manoj

    1. Service
    Tax – Introduction

    It is
    quite surprising to know that unlike other central taxation laws like Central
    Excise Act, 1944; Customs Act, 1962; Income Tax Act, 1961; Central Sales Tax
    Act, 1956; etc; there is no specific act like Service Tax Act. The power to levy service tax is derived by the Central Government
    vide residual entry No. 97 of Schedule VII of the Constitution of India.
    Service Tax is levied, collected and administered under Chapter V of the
    Finance Act, 1994 (hereinafter referred to as the Act). It extends to whole of
    India except
    the state of Jammu & Kashmir.
    Service
    Tax is, as the name suggest, a tax on services. It is an indirect tax, akin to
    excise duty and sales tax, where the incidence of tax is passed on to the
    consumer. It is significantly different from excise duty and sales tax, where
    the tax is levied on goods, which are tangible. The taxable event for levy of
    service tax is the rendering of service, which is intangible.

    Since
    introduction of Service Tax in the year 1994 (when initially only three service
    were taxable), the concept was based on selective approach, wherein the
    services specified (positive list) under Section 65(105) of the Act (as
    amended) were taxable.
     The
    Finance Act, 2012 has made a paradigm shift in the taxation of services. In the
    new concept, popularly known as Negative List approach, all the services provided or agreed to be
    provided in the taxable territory are taxable, unless they are specified
    under the negative list entry or otherwise exempted. This has tremendously broadened the scope of levy of service tax.
    The negative list approach is made applicable w.e.f. 01-07-2012. Section 66B of
    the Act is the charging section which prescribes the rate of service tax as
    12%. After adding the Primary Education Cess of 2% on service tax and Higher
    Secondary Education Cess of 1% on service tax, the effective rate of service
    tax, is 12.36%. [Refer Para 10.1]
    In this
    Article, the author has attempted to reply, to some of the queries, in
    Frequently Asked Questions (FAQ’s) format, related to service tax on ‘Goods
    Transport Agency Service’ with reference to the new negative list approach. It can be used as a guide to service tax on GTA which is one of
    the most litigated services.

    2. Service
    Tax on GTA – Background

    The levy
    of Service Tax on Road Transportation Service has always remained subject
    matter of uncertainty and litigation. Earlier, The Finance Act, 1997 had levied
    Service Tax on Goods Transport Operators w.e.f. 16-11-1997 which was
    subsequently withdrawn after nation-wide strike. Thereafter by the Finance (No.
    2) Act, 2004 Service Tax has been imposed on Transport of Goods by Road service
    rendered by any goods transport agency with effect from 10-09-2004. However,
    the levy was deferred till further notice again in view of transporters strike.
    The Government thereafter constituted a committee to study the matter. Taking
    into account the recommendations of the Committee, Notification Nos. 32 to
    35/2004 – ST all dated 03-12-2004 were issued, finally levying tax of Transport
    of Goods by Road with effect from 01-01-2005.

    3. Definitions

    3.1 Who
    is a GTA – Goods Transport Agency?

    As per
    Section 65B(26) of the Finance Act, 1994; “Goods Transport Agency means
    any person who provides service in
    relation to transport of goods by road and issues consignment note, by whatever name called”. Therefore,
    issue of Consignment Note (C/N) is integral and mandatory requirement before
    any road transport can be said to be GTA.
    The use
    of the phrase ‘in relation to’ has extended the scope of the definition of GTA.
    It includes not only the actual transportation of goods, but any
    intermediate/ancillary service provided in relation to such transportation,
    like loading/unloading, packing/unpacking, transshipment, temporary
    warehousing, etc. If these services are not provided as independent activities
    but are the means for successful provision of GTA Service, then they are also
    covered under GTA and abatement allowed.
    In the
    positive list approach, by statutory provision, GTA service was taxable if
    provided in a ‘goods carriage’ as defined therein. There is no such explicit
    condition in the negative list approach.

    3.2 What
    is a Consignment Note?

    Consignment
    Note is not defined in the Act. As per Explanation to

    Rule 4B of Service Tax
    Rules, 1994; consignment note means a document, issued by a goods transport
    agency against the receipt of goods for the purpose of transport of goods by
    road in a goods carriage, which is serially numbered, and contains the name of
    the consignor and consignee, registration number of the goods carriage in which
    the goods are transported, details of the goods transported, details of the
    place of origin and destination, person liable for paying service tax whether
    consignor, consignee or the goods transport agency.

    3.3 Who
    is a Courier Agency?

    As per
    section 65B(20) of the Act, “courier agency means any person engaged in the door-to-door transportationof time-sensitivedocuments, goods or articles utilising
    the services of a person, either directly or indirectly, to carry or accompany
    such documents, goods or articles”.
    Note: A
    courier agency is not restricted to transportation of goods by road. It can
    transport any documents, goods or articles by any mode of transport such as
    air, road or water.

    3.4 Is it
    mandatory to issue Consignment Note?

    Yes, Rule
    4B ibid mandates issue of C/N by any goods transport agency which provides
    service in relation to transport of goods by road in a goods carriage to the
    recipient of service. In case of default, penalty upto Rs. 10,000/- may be
    imposed u/s 77 of the Act. However, it is not mandatory for a courier agency to
    issue a consignment note.

    4. Negative
    List

    4.1
    Whether each and every transportation of goods by road is taxable for all
    persons?

    No.
    Services by way of transportation of goods by road are taxable, ONLY IF the
    same is provided by (i) a goods transportation agency; or (ii) a courier
    agency. Services of Road Transport provided by all others are not taxable
    because they are covered by the Negative List u/s 66D(p)(i) of the Act. In
    other words, if any person is providing service of transportation of goods by
    road, and is neither covered under the statutory definition of GTA, nor under
    courier agency, then he is not liable to pay any service tax on such
    transportation.

    5. Reverse
    Charge on GTA

    5.1 We
    are a Partnership Firm. We purchased Plant & Machinery from Kolkata and
    paid freight of Rs. 20,000/-to the transporter. Our chartered accountant
    informed that we are legally required to obtain service tax registration and
    pay service tax on Rs. 20,000/-!!!!Why? We are not providing any service?

    Your C.A.
    is absolutely correct. Normally, the liability to pay service tax is on the
    person providing the service. But, by fiction of law, section 68(2) of the Act
    has empowered the Central Government to notify such services, on which the
    liability to pay service tax, to the extent specified, shall be shifted from
    the service provider to the service recipient. This is popularly known as
    Reverse Charge Mechanism (RCM). Notification No. 30/2012-ST dated 20-06-2012
    has been issued which covers GTA service and shifts full (100%) liability of
    service tax on the service receiver. Any person located in taxable territory,
    who pays or is liable to pay freight is treated as service receiver.

    5.2 Does
    the same rule apply to individual/proprietorship firm paying freight?

    No. As per Entry No. A(ii)
    of N/No.-30/2012, reverse charge is applicable only when taxable service
    provided or agreed to be provided by a goods transport agency in respect of
    transportation of goods by road, where the
    person liable to pay freight is,—
    a) any factory registered
    under or governed by the Factories Act, 1948 (63 of 1948);
    b) any society registered
    under the Societies Registration Act, 1860 (21 of 1860) or under any other law
    for the time being in force in any part of India;
    c) any co-operative society
    established by or under any law;
    d) any dealer of excisable
    goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the
    rules made there under;
    e) any body corporate
    established, by or under any law; or
    f) any partnership firm whether
    registered or not under any law including association of persons;
    So, it can be clearly seen
    that an individual/proprietorship firm is not covered in the above ‘specified category’. It means, if the freight
    is paid (either himself or through his agent) by an individual/proprietorship
    firm or HUF then the service tax thereon shall be paid by the GTA itself.

    Note: N/No.-30/2012 is
    effective from 01-07-2012. But, even before that, reverse charge was applicable
    on GTA and instead of ‘person liable to pay freight’, it earlier covered ‘if
    the consignor or consignee’ is a specified category. The specified category as
    prescribed earlier was slightly different from the current specified category.
    ILLUSTRATION:

    A goods transportation agency transports a consignment of M.S. Rod from
    Rourkela to Mumbai. The consignor is a public limited company and the consignee
    is an unregistered partnership firm. The goods shall be used in construction of
    a single residential house. As per the agreement, freight shall be payable by
    the consignee. The consignment note is prepared on ‘TO PAY’ basis. Who is the
    person liable to pay service tax?

    One of the ‘specified category’ is a partnership firm whether registered or not
    under any law. Here, the person liable to pay freight is a ‘specified
    category’, so reverse charge is applicable. The service tax shall be paid by
    the partnership firm. The end use of goods is generally not relevant for taxing
    GTA service (Except few instances, say when it is provided to the United
    Nations or a specified international organization, SEZ, etc.)

    ILLUSTRATION: 

    ABC Ltd. sells the goods to
    XYZ Ltd. The freight for transportation of the goods has been paid by ABC Ltd
    to the GTA. The consignment note is prepared on ‘FREIGHT PAID’ basis. ABC Ltd.
    collects this freight from XYZ Ltd., on actual basis, by separately showing it
    in the invoice, which is paid by XYZ Ltd., to ABC Ltd. Who is liable for
    payment of Service Tax?

    ABC Ltd. is the person liable to pay freight. It cannot be said to be paying
    the freight on behalf of XYZ Ltd. ABC Ltd. is only getting reimbursement of the
    freight paid by it, initially. As such, the liability for payment of service
    tax will only be on ABC Ltd.


    5.3 It
    means an Individual/Proprietorship Firm can pay any amount of freight to any
    GTA without any service tax implications?
    Yes, if
    the same is neither a factory, nor a registered dealer under Central Excise
    Act, 1944.
    Practical Issue: As
    mentioned in Para 2.2, the consignment note should indicate that whether
    consignor, consignee or the GTA shall be paying service tax on the consignment.
    It is the duty of the GTA to ascertain, in each case, the person liable to pay
    freight as per the agreement, check if such person is covered under specified
    category and accordingly mention the person liable to pay service tax in C/N as
    per law. In practical situation, it would be very difficult for GTA, especially
    when freight is to be paid by an individual/proprietorship firm. How can a GTA
    know that such a person is registered or governed under the Factory Act, 1948
    or is a registered dealer of central excise? Should he take certified true copy
    of such registration certificate for each such person and in case of
    non-registration, a declaration to such effect?

    5.4 We
    have entered into a contract with a very renowned and big size GTA which is a
    Public Limited Company for transportation of raw materials to our factory. They
    are registered with the service tax department. Who is liable to pay service
    tax?

    For
    application of reverse charge, the size and status of the GTA providing
    transportation service is irrelevant. Since you are a factory (specified
    category), paying the freight, you shall discharge the service tax liability.

    5.5 What
    if the service tax is charged separately by the GTA in C/N or Bill?

    The
    reverse charge liability under section 68(2) of the Act is a statutory
    liability imposed by law. The liability of service provider and service
    receiver is different and independent of each other. Even when the service
    provider (GTA) has wrongly charged service tax in bill, the liability of
    service receiver is not discharged. So, it is suggested that the person paying
    freight shall deduct service tax charged by the GTA and pay only the freight
    amount to the GTA. The service tax on GTA shall be deposited directly by the
    service recipient to the government exchequer.

    5.6
    Whether reverse charge is applicable on courier agency?

    No,
    courier agency is not covered under reverse charge. Any person receiving
    services of a courier agency are not liable to pay service tax on payment of
    courier charges.

    6. Place
    of Provision of GTA Service
    6.1 What
    is the place of provision of a service of transportation of goods?

    As per
    Rule 10 of Place of Provision of Services Rules, 2012, Place of provision of a
    service of transportation of goods is the place of destination of goods, except
    in the case of services provided by a GTA in respect of transportation of goods
    by road, in which case the place of provision is the location of the person
    liable to pay tax (as determined in terms of Rule 2(1)(d) of Service Tax Rules,
    1994).

    6.2 Who
    is a person liable to pay tax?

    Rule
    2(1)(d) of Service Tax Rules, 1994 provides that where a service of
    transportation of goods is provided by a‘goods transportation agency’, and due
    to reverse charge [Refer Para 5.2] , the person liable to pay tax is the person
    who pays, or is liable to pay freight (either himself or through his agent) for
    the transportation of goods by road in a goods carriage. But, if the person liable to pay freight is located
    in non-taxable territory, then the person liable to pay service tax shall be
    the service provider. [Proviso to Rule 2(1)(d) ibid]
    In simple
    words, in all the cases of transportation of goods by road, by GTA, where the
    location of the person liable to pay freight is in the state of Jammu&
    Kashmir or Outside India, the person liable to pay service tax is GTA itself.
    ILLUSTRATION: 

    A goods transportation agency,
    GTA Ltd. is located in Bhubaneswar. It transports a consignment of steel ingots
    from Rourkela to a Steel Rolling Mill in Jammu (Non-Taxable Territory). As per
    the agreement, the freight shall be payable by the rolling mill in Jammu. The
    consignment note is prepared on ‘TO PAY’ basis. Who is the person liable to pay
    service tax? 
    The service tax shall be
    paid by GTA Ltd. because the person liable to pay freight is located in Jammu
    which is in non-taxable territory and as per proviso to Rule 2(1)(d) ibid, the
    person liable to pay tax is the service provider i.e. GTA Ltd.

    7. Threshold
    Exemption

    7.1 I
    have heard that just like basic exemption of Rs. 2 Lacs in Income-tax, there is
    a threshold exemption of Rs. 10 Lacs in service tax. Is it correct?
    Yes,
    there is threshold exemption of Rs. 10 Lacs available under N/No. – 33/2012-ST,
    but the same is allowed only to the service provider. The service recipient
    liable to pay tax under RCM, on services covered u/s 68(2) has been
    specifically excluded to avail the threshold exemption.
    In strict
    legal terms, suppose a partnership firm of chartered accountants or advocates
    is setting up a new office. They paid freight of Rs. 1,501/- to GTA on
    transportation of furniture & fixtures purchased for the office. For such a
    trivial transaction, the partnership firm must obtain service tax registration
    and pay tax thereon and file half yearly return!!! This is quite illogical and
    harsh requirement, particularly for the small assessee’s, but that’s law.
    The trade
    associations/ chamber of commerce should send representation to the Central
    Government to allow some threshold exemption to the service recipient liable to
    pay tax under reverse charge. It would prevent small assessee’s from genuine
    hardship. This may also save a lot of unknowing defaults resulting into
    litigations, which could put extra pressure on judiciary.

    8. Exemptions
    – Value / Item Based

    8.1
    Whether service tax leviable on every consignment by GTA, including local
    transporting, where the freight charged is very low?
    No. Mega
    Exemption Notification No. 25/2012-ST has exempted low value consignments from
    the levy of service tax, as follows: (a) Where the gross amount charged for the
    transportation of goods on a consignment transported in a single goods carriage is upto Rs
    1,500/-; or (b) Where the gross amount charged for transportation of all such
    goods for a single consignee in
    the goods carriage is upto Rs. 750/-
    Note:
    Many authors have interpreted that the exemption of higher limit of Rs. 1500 is
    available if the goods carriage is transporting goods of single consignee. But
    in my view, the higher exemption is available even when the goods carriage is
    transporting goods of more than one consignee, if the gross amount charged from
    all the consignee’s for single goods carriage is upto Rs. 1500.
    ILLUSTRATION: 

    A company receives goods
    from a GTA in a truck. No other goods are loaded in that truck. The company
    pays freight of Rs. 1500/- to GTA. No service tax is payable by any person on
    this consignment as it is exempted.
    ILLUSTRATION: 

    A company receives goods
    from a GTA in a truck. Some other goods not belonging to the company are also
    loaded in the truck. The company pays freight of Rs. 900/- to GTA. The freight
    of other goods is Rs. 500/-. Service Tax is not payable by the company on this
    consignment as the total freight for the truck is Rs. 1400 (<1501) so it is
    exempted.
    ILLUSTRATION: 

    In the above illustration,
    if the freight of other goods is Rs. 700/-, then the total freight for the
    truck is Rs. 1600 (>1500). Freight paid by company is Rs. 900 (>750). So,
    exemption is not available and the company should pay service tax on Rs.
    900/-!!

    Practical
    Issue: What could be the documentary proof that the goods carriage is
    transporting goods belonging to only single consignee or more than one
    consignee!! Should the consignor/consignee take a certificate from the GTA that
    vehicle did not carried any other goods?


    8.2 A proprietorship firm trading in steel is registered under central
    excise as dealer, has paid freight for a quarter as below. What is the service
    tax liability?

    Here, the
    proprietorship firm is liable to pay service tax under reverse charge as it is
    registered under central excise. The consignment in a single vehicle with
    freight upto Rs. 1,500 is fully exempted. So, service tax on balance Rs.
    5,31,000/- @ 3.09% = 16,408/-

    8.3 In
    the above example at Para 8.2, if the proprietorship firm is not registered
    under central excise, then what are the consequences?

    Then, RCM
    is not applicable and the service tax shall be paid by the respective GTA,
    after considering the exempted consignments. Assuming that a single GTA is
    involved in the above case, the GTA is liable to pay tax amounting to Rs.
    16,408/-

    8.4 Is
    there any other exemption available on GTA Service?

    Yes.
    N/No. 3/2013-ST dated 01-03-2013 has amended the N/No. 25/2012 w.e.f.
    01-04-2013, extending exemption for services provided by a GTA, by way of
    transport in a goods carriage of;

    i.
    agricultural produce;
    ii. foodstuff includingflours, tea, coffee,
    jaggery, sugar, milk products, salt and edible oil, excluding alcoholic
    beverages;
    iii.
    chemical fertilizer and oilcakes;
    iv.
    newspaper or magazines registered with the Registrar of Newspapers; 
    v. relief
    materials meant for victims of natural or man-made disasters, calamities,
    accidents or mishap; or
    vi.
    defense or military equipments;”
    This
    amendment is a positive for the FMCG and food companies like Hindustan
    Unilever, Nestle, ITC, Perfetti, Kellogs, etc. and those manufacturing or
    trading/dealing or retailers (including departmental stores like Big Bazaar,
    Vishal Mega Mart, etc.) in these products. It is pertinent to mention that
    prior to this amendment; the exemption was available on fruits, vegetables,
    eggs, milk, food grains or pulses in a goods carriage.

    8.5 We
    are wholesale dealers of food items like rice, wheat, sugar, refined oil,
    mustard oil, jeera, etc. Are we liable to pay service tax on freight paid on
    transportation of these food items?

    No.
    Neither service receiver, nor service provider (GTA) is liable to pay service
    tax as the transportation of these items is exempted.

    9. Registration
    of GTA

    9.1
    Whether it is compulsory for a GTA to take registration for service tax?

    As per
    section 69(2) of the Act, registration is compulsory, when the aggregate value
    of taxable services, provided from all the premises, of all descriptions, exceeds
    Rs. 9 Lacs. So, a GTA need not apply for service tax registration until the
    limit of Rs. 9 Lac is reached. While calculating the limit of Rs. 9 Lac, the
    GTA service where reverse charge is applicable is to be excluded.

    9.2 Does
    it mean that a GTA providing all transportation service to persons covered
    under RCM is not required to obtain service tax registration?

    Yes,
    because he is neither liable to pay tax, nor his aggregate value of taxable
    services exceed Rs. 9 Lacs. As per circular no. 341/18/2004-ST dated
    17-12-2004, according to provisions of section 69 of the Act, requirement of
    registration is limited to persons liable to pay service tax. Thus those goods
    transport agencies, which are not liable to pay any service tax, are not
    required to be registered under the service tax rules
    .

    9.3
    Whether it is compulsory for a recipient of GTA service to take registration
    for service tax?

    Yes, if
    reverse charge is applicable, service recipient becomes liable to pay service
    tax and section 69(1) of the Act mandates that every person liable to pay tax
    shall obtain service tax registration. The application shall be made in Form
    ST-1 within 30 days of arising of liability. The Range Superintendent shall
    issue the registration certificate in Form ST-2. The half-yearly returns are
    required to be filed in Form ST-3 by 25
    th October/April
    every year for 1
    st & 2nd Half
    respectively.

    10. Abatement
    on GTA

    10.1 What
    is abatement on GTA?

    The
    dictionary meaning of abatement is‘diminution in amount, degree or intensity;
    moderation’ or reduction. Notification No. 26/2012-ST dated 20-06-2012 has
    allowed abatement of 75% on GTA. It means that if the value of GTA service
    (freight) is Rs. 100, service tax is exempted on
    Rs. 75 and service tax @ 12.36% (including Ed. & SHE Cess) shall be paid
    only on the balance value of Rs. 25. So, effective
    rate of service tax on GTA service is 3.09% of total freight.

    10.2 Who
    can avail abatement?

    The
    abatement can be availed by the person liable to pay service tax on GTA. In
    other words, in case of reverse charge, the service recipient can avail
    abatement and pay tax @ 3.09% and when reverse charge is not applicable, than
    the GTA can avail abatement and pay tax @ 3.09%

    10.3 What
    are the conditions for availing abatement?

    The
    abatement is available subject to the condition that the CENVAT credit on
    inputs, capital goods and input services, used for providing the taxable
    service, has not been taken under the provisions of the CENVAT Credit Rules,
    2004.
    Note: In
    the positive list approach, due to a lot of litigations and practical
    difficulty in proving non-availment of cenvat credit by the GTA, the government
    had allowed unconditional abatement of 75% w.e.f. 01-03-2008 vide N/No.
    13/2008-ST, and dropped the similar condition as in Para 10.3. But, it has
    re-appeared in the negative list regime w.e.f. 01-07-2012 vide N/No.
    26/2012-ST!!!

    11. Cenvat
    Credit

    11.1 A
    manufacturing company is paying freight on transportation of raw materials upto
    its factory. Can it avail abatement and cenvat credit simultaneously?

    Yes, any
    service receiver can avail abatement and pay tax @ 3.09% and still take cenvat
    credit of such tax, if the GTA service is otherwise eligible as ‘input
    service’. In case of outward freight, cenvat credit is not available for
    freight paid beyond the ‘place of removal’. The above condition in Para 10.3
    restricting the cenvat credit is for the service provider using any inputs,
    capital goods or input services for providing such services.

    11.2 How
    can a service recipient ascertain that the GTA has not taken cenvat credit?

    The
    service recipient should obtain a declaration/certificate from the GTA that
    they have not availed cenvat credit on inputs, capital goods and input
    services, used for providing the taxable service. In the absence of such a
    declaration, the Assessing Officer may deny the benefit of abatement and can
    raise demand. It is suggested that the GTA should have a declaration
    pre-printed in its consignment note. [Refer Note to Para 10.3]

    11.3 A
    person has cenvat credit balance available for utilization. Can he utilize
    cenvat credit for payment of service tax on GTA under reverse charge?

    No, the
    service recipient is not allowed to utilize cenvat credit for payment of
    service tax under reverse charge. [Explanation to Rule 3(4) of Cenvat Credit
    Rules, 2004]. Thus, the service recipient must directly deposit service tax on
    GTA through GAR-7 Challan.

    11.4 When
    can a service recipient avail cenvat credit of service tax paid under RCM?

    As per 1st proviso
    to Rule 4(7) of Cenvat Credit Rules, 2004; the service recipient can avail
    cenvat credit of an input service, where service tax is paid by him on reverse
    charge, after making payment of value of input service to the service provider
    and after payment of service tax thereon. Thus, cenvat credit is not available
    unless payment of value of input service is made.

    11.5 What
    is the relevant document for availing cenvat credit by service recipient?

    The
    cenvat credit is available to service recipient as the person liable to pay tax
    on the basis of GAR-7 challan evidencing the payment of service tax. [Rule
    9(1)(e) of Service Tax Rules, 1994]

    12. Due
    date for payment of Service Tax
    12.1 What
    is the due date for payment of service tax?
    However,
    for the month/quarter ending on 31
    stMarch,
    the due date shall be 31
    st March
    of the same month/quarter. [2
    ndproviso
    to Rule 6(1)]
    13. Point
    of Taxation

    13.1 A
    company, which is following mercantile system of accounting, is unable to
    decide due date for the following GTA service received by it during the month
    of October, 2013
    Which is
    the relevant date for determining the due date for payment of service tax?
    As per
    Rule 6(1) ibid; as summarized above, service tax shall be paid to the credit of
    Central Government on 6
    th/5thof the
    month/quarter, as the case may be, immediately following the month/quarter in
    which the service is deemed to be provided as
    per the rules framed in this regard. The Point of Taxation Rules, 2011 has been
    framed which defines‘point of taxation’ means the point in time when a service
    shall be deemed to have been provided. In case of service recipients liable to
    pay tax u/s 68(2) of the Act, due to reverse charge, Rule 7 of the Point of
    Taxation Rules, 2011 is applicable.
    As per
    Rule 7 ibid, the point of taxation is the date
    of payment. Therefore, in the above example, the service tax is payable
    for Sr. No. 1 & 2 for the month of October and the due date shall be
    06-11-2013 [E-Payment]. Thus, date of consignment note, receipt of goods and
    bill date is not relevant. However, if the payment is not made within 6 months
    from the date of invoice, then the point of taxation shall be the date of
    completion of service or date of invoice, whichever is earlier.

    14. Default
    on payment – Voluntary Compliance
    14.1 We
    have been paying freight on transportation of goods since very long, without
    knowing that due to reverse charge, we are liable to pay service tax. We are
    not registered with the service tax authorities. What should we do?

    The
    Central Government has launched an amnesty scheme known as Service Tax –
    Voluntary Compliance Encouragement Scheme, 2013 (VCES). It has given this last
    opportunity to defaulted taxpayer’s whereby complete
    waiver of interest, penalty and prosecution is ensured to an
    applicant. Any person who has ‘tax dues’ for the period 01-10-2007 to
    31-12-2012, outstanding as on 01-03-2013, can take the benefit of VCES. An
    application under VCES can be made on or before31-12-2013. Outstanding tax can
    be paid in installments but at least 50% of tax due shall be paid upto
    31-12-2013. Balance tax can be paid upto 30-06-2014.
    Note: The
    rate of interest as prescribed u/s 75 of the Act is 18% p.a. and penalty of
    upto 100% of tax defaulted is imposable u/s 78. Under Section 70, penalty/late
    fee for late/non-filing of return of service tax is upto Rs. 20,000/- for each
    return. Prosecution can also be launched in appropriate cases. As reported in
    the media, the finance minister has instructed the authorities to send notices
    to about 10 Lac non-filers and stop-filers registered with the department,
    after the VCES comes to an end.

    14.2 We
    are in receipt of a Show-Cause Notice dated 10-03-2013 u/s 73 of the Act. Are
    we eligible to take benefit under VCES?

    Yes, You
    Are!!! If the service tax authorities issues
    or make, upto 28-02-2013; any show cause notice or order of
    determination demanding payment of service tax, then a declaration shall not be
    entertained for the tax so demanded. Since the notice is dated 10-03-2013, you
    are eligible to file application under VCES.

    Author
    Manoj Agarwal,
    Service Tax Consultant,
    Ganpati Campus, Lal
    Building Road,
    Rourkela– 769012
    E:Mail: ServiceTaxExpert@yahoo.com,tax2001-it@yahoo.com
    Kindly contact for further
    clarifications.

    Disclaimer: This article is the property of the author. No one shall use
    this article for commercial purposes, without the permission of the author. The
    author shall not be responsible or liable for anything done or omitted to be
    done on the basis of this article
    .

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