TMI BlogImposition of Service Tax on new services consequent to enactment of Finance Bill, 2003-reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... 01. However, it was restricted only to motorcars and two wheeled motor vehicles. 1 Light motor vehicles like maxi cabs etc. were not covered . Provision have been made to widen the scope of authorized automobile service to cover all such vehicles; o foreign exchange broking service provided by any body corporate or non-banking financial company was covered under the tax net in the category of banking and other financial service with effect from 16.7.2001. Provisions have been made to extend the scope of the tax to include the service provided by all foreign exchange brokers (including moneychangers and forex dealers). As per the provisions of the Finance Act, the above levies or extensions of levies are to come into effect from a date to be appointed by the Central government . In this regard, vide notification No.7/2003-Service Tax, date 20th June 2003 , the government has appointed 1 st July, 2003, as the date from which the levy of Service tax on the above services would come into effect. 2. EXEMPTIONS AND CLARIFICATIONS 2.1 BUSINESS AUXILIARY SERVICE: 2.1.1 Call centers and medical transcription centers: Business auxiliary services provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stomer management, information and tracking of delivery schedules, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, managing distribution logistics. The services provided in relation to getting a customer, verification of prospective customer, processing of purchase order etc would also be covered under service tax, as the law specifically provides for inclusion of such services as business auxiliary support services. As regards the question whether insurance agents, C F agents working on commission basis fall under the definition of business auxiliary service, it is clarified that they do not, as they are specifically covered within the definition of other specified taxable services, namely the Insurance service and C F Service respectively. Under Section 65A of Finance Act 1994, it has also been provided that in case of overlap, a service would be classified under the head, (a) which provides most specific description, (b) in case of a composite service having combination of different taxable services, the service which give them their essential character and (c) in case the test of (a) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional training institute; have been exempted from service tax w.e.f. 1 st July, 2003vide Notification No.9/2003-Servtice Tax dated 20 th June 2003 . Therefore, vocational coaching and training services provided by typing and shorthand institutes, TV/ vehicle repair training institutes, tailoring institutes, industrial training institutes, foreign language institutes, computer-training centers, hobby classes, institutes teaching martial arts, painting, dancing etc would not be chargeable to service tax. This exemption would remain in force upto 29 th February 2004. 2.2.2 Institutes like the Institute of Chartered Accountants of India some time hire the services of other institutes to impart some part of training (like language or computer training) to the students undertaking courses for obtaining recognized degrees/diplomas (like Chartered Accountancy) from their institute. Whereas institutes the Institute of Chartered Accountants of India will not be chargeable to service tax because they confer qualifications recognized by law, the institutes or centers providing such part of training may be otherwise under service tax net. Vide notification No. 10/2003-Service Tax date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce receivers, such services would be chargeable to tax, as in this case, the individuals are rendering services on behalf of an institution. Whether free summer training/ in house training provided by employers to their employees are covered under service tax net: It is clarified that in case employers provide any free training themselves, no service tax is chargeable. However if an employer hires an outside commercial coaching or training center for imparting some training to its employees, then the payment made by the said employer to such coaching center will be chargeable to service tax. 2.3 MAINTENANCE AND REPAIR SERVICES: 2.3.1 Maintenance contracts entered into before 1 st July 2003 : There are cases where maintenance contracts are entered into for a period of more than one year. Vide notification No.11/2003- Service Tax, dated 20 th June 2003 for maintenance contracts entered into prior to 1 st July, 2003, exemption has been provided to that part of the value of the service for which bill/invoices have been raised and the amount has actually been received prior to the 1 st July, 2003. For such contracts, all subsequent payments or payments made again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person under 'License Production Agreement`, does not make the agreement a Franchise Agreement. A franchise agreement also includes the franchisee being obliged to follow the concept of business operation, managerial expertise, market techniques etc. of the franchisor and is under an obligation not to engage in selling, producing or providing similar goods or services, identified with any other person. Therefore, in the absence of such ingredients, a mere licensed production cannot be called as a franchise agreement and accordingly the license fees paid for such license production cannot be charged to service tax. 2.5 TECHNICAL INSPECTION AND CERTIFICATION SERVICES: A doubt has been raised whether certification given in respect of immovable property should fall under the purview of 'technical inspection and certification services`. In this regard it may be recalled that earlier, CBEC vide its order No. 1/1/2002, dated 26.02.2003, issued under Section 37B (of the Central excise Act as made applicable to service tax) had clarified that certification given under authority of any code or statute can not be considered as a consulting engineer service. However, the new service inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horized service stations, maintenance or repair services, commissioning and installation services and photography services it has been provided in the law that the cost of goods and material shall not form part of the value to be subjected to service tax, if evidence (like sale invoice/bill) shows that these goods were sold. Such dispensation has, however, not been provided for other services like commercial coaching and training centers, telecom services. In this regard, a general exemption under Notification No. 12/2003-service Tax, dated 20 th June, 2003 has been issued exempting that part of the value of all taxable services from service tax, which represents the cost of goods or material sold by the service provider to the receiver of such services during the course of provision of the taxable services. This exemption would be available only in cases where the sale of such goods is evidenced and the sale value is quantified and shown separately in the invoice. It is also clarified that in case of commercial training and coaching institutes, the exclusion shall apply only to the sale value of standard textbooks, which are priced. Any study material or written text provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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