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News Indirect Tax-Service Tax

  • Aug 24, 2023
  • No service tax on school bus, rules Appellate Tribunal

    School buses do not fall under the definition of ‘cab’ and therefore no service tax can be levied on it, Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) said in its ruling. The bench was hearing the appeal by Akshar Travels for providing buses for rent on a monthly basis to a school owned and managed by JK Paper Ltd.

    A two-member bench consisting of Ramesh Nair and CL Mahar held that the motor vehicle has been used by an educational body for transportation of school children and therefore, the same is excluded from the definition of cab under Section 65(20) of the Finance Act, 1994.

    The chief commissioner of excise and customs had ruled that as service recipient is JK paper Limited which is a commercial organization and cannot be treated as educational body and demanded service tax on the income for the financial year 2007-08.

  • Feb 18, 2023
  • No service tax on takeaway food items sold by restaurants: CESTAT

    The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) recently quashed the show-cause notice to Haldiram Marketing Private Limited, passed by the Commissioner, CGST in March 2022, the Bar & Bench reported.

    The CESTAT bench ruled that service tax cannot be levied on takeaway/ parcel food items sold by restaurants while hearing the pleas filed by Haldiram Marketing Pvt Ltd against the order passed by Central Goods & Services Tax Commissioner.
    A division bench comprising President Justice Dilip Gupta and Member (Technical) PV Subba Rao noted that the Ministry of Finance had introduced the service tax for restaurant services in February 2011. The ministry had also clarified again on August 13, 2015, that the same would not be applicable to "pick-up" or "home delivery".

  • Aug 03, 2022
  • No service tax on pre-2007 composite work contracts: SC

    The Supreme Court on Tuesday ruled that no service tax will be levied on composite work contracts that were executed before 2007.

    Setting aside various judgements, given by high courts and tax tribunals across the country, that ruled to the contrary, a Bench comprising justices M R Shah and B V Nagarathna said that assesses are not liable to pay the service tax for the contracts performed prior to the introduction of the Finance Act, 2007.

  • May 08, 2021
  • Do your due diligence before sending show cause notices on service tax defaults: CBIC tells officers

    The Central Board of Indirect Taxes and Customs (CBIC) has directed its offices to not send show-cause notices (SCNs) for service tax defaults, merely on the basis of discrepancies between income tax returns and service tax amount.

    Various tax-related associations have complained to the Union finance ministry that SCNs were wrongly sent for the financial year 2015-16.

    The GST department has also issued notices to many entities and professionals who are exempted from service tax, like doctors, they had complained.

  • Jan 31, 2020
  • Notice pay recovery not liable to service tax, rules Madras High Court

    Recovery of notice period pay will not be subjected to services tax, Madras High Court has ruled. Now, the government is expected to come out with a clarification to deal with such matter under the Goods & Services Tax (GST) regime. The case belongs to the old regime of service tax. The petitioner GE T&D India Limited (formerly Alstom T&D India) received certain amount in lieu of notice period from outgoing employees. The Assessing Officer was of the view that this amount would attract Service Tax since the petitioner is deemed to have facilitated the termination of employment and thus a category of service entailed and described as 'facilitation of termination of employment' was carved out by the Assessing Officer. Accordingly show cause notices were issued against which the petitioner moved to the court.

  • Jul 25, 2019
  • Service tax demand is only for premium bank accounts’

    Service tax demands from the 13 banks are only for premium accounts which require a customer to maintain a hefty balance or fixed deposit, according to government sources. SCN issued
    The matter, related to tax on minimum balance, is pending in Delhi High Court, and has been listed for next hearing on November 14. It dates back to March-April 2010, when the government issued show-cause notice (SCN) to nine private and foreign banks – HDFC Bank, Kotak Mahindra/ING Vysya Bank, Axis Bank, Deutsche Bank, HSBC Bank, ICICI Bank, Citibank, Standard Chartered Bank and YES Bank – involving a service tax of Rs 15,581.07 crore.

  • Jul 02, 2019
  • Total service tax arrears rise to Rs 1.66 trillion in FY18: CAG report

    Total service tax arrears rose to Rs 1.66 lakh crore in 2017-18, up from Rs 1.18 lakh crore in the preceding financial year, said a CAG report tabled in Parliament Monday. Similarly, in respect of central excise, total arrears increased to Rs 96,496 crore in FY 2017-18 from Rs 84,200 crore in the previous year. "Further, recovery as per cent of gross arrears had reduced from 1.19 per cent in 2016-17 to 1.02 per cent in 2017-18 for service tax. "Similarly, recovery as per cent of gross arrears had reduced from 1.85 per cent in 2016-17 to 1.27 per cent in 2017-18 for central excise," said the audit report of Comptroller and Auditor General of India (CAG).

  • Apr 09, 2019
  • Taxmen to scrutinise mismatch between ITR and service tax returns

    The revenue department has asked tax officials to scrutinise the mismatch in turnover towards services between income tax returns and service tax returns by businesses during 2015-16 and 2016-17. Central Board of Indirect Taxes and Customs (CBIC) Chairman P K Das in a letter to field formation stated that there was a considerable gap of Rs 12 lakh crore between the turnover on account of services as per the ITR/TDS (tax deducted at source) data and the value of services declared in the corresponding service tax returns for fiscal 2015-16.

  • Mar 26, 2018
  • Service tax can't be imposed in J&K, says tribunal of pre-GST levy

    A tribunal has rejected indirect tax authorities’ demand to levy service tax for goods transported to Jammu and Kashmir on the reverse charge mechanism. The case was from the earlier service tax regime, prior to rollout of the current goods and services tax (GST). Experts say such a dispute would not arise in the GST regime. A company supplying petroleum products had got a notice for services given by a goods transport agency in J&K between April 2011 and September 2014. The company contended that service tax, imposed since 1994, excluded the state of J&K; hence, no such levy was possible.

  • Dec 14, 2017
  • Service tax notices to IT firms: Concerns will remain till rules are amended, say Experts

    Even though the tax department has set aside a clutch of orders sent to IT companies reversing their tax exemptions in respect of IT/IT-enabled services (IT/ITes) provided to clients abroad and also slapping service tax and penalty on them, tax experts said the “technical issue” could linger. Under the Place of Supply Rules — which were applicable to service tax earlier and hold good for the GST now — in case goods are provided to a service provider, the place of supply of the service is where the goods are located and the tax needs to be paid there.

  • Dec 13, 2017
  • Orders on service tax demand to IT firms set aside: Govt

    In a relief to IT companies, a Rs 10,000 crore service tax demand notices on dozens of IT companies has been set aside, the government said today.The tax department had slapped service tax demand notices on about 200 information technology and IT-enabled services companies in the country. It had asked them return export benefits claimed between 2012 and 2016 on softwares provided to clients outside India. A day after IT companies raised the issue of tax demand with Finance Minister Arun Jaitley in the customary pre-budget consultations, the finance ministry issued a statement to state that the Commissioner (Appeals) set aside the orders of the lower adjudicating authority.

  • Jun 21, 2017
  • Capital gains tax evasion under CBI scanner

    The Central Bureau of Investigation (CBI) is probing if any government officials were involved in misusing stock exchange platforms to benefit from the long-term capital gains tax (LTCG) exemption.According to sources, CBI officials visited the headquarters of the Securities and Exchange Board of India (Sebi) in Mumbai to get relevant files pertaining to LTCG cases probed by the markets regulator.This comes at a time the income tax (I-T) department is probing the entities which had allegedly misused capital gains provisions to evade taxes worth Rs 34,000 crore.

  • Jun 20, 2017
  • I-T Lays Claim to Cairn Dividends as Part of Retro Tax Payment

    The income tax department has demanded all dividends due to Cairn Energy Plc from Cairn India (renamed Vedanta Ltd) against part of the Rs 10,247-crore tax levied on the company in the wake of the controversial retrospective tax amendment. The company was required to pay the amount by June 15, failing which the department had said it would start recovery proceedings.Vedanta said late on Monday that money held in escrow for this purpose will be paid to the tax department.“Vedanta Ltd has advised the banks holding approximately Rs.666 crore in the dividend account to be transferred to the IT authorities,” the company said in its release. “It may be recalled that the dividends due to Cairn Energy Plc for the last three years were lying in an unpaid dividend account as initially they were subject to an attachment order under Section 281B by the tax department and were not available for use by Cairn (now Vedanta Ltd).”

  • Apr 27, 2017
  • Government extends service tax return filing date to April 30

    Centre has extended the last date for filing service tax return by five days to April 30, in a relief to lakhs of service providers. “The CBEC hereby extends the date for submission of form ST-3 for the period from October 1 to March 31, 2017, from April 25 to April 30, 2017,” the apex policy makingCentre has extended the last date for filing service tax return by five days to April 30, in a relief to lakhs of service providers. “The CBEC hereby extends the date for submission of form ST-3 for the period from October 1 to March 31, 2017, from April 25 to April 30, 2017,” the apex policy making body of the indirect tax department said in an office order.

  • Apr 17, 2017
  • Mumbai zone service tax mop-up falls short of revised target

    The Union Budget 2017 had set a target of Rs 76,300 crore from the Mumbai zone but this was revised upwards to Rs 83,000 crore in February. (Reuters)The service tax collection from the Mumbai zone has missed the revised target by a whisker at Rs 81,599 crore, which is a growth of 18.8 per cent from Rs 68,696 crore a year ago, a senior official has said. The Union Budget 2017 had set a target of Rs 76,300 crore from the Mumbai zone but this was revised upwards to Rs 83,000 crore in February. The Mumbai zone of the service tax department is responsible for over one-third of overall service tax collection from the entire country.

  • Jan 27, 2017
  • Ahead of Budget 2017, service tax blow for online travel players

    Domestic hotel and tour aggregators such as OYO Rooms, EaseMyTrip and MakeMyTrip were expecting tax relief in the Budget to be presented on February 1. But the mood has turned sombre, with the finance ministry deciding to impose service tax on what they receive from customers and not just the commission earned from hotels and others. In a quiet move, the Central Board of Excise and Customs has amended the service tax rules to clarify this because there was ambiguity on the point.

  • Jan 23, 2017
  • Amended I-T law harsh, prone to misuse by taxmen: Experts

    As the dust begins to settle on demonetization and the taxman hunts for unexplained money, there is a lurking concern among practitioners and senior levels of the tax office as to how harshly the new law would be used.Money borrowed from a friend, jewellery inherited from great grandmother, gifts, capital received by a small businessman, amount spent in daughter's wedding or in regular household expenditure can be questioned and taxed at a far higher rate if someone fails to offer a "satisfactory explanation" to the tax officer.

  • Jan 20, 2017
  • India to levy service tax on freight for imports on delivered basis

    Overseas exporters chartering foreign vessels to supply goods to India will have to pay a service tax on freight from Sunday, a government notification said. It will be the same as the 4.5 percent service tax that India currently levies on free-on-board (FOB) cargoes, where the ship is chartered by a local buyer. Prior to the change, imports in foreign ships hired by the overseas seller - known as on a cost and freight (CFR) basis - have been exempt from this charge.

  • Dec 27, 2016
  • Service tax mop from Mumbai zone jumps 25.5 per cent till November

    In spite of demonetisation, the Mumbai zone of the service tax department has not only exceeded the revenue collection as of November, but also has surpassed the target for the period. The revenue collection from the Mumbai zone rose 25.5 per cent or by Rs 10,362 crore to Rs 51,062 crore as of end November, according to the department sources.

  • Nov 14, 2016
  • Mumbai zone's Apr-Oct service tax mop-up exceeds target

    Service tax collection from the Mumbai zone rose to Rs 45,821 crore in the April-October period of this fiscal, exceeding the target by more than Rs 5,000 crore.
    Revenue collection by the service tax department was up by Rs 9,801 crore or 27.3% compared to Rs 36,020 crore mopped up in the same period of the previous fiscal, the department's data showed.The zone has surpassed the target for the period by Rs 5,062 crore or 12.4%.