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Statutory Provisions

Home Acts & Rules Bill Bills FINANCE BILL, 2011 Chapters List Statements - Notes - Memorandum This

Notes - Notes on clauses - Service Tax - FINANCE BILL, 2011

FINANCE BILL, 2011
Statements - Notes - Memorandum
  • Contents

Clause  71 of the Bill seeks to amend Chapter V of the Finance Act, 1994 relating to service tax in the following manner:—

Sub-clause (A) seeks to amend section 65 so as to,—

(a) define the term “clinical establishment”, omit the definition of “authorised service station” and amend the definitions of “club or association”, “commercial training and coaching centre” and “support services of business or commerce”;

(b) specify or expand the scope of  the following taxable services—

(i) service provided in relation to repair, etc., of motor vehicle;

(ii) life insurance service;

(iii) service provided by clubs or associations;

(iv) (a) services provided by a business entity to individuals

in relation to advice, consultancy or assistance in any branch

of law;

(b) representational service before a judicial or quasi-judicial authority provided by any person to a business entity;

(c) include arbitration service provided to any business entity by a arbitral tribunal;

(v) services provided by clinical establishments and doctors of such establishments;

(vi) services provided by air-conditioned restaurants also having licence to serve alcoholic beverages;

(vii) service relating to providing of  short-term accommodation by hotels and similar establishments;

Sub-clause (B) seeks to amend section 66 of the said Act, inter alia, to specify the following services as taxable services, namely:—

(a) representational services excluding the services provided to an individual by way of appearance before any court, tribunal or authority;

(b) services provided by an arbitral tribunal;

(c) services provided by an air-conditioned restaurant in relation to serving of food or beverages;

(d) services provided by hotel, etc., in relation to accommodation provided for a period of less than three months;

Sub-clause (C) seeks to amend section 70 of the said Act with a view to enhance the maximum late fee for non-filing of returns from two thousand rupees to twenty thousand rupees;

Sub-clause (D) seeks to amend section 73 with a view to omit sub-section (1A) and provisos to sub-section (2) and to insert a new sub-section (4A) to provide for mitigation of penalty;

Sub-clause (E) seeks to amend section 73B with a view to insert a proviso therein to provide concessional rate of interest for certain specified category of service providers;

Sub-clause (F) seeks to amend section 75 with a view to provide for concessional rate of interest for certain category of service providers whose service tax payments are delayed;

Sub-clause (G) seeks to amend section 76 with a view to reduce maximum penalty for failure to pay service tax  from hundred per cent.  to fifty per cent. of tax payable;

Sub-clause (H) seeks to amend section 77 with a view to enhance the maximum penalty from five thousand rupees to ten thousand rupees, in the cases of certain specified offences for which penalty is not specifically provided in the Act;

Sub-clause (I) seeks to substitute a new section for section 78 relating to penalty for suppressing, etc., of value of taxable services with a view to rationalise penalty in the case of serious offences, as equal to tax evaded.

The proposed section 78 provides that in case of certain specified offences penalty will be fifty per cent. and if such penalty is paid along with service tax and interest, within thirty days from the date of order, penalty will be further reduced to twenty-five per cent. and for specified category of service providers, ninety days from the date of order will be available for settling the tax dues, penalty and interest;

Sub-clause (J) seeks to amend section 80 with view to omit penalty waiver for serious offences but the same will be provided for certain specified offences;

Sub-clause (K) seeks to amend section 82 with a view to substitute certain words;

Sub-clause (L) seeks to amend section 83 with a view to make

applicable certain provisions of Central Excise Act to service tax;

Sub-clause (M) seeks to insert new sections 88 and 89. Section 88 seeks to provide for liability under Act to be first charge and section 89 seeks to provide for offences and penalties to enable prosecution of certain specified offences involving service tax evasion. The power to prosecute offenders rests with the Chief Commissioner of Central Excise and the prosecution would be done only with the previous sanction of the Chief Commissioner of Central Excise;

Sub-clause (N) seeks to amend section 93A of the Finance Act, 1994 so as to empower the Central Government to make rules to provide for the circumstances or conditions under which the amount of rebate granted in respect of service tax paid on taxable services which are used as input services for manufacturing the exported goods or for providing the exported services shall not be recovered, even if the sale proceeds are not realised by the exporter.

Sub-clause (O) seeks to amend section 95 of the said Act so as to empower the Central Government to issue orders for removal of difficulty in case of implementing, classifying or assessing the value of any taxable service incorporated by the proposed legislation in this Chapter, up to one year from the date of enactment of the Finance Bill, 2011.

Sub-clause (P) seeks to insert a new section 96J in the Finance Act, 1994. Under the existing provision of section 66 in respect of, any service provided or to be provided to its members by any club or association in relation to provisions of services, facilities or advantages for a subscription or for any other amounts, service tax shall be chargeable.

It is proposed to exempt retrospectively the associations formed for representing the industry or commerce from payment of service tax in respect of membership fee collected by such club or associations during the period from 16th June, 2005 to 31st March, 2008. Refund will be made of all service tax collected in respect of the exempted period.

Clause 72 of the Bill seeks to give retrospective effect to the notification of the Government of India number G.S.R.492 (E), dated the 7th July, 2009, from the 1st day of April, 2000, so as to allow the exemption to a tour operator having a contract carriage permit for inter-State or intra-State transportation of passengers, excluding tourism, conducted tour, charter or hire service, under the said notification.

 
 
 
 

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