Transcript jaipur-icai.org

Negative List &
Mega Exemptions in Service Tax
Presented by
CA Virendra Parwal
B.Com , FCA, LLB.
Workshop on Service Tax at ICAI Jaipur Branch on 04th February 2015
1
What is the broad the scheme of new taxation?
 Section 65B(44)- Definition of Service.
 Section 66B- Charge of service tax - Service tax shall be levied on all services
provided or agreed to be provided in a taxable territory, other than services
specified in the negative list.
 Section 66D-The negative list of services .
 Section 66C- Empowers the Central Government to make rules for
determination of place of provision of service Provision of service.
 Section 66E- Declared Services- To remove ambiguity
 Mega Exemption Notification -In addition to the services specified in the
negative list, certain exemptions have been given vide N. No.25/2012-ST
 Section 66F- Principles for interpretation wherever services have to be treated
differentially for any reason
2
What is not in the ambit of Service Tax ?
Exemptions
From Service Tax
Negative List
(Sec 66D)
Mega Exemption
Notification
(25/2012)
Small Service
Provider
Exemption
3
Negative List of Services
Section 66B:
Service tax will be leviable on all services provided in the
taxable territory by a person to another for a consideration
other than the services specified in the negative list.
Section 66D:
The services specified in the negative list therefore go out of the
ambit of chargeability of service tax.
In all, there are 17 heads
of services that have been
specified in the negative
list.
Tax Free
1. Services provided by Government or local authority
Services provided by the Government or local authorities are in the negative list
except the following:
 Services provided by the Department of Posts by way of speed post, express
parcel post, life insurance and agency services carried out on payment of
commission on non government business;
 Services in relation to a vessel or an aircraft inside or outside the precincts of a
port or an airport;
 Transport of goods and/or passengers;
 Support services, other than those covered by clauses (a) to (c) above, to
business entities.
5
What are Support Services ?

Support services means
•
infrastructural, operational, administrative, logistic,
•
marketing
•
or any other support of any kind comprising functions that entities carry out in
ordinary course of operations themselves but may obtain as services by
outsourcing from others for any reason whatsoever
and shall include
 advertisement and promotion,
 construction or works contract,
 renting of immovable property,
 security,
 testing and analysis.
Note: Services Provided by government in terms of their “Sovereign Rights to
business entities are not support services – RTO, Factories inspector, Directorate of
Boiler perform duties/functions which are statutory in nature
6
Let’s Think…
 Grant of Mining or Licensing Rights are Support Services ?
No, they are sovereign right to business rights provided by government
hence are not under the ambit of service tax.
 Warehousing facility provided by government are Support Services ?
Yes, they are support services liable for service tax.
7
‘Government’ has not been defined in the
Act. What is the meaning of Government?
 Definition of ‘Government’ as contained in the General Clauses Act, 1897
would be applicable as per which ‘Government’ includes both State
Government and Central Government. Further as per the General Clause
Act 1897, State includes Union Territory.
 Corporations formed under Central or State Act or government companies
registered under the Companies Act or autonomous institutions set up by a
special Act are not covered under this entry.
 ‘Government’ would include various departments and offices of the Central
or State Government or the U.T. Administrations which carry out their
functions in the name and by order of the President of India or the
Governor of a State.
8
2. Services provided by Reserve Bank Of India
 All services provided by RBI are part of negative
list
 However services provided to RBI are not in
negative list hence are taxable unless covered
in any other entry of negative list
9
3. Services by a foreign diplomatic mission located in India
Note: This entry does not cover services, if any, provided by
any office or establishment of an international organization.
10
4. Services relating to agriculture or agriculture produce which
pertains to below activities Agricultural operations directly related to production of any agricultural
produce including cultivation, harvesting, threshing, plant protection or
testing;
 Supply of farm labor;
 Processes carried out at the agricultural farm including tending, pruning,
cutting, harvesting, drying cleaning, trimming, sun drying, fumigating, curing,
sorting, grading, cooling or bulk packaging and such like operations which do
not alter essential characteristics of agricultural produce but makes it only
marketable for the primary market;
 Renting of agro machinery or vacant land with or without a structure
incidental to its use;
 Loading, unloading, packing, storage and warehousing of agricultural produce;
11
 Agricultural extension services;
(Agricultural extension services have been defined as application of scientific
research and knowledge to agricultural practices through farmer education
or training.)
 Services provided by any Agricultural Produce Marketing Committee or
Board or
services provided by commission agent for sale or purchase of agricultural
produce;
Definition
Agriculture means the cultivation of plants and rearing of all life forms of
animal, except the rearing of horses, for food, fiber, fuel raw material or
other similar products. [Sec 65B(3)]
Agricultural produce means any produce of agriculture on which either
no processing is done or such processing is done as is usually done by a
cultivator or producer which does not alter its essential characteristics but
makes it marketable for primary market. [Sec 65B(5)]
12
Let’s Think…
 Leasing of vacant land with a green house or a storage
shed meant for agricultural produce
 Training provided to Farmers for organic farming
 Services by way of renting of shop in the mandi by
APMC for doing business of agriculture produce
 Potato chips or tomato ketchup qualify as agriculture
produce ?
 Is Hen Poultry covered under ‘agriculture’ ?
Animal also covers ‘bird’ – Davinder Singh v WTO (1982) 1 ITD
610 – Accordingly poultry would be agriculture produce.
13
5. Trading of goods

(Neither Manufacture nor Service)


Risk and Reward to be transferred
Involves transfer of title in goods
‘Trading of Goods’ per se is not taxable but services
provided in relation to trading of goods shall be
liable to Service Tax
14
Let’s Think…
 Would activities of a commission agent or a clearing
and forwarding agent who sells goods on behalf of
another for a commission be included in trading of
goods?
No. The services provided by commission agent or a clearing
and forwarding agent are not in the nature of trading of goods.
These are auxiliary for trading of goods as title in the goods
never passes on to such agents to come within the ambit of
trading of goods.
15
Let’s Think…
 Would future contracts in commodities be covered
under trading of goods?
Yes. Futures contracts would be covered under trading
of goods as these are contracts which involve transfer
of title in goods on a future date at a pre-determined
price.
16
Let’s Think…
 Would auxiliary services relating to future contracts
or commodity futures be covered in the negative list
entry relating to trading of goods?
No. Such services provided by commodity
exchanges clearing houses or agents would
not be covered in the negative list entry
relating to trading of goods.
17
6. Processes amounting to manufacture or production of goods
 Process on which duties of excise are levible U/s 3 of
Central Excise Act 1944.
 Covers manufacturing activity carried out on contract or
job work basis, not involving transfer of title in goods
provided duties of excise are levible on such processes
under CE Act 1944
 If Central Excise Duty is levible on a process as the same
amounts to manufacture then such process would be
covered in negative list even if there is a central excise duty
exemption from such process.
18
7. Selling of space for advertisement in print media
 selling of space for advertisements in print media
Definition of Print Media:
Sec.65B(39a)
"print media" means,—
(i)
"book" as defined in subsection (1) of section 1 of the Press and
Registration of Books Act, 1867 (25 of 1867), but does not include
business directories, yellow pages and trade catalogues which are
primarily meant for commercial purposes;
(ii) "newspaper" as defined in subsection (1) of section 1 of the Press and
Registration of Books Act, 1867 (25 of 1867); ]
19
Let’s Think…
Services provided by Advertisement Agencies:
a) Relating to preparation of advertisement
b) Composite service of providing space of
advertisement with design and preparation of the
advertisement
20
8. Access to a road or a bridge on payment of toll charges
 It covers the access to national and state highways.
Let’s Think….
 Are collection charges or service charges paid to any toll
collecting agency also covered?
No. The negative list entry only covers access to a road or a
bridge on payment of toll charges. Services of toll collection
on behalf of an agency authorized to levy toll are in the nature
of services used for providing the negative list services.
21
9. Betting, gambling or lottery
 Defined in section 65B of the Act as ‘putting on stake
something of value, particularly money, with consciousness of
risk and hope of gain on the outcome of a game or a contest,
whose result may be determined by chance or accident, or on
the likelihood of anything occurring or not occurring’.
 Does not include auxiliary services that are used for
organization or promotion of betting or gambling events.
22
10. Entry to Entertainment Events and Access to Amusement Facilities.
 Entertainment Event
An event or a performance which is intended to provide
 recreation, pastime, fun or enjoyment,
 such as exhibition of cinematographic films, circus, concerts, sporting events,
fairs, pageants, award functions, dance performances, musical
performances, theatrical performances
 including cultural programs, drama, ballets or any such event or programme
 Amusement Facility
 A facility where fun or recreation is provided by means of
 rides, gaming devices or bowling alleys in amusement parks, amusement
arcades, water parks, theme parks or such other place
 but does not include a place within such facility where other services are
provided.
23
Let’s Think…
 If a cultural programme, drama or a ballet is
held in an open garden and not in a theatre
would it qualify as an entertainment event?
Yes. The words used in the definition are
‘theatrical
performances’
and
not
‘performances in theatres’.
24
Let’s Think…
 Would a standalone ride set up in a mall qualify as an
amusement facility?
Yes. A standalone amusement ride in a mall is also a
facility in which fun or recreation is provided by means
of a ride. Access to such amusement ride on payment
of charges would be covered in the negative list.
25
Let’s Think…
 Would entry to video parlors exhibiting movies played on
a DVD player and displayed through a TV screen be
covered in the entry?
Yes. Such exhibition is an exhibition of cinematographic
film.
26
Let’s Think…
 Would membership of a club qualify as access to an
amusement facility?
No. A club does not fall in the definition of an
amusement facility.
27
11. Transmission or distribution of electricity by an
electricity transmission or distribution utility
Electricity transmission or distribution utility includes:
.

The Central Electricity Authority,

A State Electricity Board,

The Central Transmission Utility (CTU),

A State Transmission Utility (STU) notified under the Electricity Act, 2003 or

A distribution or transmission licensee licensed under the said Act or any
other entity entrusted with such function by the Central or State
Government
28
Let’s Think…
 If charges are collected by a developer or a housing society for distribution
of electricity within a residential complex then are such services covered
under this entry?
No. The developer or the housing society would be covered under this
entry only if it is entrusted with such function by the Central or a State
government or if it is, for such distribution, a distribution licensee licensed
under the Electricity Act, 2003.
29
Let’s Think…
 If the services provided by way installation of gensets or similar
equipment by private contractors for distribution of electricity covered by
this entry?
No. the entry does not cover services provided by private
contractors.
Moreover the services provided are not by way of transmission or
distribution of electricity.
•Charges for installation of Electricity Meter
It has close nexus with transmission & distribution of electricityCircular No.131/13/2010-ST dated 7-12-2010
30
12. Specified services relating to education
The following services are specified in the negative list –
 Pre-school education and education up to higher secondary school or
equivalent
 Education as a part of a prescribed curriculum for obtaining a
qualification recognized by law for the time being in force;
 Education as a part of an approved vocational education course
Approved vocational education courses means:
 a course run by an industrial training institute or an industrial training center
affiliated to the National Council for Vocational Training offering courses in
designated trades as notified under the Apprentices Act, 1961(52 of 1961)
 a Modular Employable Skill Course, approved by the National Council of Vocational
Training, run by a person registered with the Directorate General of Employment and
Training, Ministry of Labour and Employment, Government of India;
 a course run by an institute affiliated to the National Skill Development Corporation
set up by the Government of India.
31
Let’s Think…
 Are services provided by boarding schools covered in this entry?
Bundled Services- Natural Bundling, Dominant nature test.
In this case since dominant nature is determined by the service of education
other dominant service of providing residential dwelling is also covered in a
separate entry of the negative list, the entire bundle would be treated as a
negative list service.
 Are private tuitions covered here ?
No, they are not covered in the negative list. Can avail the benefit of
threshold exemption (for private tutors)
 Are placement services provided to educational institutions for security of job
placements of students covered in this negative list entry ?
No, such services are not covered in negative list
 Online teaching is covered in negative list entry (l)?
If it is not part of course for curriculum, not covered in negative list
32
13. Services by way of renting of residential dwelling for
use as residence
Scenario
Taxable or non taxable
(i) Flat provided on rent by a director of a
company to the company for the purpose
of stay of its employees and guests?
To employees for residence not
taxable
(ii) if a house is given on rent and the
same is used as a hotel or a lodge
Taxable
(iii) rooms in a hotel or a lodge are let out
whether or not for temporary stay
Taxable
(iv) government department allots
houses to its employees and charges a
license fee
(v) furnished flats given on rent for
temporary stay
Non taxable. Such service would be
covered in the negative list entry relating
to services provided by government
Taxable as it is in the nature of lodge
or guest house
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14.
Financial sector
Services by way of—
 extending deposits, loans or advances in so far as the consideration is represented
by way of interest or discount;
Illustrations of such services are • Fixed deposits or saving deposits or any other such deposits in a bank for which
return is received by way of interest.
• Providing a loan or over draft facility for in consideration for payment of interest.
• Mortgages or loans with a collateral security to the extent that the consideration
for advancing such loans or advances are represented by way of interest.
• Corporate deposits to the extent that the consideration for advancing such loans
or advances are represented by way of interest or discount.
 Inter se sale or purchase of foreign currency amongst banks or authorized dealers of
foreign exchange or amongst banks and such dealers;
34
Let’s Think…
 Services provided by banks or authorized dealers of foreign exchange by
way of sale of foreign exchange to general public. Taxable or not ?
This is not covered under negative list
and hence is taxable.
35
Let’s Think
 If any service charges or administrative charges are recovered in addition
to interest on a loan, advance or a deposit would such charges be also a
part of this negative list entry?
No. The services of loans, advances or deposits are
exempt in so far as the consideration is represented by
way of interest or discount. Any charges or amounts
collected over and above the interest or discount
amounts would represent taxable consideration.
36
15. Service relating to transportation of passengers
Following services relating to transportation of passengers have been specified in the
negative list:
i.
ii.
iii.
iv.
v.
vi.
Services by a stage carriage
Services by railways in a class other than 1st class or an AC coach
Services by Metro, monorail or tramway;
Inland waterways;
Services by public transport, other than predominantly for tourism
purpose, in a vessel of less than fifteen tonne net; and
Services by Metered cabs, radio taxis or auto rickshaws
Stage Carriage means a motor vehicle carrying or adapted to carry more than six persons excluding the
driver which carries passengers for hire or reward at separate fares paid by or for individual
passengers, either for the whole journey or for stages of the journey (Motor Vehicles Act, 1988)
Inland Water ways means national waterways as defined in section 2(h) of the Inland Waterways
Authority of India Act, 1985 or other waterway on any inland water, as defined in section 2(b) of
the Inland Vessels Act, 1917;
37
16. Service relating to transportation of goods
Following services relating to transportation of goods have
been specified in the negative list of services:
i.
By road except the services of a goods transportation
agency (GTA) & a courier agency
ii. By aircraft or vessel from a place outside India to the
first customs station of landing in India; or
iii. By inland waterways.
38
Let’s Think
Nature of service relating to transportation of goods
Whether covered in the
negative list entry?
By railways
No
By air within the country or abroad
By a vessel in the coastal waters
No
No
By a vessel on a national waterway
Yes
By Angadia’s
By Bullock Cart
Yes
Yes
By Individual Lorry owner
Yes
39
17. Funeral, burial, crematorium or mortuary
services including transportation of the
deceased
Lets Think…..
What about transportation of patient ?
40
Exempted Services
 Vide notification No 25/2012-ST,(as amended)
government has specified 42 clause in which
services are exempt from service tax
41
1. Services provided to the United Nations or a specified
international organization
Specified international organizations
1. International Civil Aviation Organization
2. World Health Organization
3. International Labor Organization
4. Food and Agriculture Organization of the United Nations
5. UN Educational, Scientific and Cultural Organization (UNESCO)
6. International Monetary Fund (IMF)
7. International Bank for Reconstruction and Development
8. Universal Postal Union
9. International Telecommunication Union
10.World Meteorological Organization
11. Permanent Central Opium Board
12. International Hydrographic Bureau
13. Commissioner for Indus Waters, Government of Pakistan and his advisers and assistants
14. Asian African Legal Consultative Committee
15. Commonwealth Asia Pacific Youth Development Centre, Chandigarh
16. Delegation of Commission of European Community
17. Customs Co-operation Council
18. Asia Pacific Telecommunity
19. International Centre of Public Enterprises in Developing Countries, Ljubljana (Yugoslavia)
20. International Centre for Genetic Engineering and Biotechnology
21. Asian Development Bank
22. South Asian Association for Regional Co-operation
23. International Jute Organization, Dhaka, Bangladesh
42
2.




Health care services by a clinical establishment, an authorized medical
practitioner or para-medics
“Clinical establishment" means a
hospital, nursing home, clinic, sanatorium or an institution by, whatever name called,
that
offers services or facilities requiring diagnosis or treatment or care for illness, injury,
deformity, abnormality or pregnancy
in any recognized system of medicine,
established and administered or maintained by any person or a place established as an
independent entity or a part of an establishment to carry out diagnostic or investigative
services of diseases,
As per section 2(h) of the Clinical Establishments Act, 2010, the following systems of medicine are
recognized systems of medicine:

Allopathy

Yoga

Naturopathy

Ayurveda

Homeopathy

Siddha

Unani

Any other system of medicine that may be recognized by central government
43
“Authorized Medical Practitioner” means

any medical practitioner registered with any of the Councils of the
recognized system of medicine and includes medical professional having the
requisite qualification to practice in any recognized system of medicine as per
any law for the time being in force,
“Paramedic” means
 trained health care professionals, for example nursing staff, physiotherapists,
technicians, lab assistants etc.
Lets Think……
Whether Ambulance services provided by a private party is taxable?
Exempt only if the renting provided by clinical establishment,
medical practitioner or paramedics)
44
2A. Services provided by cord blood banks by
way of preservation of stem cells or any other
service in relation to such preservation.
2B. Services provided by operators of the
Common Bio-medical Waste Treatment
Facility to a clinical establishment by way of
treatment or disposal of bio-medical waste or
the processes incidental thereto.
45
3 .Services by a veterinary clinic in relation to health care of
animals or birds;
4. Services by an entity registered under section 12AA of the
Income-tax Act, 1961 (43 of 1961) by way of ‘charitable
activities’ (Define in next slide)
5. Services by a person by way of—
a) renting of precincts of a religious place meant for general
public; or
b)conduct of any religious ceremony;
 Commercial shops in the premises of religious place given on rent. (So long as the
religious place is meant for general public, renting of precincts would be exempt, even
is such premises is given for commercial purposes).
5A. Services by a specified organisation in respect of a religious
pilgrimage facilitated by the Ministry of External Affairs of
the Government of India, under bilateral arrangement;
46
• charitable activities” means activities relating to (i) public health by way of (a) care or counseling of (i) terminally ill persons or persons with severe physical or
mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a
dependence-forming substance such as narcotics drugs or alcohol; or
(b) public awareness of preventive health, family planning or prevention of HIV
infection;
(ii) advancement of religion or spirituality;
(iii) advancement of educational programmes or skill development relating to,(a)
abandoned, orphaned or homeless children;
(b)
physically or mentally abused and traumatized persons;
(c)
prisoners; or
(d)
persons over the age of 65 years residing in a rural area;
(iv) preservation of environment including watershed, forests and wildlife; or
47
6. Individual Advocates and Arbitral Tribunal
Services provided by-
(a) an arbitral tribunal to (i) any person other than a business entity; or
(ii) a business entity with a turnover up to rupees ten lakh in the preceding
financial year;
(b) an individual as an advocate or a partnership firm of advocates by way
of legal services to,(i) an advocate or partnership firm of advocates providing legal services ;
(ii) any person other than a business entity; or
(iii) a business entity with a turnover up to rupees ten lakh in the preceding
financial year; or
(c) a person represented on an arbitral tribunal to an arbitral tribunal;
“arbitral tribunal” has the meaning assigned to it in clause (d) of section 2 of the
Arbitration and Conciliation Act, 1996 (26 of 1996)
48
Technical testing or analysis
 "7. Services by way of technical testing or analysis of newly developed
drugs, including vaccines and herbal remedies, on human participants by a
clinical research organisation approved to conduct clinical trials by the Drug
Controller General of India;“
 Entry 7 omitted by Notification No. 6/2014-ST, dated 11-7-2014, w.e.f. 117-2014.
49
8. Services by way of training or coaching in recreational
activities relating to arts, culture or sports;
It extends to coaching or training relating to all forms of
 Dance
 Music
 Painting
 Sculpture Making
 Theatre
 Sports
50
9.
Services provided, -
(a) by an educational institution to its students, faculty
and staff;
(b)
to an educational institution, by way of,(i)
transportation of students, faculty and staff;
(ii)
catering, including any mid-day meals scheme
sponsored by the Government;
(iii)
security or cleaning or house-keeping services
performed in such educational institution;
(iv)
services relating to admission to, or conduct of
examination by, such institution;”;
51
Let’s Think…
Taxable or Exempt ?
 A school is engaged in providing education to its students up to Class XII. It
has a big playground which is given on rent for marriages only if the
booking is in name of any staff or faculty.
Taxable
 Charges collected for summer camp, hobby classes etc.
Taxable
 Extra classes for preparation of IIT exam
Exempt
52
9A. Any services provided by, (i)
the National Skill Development Corporation set up by the
Government of India;
(ii)
a Sector Skill Council approved by the National Skill
Development Corporation;
(iii) an assessment agency approved by the Sector Skill Council
or the National Skill Development Corporation;
(iv) a training partner approved by the National Skill
Development Corporation or the Sector Skill Council
in relation to (a) the National Skill Development Programme
implemented by the National Skill Development Corporation; or
(b) a vocational skill development course under the National Skill
Certification and Monetary Reward Scheme; or (c) any other
Scheme implemented by the National Skill Development
Corporation.”
53
10. Services provided to a recognized sports body by: an individual as a player, referee, umpire, coach or manager for
participation in a tournament or championship organized by a
recognized sports body;
 another recognized sports body;
“recognized sports body” means
(i)
The Indian Olympic Association,
(ii)
Sports Authority of India,
(iii) A national sports federation recognized by the Ministry of Sports and Youth Affairs of
the Central Government, and its affiliate federations,
(iv) National sports promotion organizations recognized by the Ministry of Sports and
Youth Affairs of the Central Government,
(v)
The International Olympic Association or a federation recognized by the International
Olympic Association or
(vi) A federation or a body which regulates a sport at international level,
54
Let’s Think….
 Services by individuals such as selectors, commentators, curators, technical
experts etc are exempt from Service Tax ?
No, they are not exempt as no specific entry related to them in the exemption
notification.
55
11. Services by way of sponsorship of tournaments or championships
organized:-
 by a national sports federation, or its affiliated federations,
where the participating teams or individuals represent any
district, state, zone or country;
 by Association of Indian Universities, Inter-University Sports
Board, School Games Federation of India, All India Sports
Council for the Deaf, Paralympic Committee of India, Special
Olympics Bharat;
 by Central Civil Services Cultural and Sports Board;
 as part of national games, by Indian Olympic Association; or
 under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA)
Scheme;
56
12. Services provided to the Government or local authority by way of
erection, construction, maintenance, repair, alteration, renovation or
restoration of:–

a civil structure or any other original works meant predominantly for use
other than for commerce, industry, or any other business or profession;

a historical monument, archaeological site or remains of national importance,
archaeological excavation, or antiquity specified under Ancient Monuments
and Archaeological Sites and Remains Act, 1958

a structure meant predominantly for use as an educational or a clinical or an
art/cultural establishment;

canal, dam or other irrigation works;

pipeline, conduit or plant for Drinking water supply, Water treatment
Sewerage treatment or disposal; or

a residential complex predominantly meant for self-use or the use of their
employees or other persons specified in the Explanation 1 to clause 44 of
section 65 B of the said Finance Act (e.g. MP, MLA etc)
57
“Original works” means 1.
all new constructions; or
2.
all types of additions and alterations to abandoned or damaged structures on
land that are required to make them workable,
Let’s Think…

I am providing service of construction of hospitals and educational institutes.
Am I required to pay service tax?
If you are constructing such structures for the government or local
authority, you are not required to pay service tax. If you are
constructing for others, you are required to pay tax.
58
13. Services provided by way of erection, construction,
maintenance, repair, alteration, renovation or
restoration of: road, bridge, tunnel, or terminal for road transportation for use
by general public;
 building owned by an entity registered under section 12 AA of
the Income tax Act, 1961 and meant predominantly for
religious use by general public;
 pollution control or effluent treatment plant, except located as
a part of a factory; or
 a structure meant for funeral, burial or cremation of deceased;
59
Let’s Think…
Contractor provided services of construction of road like construction of
roads in a factory, residential colony etc. Whether such activities are
exempt or taxable ?
Construction of roads for use by general public is exempt from service
tax. Construction of roads which are not for general public use e.g.
construction of roads in a factory, residential complex etc would be
taxable.
‘General Public’ (Aaam Adami) means body of people at large
sufficiently defined by some common quality of public or in personnel
nature.
60
14. Services by way of 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 complex;
“single residential unit" means a self-contained residential unit which is designed
for use, wholly or principally, for residential purposes for one family;”
"residential complex" means any complex comprising of a building or buildings,
having more than one single residential unit



low- cost houses up to a carpet area of 60 sq. mtr. per house in a housing
project approved by competent authority empowered under the ‘Scheme of
Affordable Housing in Partnership’ framed by the Ministry of Housing and
Urban Poverty Alleviation, Government of India;
post- harvest storage infrastructure for agricultural produce including a cold
storages for such purposes; or
mechanized food grain handling system, machinery or equipment for units
processing agricultural produce as food stuff excluding alcoholic beverages;
61
Lets Think…..
 Construction of two floor house. Whether single
residential unit or residential complex?
 A Ltd constructed 6 villas in a township. It has
separate entrance and separate registry of villas has
taken place when sold to buyers. The consideration
was received by seller before construction of villas.
The villas have a common park and recreation room. Is
service tax applicable on the same?
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15. Services provided by way of temporary transfer or
permitting the use or enjoyment of a copyright, (a) covered under clause (a) of sub-section (1) of section
13 of the Copyright Act, 1957 (14 of 1957), relating to
original literary, dramatic, musical or artistic works; or
 (b) of cinematograph films for exhibition in a cinema hall
or cinema theatre;”;
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16. Services by a performing artist in folk or classical art
forms of
(i) music, or
(ii) dance, or
(iii) theatre,
excluding services provided by such artist as a brand
ambassador;
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Let’s Think…
 Activities by an artist in art forms e.g western music or dance, modern
theatres, performance of actors in films or television serials would be
taxable or exempt ?
Such activities are taxable as they are not part of any classical or folk
art.
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17. Services by way of collecting or providing news by an
independent journalist, Press Trust of India or United
News of India;
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18. Services by a hotel, inn, guest house, club or
campsite, by whatever name called, for residential or
lodging purposes, having declared tariff of a unit of
accommodation below one thousand rupees per day
or equivalent;”;
"Declared Tariff" includes charges for all amenities provided in the unit of
accommodation (given on rent for stay) like furniture, air-conditioner,
refrigerators or any other amenities, but without excluding any discount offered
on the published charges for such unit
Lets Think….



Declared Tariff is Rs.1100/- per day but discount @ 20% is
allowed based on tourist season
Tariff is for separate for different type of room
Renting out of entire hotel for a lump sum amount
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19. Services provided in relation to serving of food or
beverages by a restaurant, eating joint or a mess,
other than those having the facility of airconditioning or central air-heating in any part of the
establishment, at any time during the year;”
19A. Services provided in relation to serving of food or
beverages by a canteen maintained in a factory
covered under the Factories Act, 1948 (63 of 1948),
having the facility of air-conditioning or central airheating at any time during the year;
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Lets Think…..
 Two restaurants in a complex, one is AC other is non-AC. Separately
demarcated and named but food is sourced from a common kitchen.
Only the service provided in AC is liable to service-tax –
Circular no. 173/8/2013-ST dated 7-10-2013
 Goods sold on MRP across the counter in AC restaurant
Not liable for service tax - Circular no. 173/8/2013-ST dated 7-10-2013
 Room service of food and beverages is covered by restaurant
(No- Circular no. 139/8/2011-TRU- dated 10-5-2011)
 Home delivery of food is liable for service tax?
It is incidental to the contract of sale of goods- IRCTC v. Govt of NCT of
Delhi (2011)
Service tax is not payable on VAT – Circular no. 139/8/2011- TRU dated
10-5-2011
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20. Services by way of transportation by rail or a vessel from one port in
India to another of the following goods:
relief materials meant for victims of natural or man-made disasters,
calamities, accidents or mishap;

defence or military equipment;

newspaper or magazines registered with Registrar of Newspapers;

railway equipment or materials;

agricultural produce;

foodstuff including flours, tea, coffee, jaggery, sugar, milk products, salt and
edible oil, excluding alcoholic beverages; or

chemical fertilizer, organic manure and oilcakes

Cotton, ginned or baled.
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21. Services provided by a goods transport agency by way of transportation
of:-
 Agriculture produce;
 goods where gross amount charged on a consignment
transported in a single goods carriage does not exceed Rs.
1500/-; or;
 goods, where gross amount charged for transportation of all
such goods for a single consignee in the goods carriage does
not exceed Rs. 750/-;

Contd..
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 Contd..
 foodstuff including flours, tea, coffee, jaggery, sugar, milk
products, salt and edible oil, excluding alcoholic beverages;
 chemical fertilizer, organic manure and oilcakes;
 newspaper or magazines registered with the Registrar of
Newspapers;
 relief materials meant for victims of natural or man-made
disasters, calamities, accidents or mishap; or
 defence or military equipment
 cotton, ginned or baled.
Food Stuff includes rice: Circular no.177/3/2014-ST 17-2-2014
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22. Services by way of giving on hire: to a state transport undertaking, a motor vehicle meant
to carry more than 12 passengers; or
 to a goods transport agency, a means of transportation
of goods;
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23. Transport of passengers,
accompanied belongings, by:
with
or
without

air, embarking or terminating in an airport located in the state of
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim, or Tripura or at Baghdogra located in West Bengal; or

non-air conditioned contract carriage other than radio taxi, for
transportation of passengers, excluding tourism, conducted tour,
charter or hire;

ropeway, cable car or aerial tramway;
24. Vehicle Parking (Exemption Omitted w.e.f 01-4-2013)
74
25. Services provided to the Government or a local
authority by way of:water supply, public health, sanitation
conservancy, solid waste management or slum
improvement and up-gradation
repair of a vessel;
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26. Services of general insurance business provided under following
schemes: Hut Insurance Scheme;
 Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier
known as Integrated Rural Development Programme);
 Scheme for Insurance of Tribals;
 Janata Personal Accident Policy and Gramin Accident Policy;
 Group Personal Accident Policy for Self-Employed Women;
 Agricultural Pumpset and Failed Well Insurance;
 Premia collected on export credit insurance;
 Weather Based Crop Insurance Scheme or the Modified National
 Central Sector Scheme on Cattle Insurance;
 Agricultural Insurance Scheme, approved by the Government of India
and implemented by the Ministry of Agriculture;
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 Jan Arogya Bima Policy;
 National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);
 Pilot Scheme on Seed Crop Insurance;
 Universal Health Insurance Scheme;
 Rashtriya Swasthya Bima Yojana; or
 Coconut Palm Insurance Scheme;
26A. Services of life insurance business provided under following
schemes—
a) Janashree Bima Yojana (JBY);
b) Aam Aadmi Bima Yojana (AABY);
c) life micro-insurance product as approved by the Insurance
Regulatory and Development Authority, having maximum
amount of cover of fifty thousand rupees.
77
27. Services provided by an incubatee up to a total business turnover of Rs. 50
lac in a financial year subject to the following conditions, namely :-
the total business turnover had not exceeded Rs. 50 lac
during the preceding financial year; and
a period of 3 years has not lapsed from the date of
entering into an agreement as an incubatee
“incubatee” means an entrepreneur located within the premises of a
Technology Business Incubator (TBI) or Science and Technology
Entrepreneurship Park (STEP) recognized by the National Science and
Technology Entrepreneurship Development Board (NSTEDB) of the
Department of Science and Technology, Government of India and who
has entered into an agreement with the TBI or the STEP to enable
himself to develop and produce hi-tech and innovative products,
78
28. Service by an unincorporated body or an entity registered as a
society to own members by way of reimbursement of charges or
share of contribution :as a trade union;
for the provision of exempt services by the entity to third
persons; or
up to an amount of Rs. 5,000/- per month per member for
sourcing of goods or services from a third person for the
common use of its members in a housing society or a
residential complex;
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Let’s Think…
 The members contribute an amount to RWA for holding camps to provide
health care services to poor men and women. Whether RWA is required to
pay tax on contribution received from members?
No. You are not required to pay service tax on the
contribution received as you are providing exempt health
care services to third persons. If contribution is for the
taxable services to be provided to third persons, you are
required to pay service tax.
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29. Services by the following persons in respective
capacities:(a)sub-broker or an authorised person to a stock broker;
(b) authorised person to a member of a commodity exchange;
(c) mutual fund agent to a mutual fund or asset management company;
(d) distributor to a mutual fund or asset management company;
(e) selling or marketing agent of lottery tickets to a distributer or a selling agent;
(f) selling agent or a distributer of SIM cards or recharge coupon vouchers;
(g) business facilitator or a business correspondent to a banking company or an
insurance company, in a rural area; or
“business facilitator or business correspondent” means an intermediary appointed
under business facilitator model or business correspondent model by a banking
company or an insurance company under the guidelines issued by Reserve Bank of
India,
(h) sub-contractor providing services by way of works contract to another
contractor providing works contract services which are exempt;
81
Lets Think…..
 Sub contractor provide input service to main contractor in relation to
construction of road for general public use.
 Sub contractor supplying labour to main contractor who is providing
construction service of hospital to Govt.
 M/s A Ltd is engaged in construction of Income Tax Deptt at Jaipur. It
subcontracts the labour contract to M/s X Ltd. Is service tax applicable on
any of them? Will your answer change if it sub-contracts the whole work
with material to M/s X Ltd.
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30. Carrying out an intermediate production process as job work in
relation to:• agriculture, printing or textile processing;
• cut and polished diamonds and gemstones; or plain and
studded jewellery of gold and other precious metals, falling
under Chapter 71 of the CETA,1985;
• any goods on which appropriate duty is payable by the principal
manufacturer; or
• processes of electroplating, zinc plating, anodizing, heat
treatment, powder coating, painting including spray painting or
auto black, during the course of manufacture of parts of cycles
or sewing machines upto an aggregate value of taxable service
of the specified processes of 150 lac rupees in a financial year
subject to the condition that such aggregate value had not
exceeded 150 lac rupees during the preceding financial year;
83
Lets Think….
 Embroidery work done on job basis – whether
taxable?
 Packing and bottling of liquor
(Treated as ‘manufacture’ in Maa Sharda Wine Traders v UOI
(2009) 22 STT 105 (MP HC FB)
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31.Services by an organizer to any person in
respect of a business exhibition held outside
India;
32. Services by way of making telephone calls from:-
 departmentally run public telephones;
 guaranteed public telephones operating only for
local calls; or
 free telephone at airport and hospitals where no
bills are being issued;
33. Services by way of slaughtering of animals;
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34. Services received from a service provider located in a
non- taxable territory by:-
 the Government, a local authority or an individual
in relation to any purpose other than industry,
business or commerce; or
 an entity registered under section 12AA of the
Income tax Act, 1961 (43 of 1961) for the purposes
of providing charitable activities.
 a person located in a non-taxable territory;
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35. Services of public libraries by way of lending of books,
publications or any other knowledge- enhancing content or
material;
36. Services by Employees’ State Insurance Corporation to
persons governed under the Employees’ Insurance Act,
1948 (34 of 1948);
37. Services by way of transfer of a going concern, as a whole
or an independent part thereof;
38. Services by way of public conveniences such as provision of
facilities of bathroom, washrooms, lavatories, urinal or
toilets;
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39. Services by a governmental authority by way of any
activity in relation to any function entrusted to a
municipality under article 243 W of the Constitution.
40.
Services by way of loading, unloading, packing,
storage or warehousing of rice, cotton, ginned or
baled;
41.
Services received by the Reserve Bank of India, from
outside India in relation to management of foreign
exchange reserves;
42.
Services provided by a tour operator to a foreign
tourist in relation to a tour conducted wholly outside
India.”.
88
Summary
Sector
Government
Negative List
Mega Exemption
(a)
5A, 12, 25, 36, 39
Construction Sector
12, 13, 14, 29(h) & 38
Manufacturing /Job Work
(f)
30
Education
(L)
4, 8, 9, 9A & 35
(O) & (P)
20, 21, 22, 23, 40 & 42
Tour/ Travel/ Transportation
Charitable & Religious
Renting
Public Welfare
4, 5, 13
(m)
5, 18 & 22
(h), (j), (q)
2, 7, 16, 19, 24, 28, 32 &
38
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Small Scale Exemption:- (Notification No 33/2012-ST)
Exemption to small scale service providers when value of Taxable services in the
preceding financial year had not exceeded ten lakh rupees — Notification No.
6/2005-S.T. superseded.
Provided that nothing contained in this notification shall apply to,(i) taxable services provided by a person under a brand name or trade name,
whether registered or not, of another person; or
(ii) such value of taxable services in respect of which service tax shall be paid by
such person and in such manner as specified under sub-section (2) of section 68
of the said Finance Act read with Service Tax Rules, 1994.
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Small Scale Exemption:- (Notification No 33/2012-ST)
Explanation. - For the purposes of this notification,(A) “brand name” or “trade name” means a brand name or a trade name,
whether registered or not, that is to say, a name or a mark, such as symbol,
monogram, logo, label, signature, or invented word or writing which is used in
relation to such specified services for the purpose of indicating, or so as to
indicate a connection in the course of trade between such specified services and
some person using such name or mark with or without any indication of the
identity of that person;
(B) “aggregate value” means the sum total of value of taxable services charged in
the first consecutive invoices issued during a financial year but does not include
value charged in invoices issued towards such services which are exempt from
whole of service tax leviable thereon under section 66B of the said Finance Act
under any other notification.”
4. This notification has come into force on the 1st day of July, 2012.
91
Case Study
1. A building co-owned by two or more people and given on rent with
individual share of rent less than 10 lacs per annum. Whether it is
considered as AOP or BOI.
2. In case of a works contract service, Service tax is payable on 40% of gross
amount charged. Assume total value of works contract is 20 lacs. The
taxable value would be Rs. 8 lacs. Whether he is entitled to the
exemption of SSP.
3. In case of construction of residential complex service tax is payable in
25% of the gross amount charged. Whether full value of service needs to
be considered or the abated value for the purpose of SSP exemption.
4. An authorised service station of Maruti provides servicing to the vehicle.
Whether his services is covered under the brand name and consequently
not be entitled to exemption of Rs.10 lacs.
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Final Words…
Thank You
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