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Service
Tax is administered by the Central Excise & Service tax Commissionerates and the Service Tax Commissionerates
working under the Central Board of Excise & Customs, Department of
Revenue, Ministry of Finance, Government of India. LTUs
are also collecting Service Tax in respect of the Large Tax Paying units
registered with them. The unique feature of Service Tax is
reliance on collection of tax, primarily through voluntary compliance.
Government has from the very beginning adopted a flexible approach concerning
Service Tax administration so that the assessees
and the general public gain faith and trust in the tax measure so that
voluntary tax compliance, one of the avowed objectives of the Citizens
Charter, is achieved. Substantive and procedural liberalization measures,
adopted over the years for this purpose, are clear manifestations of the
above approach. Following are some of the measures adopted in that
direction: (i) Under
Section 67 of the Finance Act, 1994, Service Tax is levied on the gross or
aggregate amount charged by the service provider on the receiver.
Rule 6(1) of the Service Tax Rules, 1994
has provided that Service Tax shall be paid to the credit of the Government
account in respect of the services deemed to be provided as per the
rules framed in this regard. Point of Taxation Rules, 2011 has provided the
point in time when a service shall be deemed to have been provided; Rule 3 of
the said rule provides that for the purposes of these rules, unless otherwise
provided, ‘point of taxation’ shall be,- (a) the
time when the invoice for the service provided or to be provided is issued:
Provided that where the invoice is not issued within 14 days of the provision
of the service, the point of taxation shall be date of such completion. (b) In a case, where the
person providing the service, receives a payment before the time specified in
clause (a), the time, when he receives such payment to the extent of such
payment. Explanation – For the purpose of this
rule, wherever any advance by whatever name known, is received by the service
provider towards the provision of taxable service, the point of taxation
shall be the date of receipt of each such advance. Rule 4. Determination of point
of taxation in case of change in effective rate of tax. – Notwithstanding
anything contained in rule 3, the point of taxation in cases where there is a
change in effective rate of tax in respect of a service, shall be determined
in the following manner, namely:- (a) In case a taxable
service has been provided before the change in effective rate of tax,- (i) Where
the invoice for the same has been issued and the payment received after the
change in effective rate of tax, the point of taxation shall be date of
payment or issuing of invoice, whichever is earlier; or (ii) Where the
invoice has also been issued prior to change in effective rate of tax but the
payment is received after the change in effective rate of tax, the point of
taxation shall be the date of issuing of invoice; or (iii) Where the payment
is also received before the change in effective rate of tax, but the invoice
for the same has been issued after the change in effective rate of tax, the
point of taxation shall be the date of payment; (b) In case a taxable
service has been provided after the change in effective rate of tax,- (i) Where
the payment for the invoice is also made after the change in effective rate
of tax but the invoice has been issued prior to the change in effective rate
of tax, the point of taxation shall be the date of payment; or (ii) Where the
invoice has been issued and the payment for the invoice received before the
change in effective rate of tax, the point of taxation shall be the date of
receipt of payment or date of issuance of invoice, whichever is earlier; or (iii) Where the invoice
has also been raised after the change in effective rate of tax but the
payment has been received before the change in effective rate of tax, the
point of taxation shall be date of issuing of invoice. Explanation – for the purposes of this
rule, “change in effective rate of tax” shall include a change in the portion
of value on which tax is payable in terms of a notification issued under the
provisions of Finance Act, 1994 or rules made thereunder. (for details Point of Taxation Rules, 2011
may be referred) (ii) Corporate
assessees are given the liberty to pay tax on
the value of taxable service, provided by them in a month, by the
6th of the following month if tax is deposited electronically and
5th of the following month if tax is deposited in any other
manner. Further, in case the assessee is
individual or proprietary firm or partnership firm, tax payment is required
to be made only once in a quarter i.e
by 6th of the following quarter if tax is deposited electronically
and 5th of the following quarter if tax is deposited in any other
manner. (iii) The
process of registration of assessees has been
considerably simplified. (iv) No
separate accounts have been prescribed for the purposes of Service Tax. It
has been provided that accounts being maintained by the assessees
under any other law in force would be sufficient. This has placed the
Department at considerable inconvenience to itself, so as to minimize
difficulties for the assessees. (v) The
Finance Act, 2001 has introduced self assessment for service tax returns;
thereby sparing the assessees from the rigours of routine scrutiny and assessment. (vi) Frequency
of filing the returns in the form of ST 3 or ST3A as the case may be is
minimized. Filing of Statutory return has been made half yearly and by the
25th of the month following the half-year ending on 31st arch and
30th September. This is in replacement of the monthly/quarterly returns
prescribed earlier. (vii) Penal
provisions do exist in respect of Service Tax also. Failure to obtain
registrations, failure to pay the tax, failure to furnish the prescribed
returns, suppression of the correct value of the taxable services and failure
to comply with notice do attract penal provisions as prescribed. But, it is
specifically provided that no penalty is imposable on the assessee
for any of the above failures, if the assessee
proves that there was reasonable cause for the failure. This provision has
been inserted to take care of the genuine difficulties of the new assessees. (viii) Service
Tax Credit Rules, 2002, have been replaced by the CENVAT Credit Rules, 2004,
introduced by the Finance Act, 2004, where under CENVAT credit has been
extended across the sectors i.e. goods and services. At present, there are in all services under service Tax net as mentioned
below
:
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