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Rate of service tax is
proposed to increase from 5 percent to 8 percent to be effective
from the date of the enactment of the Finance Bill. (this
will be applicable for invoice issued after 14.05.2003)
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Ten new following services
are added w.e.f. 14.05.2003 :-
2.1 Commercial vocational institutes, coaching
centers and private tutorials.
2.2 Maintenance and repairs services namely,
annual maintenance contracts (AMC) and other maintenance services,
authorised repair services.
2.3 Commissioning and installation services.
2.4 Business promotion and support services
including customer care services. These services include launching
of products, customer education programmes, conduct of seminars,
data warehousing, help desk services, managing front offices,
enquiry bureaus, etc
2.5 Internet café
2.6 Franchise services
2.7 Extension of service tax on port services
to minor ports
2.8 Extention of service tax on authorised
automobiles services to multi –utility vehicles (Maxicabs)
2.9 Extension of service tax on banking and
other financial services to all forex brokers.
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Service Tax Credit Rules
now extended to cover inter - services, which earlier was
allowed only in case of the same service. Section 94 is proposed
to be amended to empower the government to prescribe the manner
of availing credit of service tax on all input services and
central excise duties on input goods used in the course of
providing output services. The credit of Service tax will
be allowed only after the service provider makes the payment
for value of input service. The provision of availability
of cross-service credit is a major step towards implementing
a full VAT system.
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Exemption from Service Tax
to the taxable service for which payment was received in foreign
convertible currency for which no foreign exchange is repatriated
outside India is now being withdrawn. Hence Service Tax would
be leviable on all taxable services whether the payment is
received in foreign exchange or not.
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The exemption to the hotel
from service tax is extended beyond 31.03.2003.
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Classification of taxable service
in case of multi-service provider, it is now clarified by
introduction of section 65A and specified the norms of classification.
The classification principles of the taxable services which
are classified in two or more categories would be as follows:
6.1 A taxable service would be classified
in the category, which provide the most specific description.
6.2 In case the taxable service is a composite
service consisting of combination of services, such taxable
service will be classified in the category, which gives it
the essential character.
6.3 Where a taxable service can not be classified
in above manner, such taxable service will be classified in
the category which occurs first in clause 104 of section 65
(i.e. definition of taxable service) among those categories
which equally merit consideration.
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A provision is made by which an
assessee can make payment of Service Tax (along-with
interest thereon) of hitherto unpaid or short paid on account
of under assessment or escapement of assessment or wrong issue
of refund by paying the same voluntarily and on the basis
of his own ascertainment or ascertainment by a Central Excise
officer before service of notice and inform
the Asst. Commissioner of Central Excise or the Deputy Commissioner
of Central Excise of such payment in writing, who on receipt
of such information shall not serve any notice under section
73 (1) in respect of service tax paid.
7.1 It should be noted that
the payment of Service Tax and interest and its information
to the Asst. Commissioner or Deputy Commissioner of Central
Excise should be made before detection of the escapement
etc or failure to disclosed wholly or truly all material facts.
In that case, the assessee can be saved from concealment penalty
and proceedings.
7.2 However, this provision
will not apply where duty become payable or should have been
paid before the date on which Finance Bill 2003 received the
assent of the president. (i.e. 14.05.2003)
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A reduction in the charge of penalty for
suppression or concealment of the value of the taxable service
is sought to be given by inserting a proviso in section 78
which provides for penalty of 25% of amount of the service
tax so determined as suppressed or concealed, if paid along-with
the tax & interest thereon within 30 days from the date
of receipt of order of the Asst. Commissioner or Deputy Commissioner
of Central Excise.
8.1 This reduction in penalty
will also apply to the notices issued prior to the date on
which the Finance Bill received the assent of the president.
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Certain validating provision is to be made
from retrospective effect to exempt service tax on services
provided by Goods and transport operator to small scale units,
Traders and Companies for the period 16.07.97 to 16.10.98.
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Order denying refund claim has now become
appealable by amending Section 85.
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A new Chapter VA is inserted to provide
for advance ruling in the service tax. These provisions are
similar to that of Central Excise.
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A clarificatory amendment is made in section
67 to exclude the cost of certain parts or material used in
providing taxable service.
12.1 The cost of unexposed photograpy film,
unrecorded magnetic tape or such other storage device, if
any, sold to the client during the course of providing service.
12.2 The cost of parts or accessories, or
consumable such as lubricants and coolants, if any sold to
the customer during the course of repair of motor cars, maxicab
or two wheeled motor vehicles.
12.3 The airfare collected by air travel
agent in respect of service provided by him.
12.4 The rail fare collected by rail travel
agent in respect of service provided by him.
12.5 The cost of parts or other material,
if any sold to the customer during the course of providing
maintenance or repair service; and
12.6 The cost of parts or other material,
if any, sold to the customer during the course of providing
commissioning or installation service.
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The government is empowered to issue order
for removal of difficulties arising in the implementation
of new services within two years from the date of imposition.
This is sought to be done by amending section 95.
