed


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Services specified in Negative List are excluded (Sec. 66D)

Phrase provided or agreed to be provided

linked to Point of Taxation Rules, 2011

S. 66B vis--vis S. 67 vis--vis S. 65B(44)

Insertion of Sec. 67A:

date of determination of

rate of Service Tax

value of taxable service

rate of exchange

in force or as applicable

at the time when taxable service provided or to be provided

Section 66B - various elements analyzed.


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Sec. 67A effective from 28.05.2012

Rule 5B of STR deleted w.e.f.01.07.2012 Amendments to POTR

Not. No. 4/12-ST dt.17.03.2012

Effective from 01.04.2012

Minor amendment w.e.f.01.07.2012 (Not. No.37/12-ST dt

refers)


S ti 66B i l t l d


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Situs of Levy:

Services provided in Taxable Territory alone taxable

Taxable Territory defined [Sec. 65B(52)] means the territory to which the provisions of the cha

Sec. 64(1) provisions apply to whole of India except t& K

Non Taxable Territory defined [Sec. 65B(35)]

means the territory which is outside the taxable territ

Provisions of ESR & ISR were not applicable to the state of

Concept has undergone fundamental change



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Taxation based on Place of Provision of Services

Section 66C empowering Central Government to prescribe rules

for determination of Place of Provision of Service Rules

Place of Provisions of Services Rules, 2012 introduced vid

No.28/12-ST dt.20.06.2012 w.e.f.01.07.2012

Not. No.28/12-ST issued under S.66C r/w S.94(2)(hhh)-is No

valid?

Situs of levy..


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Taxable Person

Term Taxable Person not defined

Revised Concept Paper

Section 68(1) of FA

Section 68(2) of FA

C.G.s powers to notify a person liable to pay Service

Rule 2(1)(d) of STR

Mechanism known as Reverse Charge

Section 68(2) stands amended from 01.07.2012

Insertion of proviso

C.G.s powers to apportion liability between SP & SR

Taxable Person.


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Not. No.30/12-ST dt.20.06.2012 w.e.f. 01.07.2012 person liable to pay Service Tax apportionment of liability expanding coverage of Reverse Charge

Earlier Not. No.15/12-ST dt.17.03.2012 alongwith Not. No.36/04-ST dt.31 Issue of Notification under S.68(2)

Powers of apportionment available only under proviso to S.68(2) effective

Implications vis--vis small scale exemption Not. No.33/12-ST dt.20.06.2001.07.2012

Duality of Persons Service Provider Service Recipient Term Person exhaustively defined [Sec. 65B (37)] Exceptions carved out under Section 65B(44)

Collection Mechanism

Taxable Person.


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B. DEFINITION OF SERVICE AS PER SECTION 6OF THE FA & ITS MEANING AND SCOPE.


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SERVICE

Transfer of title ingoods or

immovableproperty

A transaction inmoney or

actionable claim

Provision ofservice by an

employee to theemployer

Any activity whichconstitutes merely

Declared services

For consideration

Carried out by aperson for another

Any activity

But shall notinclude

means And includes

or

Deemed Sale

under Article366(29A)

or


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Definition of term Service & its analysis-[Sec.

Section 66B Charging provision

All services are taxable except those specified in the vide Section 66D

Definition of term Taxable Service [Sec. 65B(51)]

Importance of definition of term Service

Term Service defined vide Section 65B(44) First ever definition of the term Service

Is the definition concise, comprehensive, clumsy or co


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Definition consists of three limbs viz.

Means Clause

Includes Clause

Excludes Clause

3 explanations at the end

Construction of definition

Old habits die hard

Definition of term Service & its analysis-[Sec. 65

DEFINITION OF SERVICE


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Means Clause:

any activity

carried out by a person for another

for consideration

Any activity

A very broad term

not defined in the Act

few relevant definitions or explanations of activity

business

A few debatable issues

TRU Circular dt.16.03.2012

1. Guidance Note 2

2. Para 2.1.1

Education (?) Guide issued on 20.06.2012

DEFINITION OF SERVICE .



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Includes clause:

Section 66E Declared Services

Section 65(22) Declared Service defined

Section 65B (44)- Service includes Declared Services

Section 66E list of Declared Services:


i. Renting of immovable property

ii. Construction of a complex, building, civil structure or

including sale of under construction propertyiii. Temporary transfer or permitting the use or enjoyment

intellectual property right

iv. Development, design, programming, customization, ad

upgradation, enhancement and implmentation of soft



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v. Agreeing to the obligation to refrain from an act or to tolerate

an act or a situation or to do an act

vi. Transfer of goods by hiring, leasing, licensing etc

vii. Activities in relation to delivery of goods on hire purchase or any

payment by installments.

viii. Service portion in execution of a works contract

ix. Service portion in an activity wherein food or any article of humaconsumption or any alcoholic/ non-alcoholic drink is supplied.

All above services were taxable earlier except Item No. V

Overlapping VAT on items (ii), (iii), (iv), (vi), (vii), (viii) and (ix)




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Person liable to pay Service Tax -

Term Taxable Person proposed to be defined in revised

Paper

A case of missing definition

word economic in relation to activity missing from th

of Service

Comparison with definition in enactments of other coun

issues arising out of proposed definition

Carried out by a person for another

self service excluded




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Exclusions:

Service does not include merely a transfer of title:

in goods

in immovable property

by way of gift or sale or in any other manner

Goods defined vide Section 65B (25)

Immovable Property not defined:

Definition as per Sec. 3(26) of General Clauses Act, applicable




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Transfer of Title

Signifies change in ownership

mere transfer of custody or possession not transfe

illustrations

Significance of word merely

Education Guide

Transaction involving an element of another activiaddition to transfer of title in goods or immovable

Clarification confusing and contradictory

Composite transaction BSNLs case



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Goods includes Securities

transfer of title in securities

Treasury operations in a company & its implications on the entitCenvat credit on input services

Trading in goods covered under Negative List S.66D Trading in goods (including securities) Is it service? Is it exclu

S.65B(44)?

A transaction in money or actionable claim excluded

Money defined vide Section 65B (33)

Actionable Claim defined vide Sec. 65B(1)

Definition given in Section 3 of Transfer of Property Act, 1882 ad Activities considered as Deemed Sale under Article 366(29A)

excluded Amendment to Finance Bill, 2012 on 08.05.2012 and its purpose Dual taxation sought to be avoided

DECLARED SERVICE Vs. DEEMED SALES EXCLU


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DECLARED SERVICE Vs. DEEMED SALES EXCLU

Transfer, delivery or supply of goods in deemed sale under Art

366(29A) of Constitution which is excluded from definition of

Transfer of property in goods otherwise than in pursuance

Transfer of property in goods involved in execution of wo Delivery of goods of hire purchase or installment system

Transfer of right to use any goods

Supply, by unincorporated association/body of persons to

Supply, by way or part of any service, of goods being food

other article for human consumption Are deemed sale and declared services in contradiction?

Construction contracts Use of IPRs Software development

Hire Purchase & Leasing Works contract Restaurant sale/Outdoor cater



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Provision of service by an employee to the employer in the coursemployment excluded

Service by employer to employees not excluded?

Latest draft circular by CBEC Whether partner is an employee of the firm? Leviability of service tax on Directors remuneration

Fees taken in any court or tribunal excluded

Other Exclusions:

Functions performed by MPs, etc.

duties performed by any constitutional authorities

duties performed by any person as a chairperson or membe

in a government body or Local authority



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Explanation 3to Sec.65B(44) Deemed Distinct Persons

1. Establishment of a person located in a taxable territanother establishment of such person located in non

territory Similar provision in Section 66A(2)

Illustration

2. An unincorporated association or body of persons anmembers thereof

Explanation to Section 65 vis--vis the presexplanation

Principle of Mutuality of interest, is it sti

Placement of Explanation 2 poor drafting?



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Person:

defined vide section 65B(37)

inclusive but exhaustive definition

Term Consideration not defined Definition includes abstained from doing or abstains fro

promises to abstain from doing

Is this service or consideration?

Consideration includes monetary payment and non- moneconsideration as well as deferred consideration

Illustrations in Education Guide Determination of value as per Sec.67 read with Valuation

of non-monetary consideration

Consideration shall it flow from the beneficiary only ?

Direct and immediate link required ?


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c.ISSUES IN NEGATIVE LIST CONTAINED IN SECTOF THE FINANCE ACT, 1994 AS AMENDED

Negative List of Services [Section 66D] w.e.f. 01


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Services provided by Central Government, State Government,Territory or a local authority except for following services(i) speed post, express parcel post, life insurance and agenc

provided by post department to a person other than Gove(ii) services in relation to an aircraft or a vessel, inside or ouprecincts of a port or an airport;

(iii) transport of goods or passengers; or(iv) support services, other than services covered under claus

above, provided to business entities.

Services by the Reserve Bank of India.

Services by a foreign diplomatic mission located in India.

Specified services relating to agriculture or agriculture produc



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Trading of goods.

Process amounting to manufacture or production of goods.

Selling of space or time slots for advertisements other than advertisements bro

or television.

Service by way of access to a road or a bridge on payment of toll charges.

Betting, gambling or lottery.

Admission to entertainment events or access to amusement facilities.

Transmission or distribution of electricity by Electricity Transmission or Distrib

Services by way of

(i) pre-school education and education up to higher secondary school or equ

(ii) education as a part of an approved vocational education course.



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(iii) education as a part of a curriculum for obtaining a qual

recognized by law;

Services by way of renting of residential dwelling for use

residence; Services by way of

(i) extending deposits, loans or advances in so far as the cois represented by way of interest or discount;

(ii) inter-se sale / purchase of foreign currency amongst ba

authorized dealers or amongst banks and such dealers;

Transportation of passengers(i) a stage carriage;

(ii) metro, monorail or tramway;

(iii) inland waterways;

(iv) metered cabs, radio taxis or auto rickshaws;



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(iv) railways in a class other than

first class; or

an air conditioned coach;

(v) public transport in a vessel other than predominantly for to

purpose between places located in India

Services by way of transportation of goods

(i) by road except the services of

a goods transportation agency; or

a courier agency;

(ii) by an aircraft or a vessel from a place outside India to custclearance

(iii) by inland waterways;

Funeral, burial, crematorium or mortuary services including tran

the deceased.

Implications of Negative List vis--vis CCR,


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Implications of Negative List vis vis CCR,

Charging S.66B-Exclusion of services covered by Negativ

Rule 2(e)- Exempted Service definition amended to

Taxable service which is exempt under a Notification

Service on which no Service Tax is leviable under S.66B

Taxable service in respect of which abatement is availe

non-availment of Cenvat credit on inputs and input serv

Services covered by the Negative List are Exempted

terms of Rule 2(e)

Implications of Negative List vis--vis CCR,


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Person providing taxable service (or manufacturing duti

and also providing services covered by Negative List H

CCR, 2004

Compliance with Sub-rule (2) or (3)(i) or (ii) or (iii) read

rule 3A of Rule 6 mandatory

Implications of services covered by exclusions under S.6

vis Rule 6 of CCR, 2004

Whether excluded activities under S.65B(44) are Exem

Service?

Implications of Negative List vis--vis CCR, 20


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Trading in goods (including securities) covered under Negvide S.66D(e)

Manufacturer/ SP engaged in dutiable/ taxable activity & tra Implications under Rule 6 of CCR, 2004

Whether Trading in goods (including securities) a Service

excluded from the definition of Service vide S.65B(44)?

Legal position with regard to Trading prior to 01.04.2011

Legal position between 01.04.2011 and 30.06.2012 Implications of judgement of CESTAT in Orion Appliances Ca

Insertion of Explanation in Rule 2(e) of CCR, 2004 whether retrospective ?

Implications of Negative List vis--vis CCR, 20


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Clause (f) of S.66D Any process amounting to manufactureproduction of goods

Meaning & Scope of the entry Clause (40) of S.65B Process amounting to manufacture or

goods defined

Relationship of entry at Clause (f) of S. 66D with Entry at serMega Exemption Notification No.25/2012-ST dated 20.06.20

Intermediate production process carried on as job work ex


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D. Issues in Mega Exemption Notification No.25/2dated 20.06.2012 effective from 01.07.2012

Exemptions A paradoxical situation contin Notification No. 25/12-ST dt.20.06.2012 effective from 01.07.2012

M i ifi i i h d d d li N N 12/12 ST d 17 03 2012


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Mega exemption notification with expanded scope compared to earlier Not. No.12/12-ST dt.17.03.2012 Other exemptions retained

Small service provider exemption or threshold exemption(Not.No.33/12-ST)

Rebate of Excise duty/ Service Tax to the exporters (Not. No.39/12-ST)

Taxable services received by SEZ unit or developer (Not.No.12/13-ST superseding Not 40/12-ST)

Services provided to diplomatic mission (Not. No.27/12-ST)

Services provided by:

Recognized technology business incubator (TBI) & Recognized Science and Technology Entreprene[Not. No. 32/12-ST]

Exemption in respect research and development cess (R&D cess) (Not. No.14/12-ST dt.17.03.2012

Exemption in respect of property tax on renting of immovable property (Not.No.29/12-ST)

GTA services to exporter of goods (Not. No.31/12-ST)

Rescinding of 81 Notifications w.e.f. 01.07.2012 (Not. No.34/12-ST)

Exemptions A paradox


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Exemption raj continues

Not compatible with GST Breaking of credit cha

Exemption to copyright for recording of cinematog

films vide budget justification

Implications of Exemption raj

Mega Exemption Notification 25/12-ST dt.20.0


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This notification is effective from 01.07.2012

Services provided to the UN/ specified international organizat- Also exempted earlier

Health care services by clinical establishment, authorized mepractitioner or paramedics- Non-taxable earlier

Services by a veterinary clinic- Non-taxable earlier

Specified Charitable activities by an entity registered U/s 12A

Income-tax Act, 1961- Earlier no such specific exemption for trust

Services of renting of precincts (land or building) of a religioumeant for general public conduct of any religious ceremony- Non-taxable earlier



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Services provided by an arbitral tribunal to:a. Any person other than a business entityb. A business entity with a turnover upto Rs. 10 Lakh in the

financial year

- Earlier arbitration service was exempted under NotificatiNo.45/2011-ST dt. 12.09.2011

Services provided by an individual as an advocate or a partneadvocates by way of legal services to,:a. An advocate or partnership firm of advocates providing leb. Any person other than a business entity;

c. A business entity with a turnover upto Rs. 10 Lakh in the financial year

- Earlier legal consultancy provided by an individual to indirepresentation services provided by an individual to an in/ non-business entity was not taxable

Mega Exemption Notification 25/12-ST dt.20.0 Services provided by a person represented on an arbitral tribu


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arbitral tribunal- Earlier arbitration service was exempted under Notificati

No.45/2011-ST dt. 12.09.2011

Technical testing/ analysis of newly developed drugs/ vaccineremedies on human participants by an approved clinical reseaorganization- Earlier exempted under Notification No.11/2007-ST dt. 0

Training/ coaching in recreational activities relating to arts, csports

- Earlier services relating to sports was not taxable.- Earlier services relating to recreational activities such as

singing, martial arts or hobbies were exempted under NoNo.3/2010-ST dt. 27.02.2010

Mega Exemption Notification 25/12-ST dt.20.0 Sponsorship of tournaments or championships organized by no


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organizations- Earlier exempt vide Notification No.30/2010-ST dt. 01.07

Services of auxiliary educational services provided to or by an

institution in respect of education exempted from Service tax- No specific exemption earlier

Services of renting of immovable property provided to [or byremoved vide Not. No. 3/13-ST]an educational institution in education exempted from Service tax:- Earlier renting of immovable property to an education wa

Services provided to a recognized sports body by an indivplayer, referee, umpire, coach or manager for participatitournament or championship of another recognized sport

- Non taxable earlier



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Services provided to the Government or local authority for coerection, commissioning, installation, completion, fitting outmaintenance, repair, alteration, renovation or restoration of

a civil structure meant predominantly for use other than focommerce, industry or any other business or profession a historical monument or archaeological site a structure meant predominantly for use as an educational

art or cultural establishment canal, dam or other irrigation works pipeline, conduit or pl

drinking water supply, water treatment, sewerage treatmedisposal; or

a residential complex predominantly meant for self-use or employees or others such as MP, MLA, Member of local auth

- Earlier above services were non taxable



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Erection, construction, commissioning, installation, completioout, maintenance, repair, alteration, renovation or restorati

road, bridge, tunnel, transport terminal for use by genera

- Earlier non-taxable, even if provided to private parties (sucontroversy of maintenance and repairs)

civil structure or any original works pertaining to scheme uJawaharlal Nehru National Urban Renewal Mission/ Rajiv A- Also exempted earlier

building owned by an entity registered under section 12AAIncome-tax Act, 1961 and meant predominantly for religiogeneral public

- Being non-commercial construction, earlier it was non-taxto controversy of maintenance and repairs



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pollution control or effluent treatment plant except located as a

factory or structure meant for funeral, burial or cremation of de

- No such exemption earlier

Erection or construction of original works pertaining to airport, port or railways, including monorail or metro;


single residential unit otherwise as a part of a residential compl

- Earlier complex having 12 or less residential units in complex an

construction for personal use were non taxable low-cost houses up to a carpet area of 60 square metres per hou

approved housing project

- Earlier only specified schemes were exempt



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Storage infrastructure for agricultural produce including a

storages for such purposes; or

- Earlier erection of cold storage equipments were exempt

Notification No. 12/2010-ST dt. 27.02.2010

mechanized food grain handling system, machinery or eq

units processing agricultural produce

- Earlier exempted under Notification No. 12/2010-ST dt. 2

Temporary transfer or permitting the use or enjoyment o

relating to original literary, dramatic, musical, artistic wo

cinematograph films



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[w.e.f. 01.04.2013 vide Not. No.3/13-ST dt.01.03.2

clause is substituted to exempt cinematograph film

exhibition in cinema hall or cinema theatre only]

- Earlier all such services were non-taxable except se

relation to cinematograph films


S i b f i ti t i f lk l i l t f f


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Services by a performing artist in folk or classical art forms ofdance or theatre excluding services as a brand ambassador- Non-taxable earlier

Collecting or providing news by an independent journalist, PreIndia or United News of India- Non-taxable earlier

Accommodation in hotel, inn, guest house, club, campsite or commercial places having declared tariff of less than Rs.1000- Non-taxable earlier

Restaurant, eating joint or a mess not having air-conditioninair heating or license to serve alcoholic beverages

- Non-taxable earlier.


f 01 04 2013 l 19 i b tit t d id N t N 3/13


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w.e.f. 01.04.2013, clause 19 is substituted vide Not. No.3/13-

01.03.2013

Services provided in relation to serving food or beverages by a

restaurant, eating joint or a mess, other than those having theair-conditioning or central air-heating in any part of the estab

at any time during the year.

Recent judgement of the Kerala H.C. declaring the levy of serv

restaurants etc. ultra vires and its implications.

Kerala Classified Hotels and Resorts Association and Others V/India & Others

2013-TIOL-533-HC-Kerala-ST

Mega Exemption Notification 25/12-ST dt.20.0 Rail or water transportation of specified/ essential goods:


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Relief materials (for victims of natural or man-made disasters, calam

accidents or mishap), defence or military equipments, newspaper or

registered with the Registrar of Newspapers, railway equipments or m

agricultural produce, foodstuff (including flours, tea, coffee, jaggeryproducts, salt & edible oil, excluding alcoholic beverages), chemical

oilcakes

- Earlier exempt under various notifications (amended w.e.f.01.04

Not. No.3/13-ST dt.01.03.2013)

Road Transportation of : (substituted vide Not. No.3/13-ST)

Agriculture produce, foodstuff (including flours, tea, coffee, jaggeryproducts, salt & edible oil, excluding alcoholic beverages), chemical

oilcakes, newspaper or magazines registered with the Registrar of Ne

Relief materials (for victims of natural or man-made disasters, calam

accidents or mishap), defence or military equipments in a goods carr

- Earlier exempt under notification No.33/2004-ST dt.03.12.2004

Mega Exemption Notification 25/12-ST dt.20.0 goods in a single carriage where gross freight is less than Rs. 1500/-


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g g g g g


goods where gross freight for single consignment is less than Rs.750/


Hiring of :

a motor vehicle (meant to carry more than twelve passengers) to a st

undertaking

motor vehicle for goods transportation to goods transport agency- Earlier exempt under notification No.1/2009-ST dt.05.01.2009


Transport of passengers by :


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Transport of passengers by :

air where passengers are embarking or terminating in airports lo

specified states

- Earlier exempt under Notification 27/2010-ST dt. 22.06.2010

contract carriage other than for tourism, conducted tour, charte- Non taxable earlier

Ropeway, cable car or aerial tramway


Motor vehicle parking to general public excluding leasing of space to

providing such parking facility (omitted w.e.f.01.04.2013 vide Not. N

- Non taxable earlier but liable to tax w.e.f.01.04.2013

Following Services provided to the Government or a local authority o

authority by way of:

Mega Exemption Notification 25/12-ST dt.20.0 Carrying out any activity in relation to any function ordinarily en


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municipality in relation to:

water supply,

public health, sanitation conservancy,

solid waste management,

slum improvement and upgradation

- Earlier non taxable

Repair or maintenance of a vessel or an aircraft (substituted a vvessel or an aircraft)

General insurance under specified schemes

- Earlier exemption was available for most of the specified schem

Services provided by an incubatee up to a total business turnove

lacs in a financial year subject to certain conditions- Earlier exempt under Notification No.10/2007-ST dt.01.03.2007

Mega Exemption Notification 25/12-ST dt.20.0 General insurance under specified schemes


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p

- Earlier exemption was available for most of the specified schem

Life Insurance business under specified scheme:

- Janashree Bima Yojana (JYB); or

- Aam Aadmi Bima Yojana (AABY).

[inserted vide Not. No.49/12-ST dt. 24.12.2012]

Services provided by an incubatee up to a total business turnove

lacs in a financial year subject to certain conditions

- Earlier exempt under Notification No.10/2007-ST dt.01.03.2007


Services by an organizer to any person in respect of business exhibition held ou


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Services by an organizer to any person in respect of business exhibition held ou

- Earlier exempt under Notification No.5/2011-ST dt.01.03.2011

Service by an unincorporated body / entity registered as a society to own mem

reimbursement of charges or share of contribution

as a trade union;

- No such specific exemption earlier

for the provision of exempt services by the entity to third persons; or

- Also exempted earlier

up to an amount of Rs. 5000/- per month per member of housing society/resid

towards common services.- Earlier exempt up to Rs.3,000/- p.m. Notification 8/2007-ST dt.0

- Latest clarification dated 10thJanuary 2014 by CBEC vide Circular N

/2014 -ST- F. No.354/237/2013-TRU Dated 10th January, 2014

Services provided by :


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cut and polished diamonds and gemstones; or plain and st


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cut and polished diamonds and gemstones; or plain and stjewellery of gold and other precious metals- Earlier exempt under Notification 19/2006-ST dt. 25

goods on which duty is payable by the principal manufact- Earlier exempt under Notification 8/2005-ST dt. 01.0

specified processes in the course of manufacture of partssewing machines up to specified limits- Also exempted earlier

Services of :

departmentally run public telephones guaranteed public telephones operating only for local cal free telephone at airport and hospitals where no bills are

issued- Earlier exempt under Notification 3/2006-ST dt. 01.03.20


Services of slaughtering of bovine animals (word Bovine omitted vid


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Services of slaughtering of bovine animals (word Bovine omitted vid

44/12-ST dt.17.08.2012)


Services received from service provider located in non-taxable territo the Government, a local authority or governmental authority or

in relation to any purpose other than industry, business or comm

an entity registered under section 12AA of the Income-tax Act, 1

purposes of providing charitable activities

a person located in a non-taxable territory;

- Earlier no such specific exemption

Services of public libraries by way of lending of books, publications o

knowledge-enhancing content or material


Mega Exemption Notification 25/12-ST dt.20.0 Services by Employees State Insurance Corporation to persons governed under the Employee


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1948- Non taxable earlier

Services by way of transfer of a going concern, as a whole or an independent part thereof;- Non taxable earlier

Services by way of public conveniences such as provision of facilities of bathroom, washroomurinal or toilets;


Services by a governmental authority by way of an activity in relation to any function entrusmunicipality under Article 243W of the Constitution;


Definition of Governmental authority amended to as "governmental authority" means an authany other body;

(i) set up by an Act of Parliament or a State Legislature; or

(ii) established by Government, with 90% or more participation by way of equity or control, to c

function entrusted to a municipality under article 243W of the Constitution

[notif no. 02 /2014 dated 30th January 2014]


Recent amendments in Notification:


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Any service provided by

NSDC set up by GOI

Sector Skill Council approved by NSDC

An assessment agency approved by Sector Skill Coun

A training partner approved by NSDC or Sector Skill C

- In relation to (a) NSDP implemented by NSDC or (b) voc

development course under the National Skill Certificat

Monetary Reward Scheme or (c) any other Scheme im

by NSDC exempted (Entry 9A inserted by Not. No. 13

dt.10.09.2013)




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Services provided in relation to serving of food or beverag

- by a canteen

- In a factory covered under the Factories Act, 1948

- Having the facility of air conditioning or central air heating

during the year

- Exempted vide Entry No.19 A (inserted vide Not. No.14/13

dt.22.10.2013)




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Services provided by Cord Blood Banks by way of preserv

cells or any other service in relation to such preservation

- Entry No. 2A (inserted vide Not. No. 4/14-ST dt. 17.02.201

- Background of the insertion of Entry

- Whether such service could be considered as Healthcare

Services by way of loading, unloading, packing, storage or

warehousing of riceexempted

- Entry No. 40 (inserted vide Not. No. 4/14-ST dt. 17.02.201

- Background of the insertion of Entry

- Rice is not agricultural produce ? ! - Political slugfest


Nature and scope of the Entries at Sr. Nos. 12, 13 & 14


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Nature and scope of the Entries at Sr. Nos. 12, 13 & 14

Distinction between the Entries at Sr. Nos. 12, 13 & 14

Exemption to Sub-contractor providing works contract service

at Sr. No. 29 (h)Scope of the Entry

Exemption to Job worker vide Sr. No. 30 of the Notification

Nature & Scope of the Entry No. 30

Impact of exemption on the entitlement to Cenvat credit in the h

worker

Input used in common for exempted Job work and for the provi

taxable servicewhether Rule 6 would apply?


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Thank You

definition of services and issues in negative list by shri shailesh sheth

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