News and Press Release
Dated:- 21-6-2012
The press release discusses the evolution of service taxation in India, starting from its inception in 1994 with a modest collection of Rs 407 crore, to Rs 97,444 crore in 2011-12. The document highlights the challenges faced due to overlaps in service categories and the lack of clarity in definitions, leading to tax leakages and litigation. The 2012 budget introduced a new taxation system known as the Negative List, where all services are taxable unless specified otherwise. This guide aims to educate taxpayers and administrators about the new system, providing guidance notes on various topics such as service definition, taxability, exemptions, and valuation.
The SC upheld state governments' power to levy entertainment tax on DTH and cable TV operators under Entry 62, List II of the Constitution. The Court dismissed most civil appeals by operators challenging the tax, ruling that broadcasting for entertainment constitutes a luxury taxable by states. Both central service tax and state entertainment tax can be imposed on the same activity as they target different aspects - service provision versus entertainment reception. The Court applied the aspect theory, finding no constitutional violation or legislative competence issues. However, the SC partially allowed Kerala's appeal, setting aside the HC's finding that taxing only operators with 7500+ connections violated Article 14, ruling the exemption was a valid legislative tool rather than discriminatory.
D. O. F. No 334/1/2012-TRU Dated:- 16-3-2012 Circular
The circular outlines changes in the Indian Budget 2012-2013 regarding service tax, focusing on simplifying tax processes and preparing for the Goods and Services Tax (GST). The service tax rate is restored to 12%, and a "Negative List" approach is introduced, taxing all services except those specifically exempted. The Place of Provision of Services Rules, 2012, are introduced to determine the location of service provision for tax purposes. The circular also details changes in valuation rules, Cenvat credit rules, and exemptions, aiming to streamline compliance and reduce litigation. The new rules will replace existing export and import service taxation rules.
The SC held that incorporated clubs and associations were not liable for service tax prior to July 1, 2012, based on the doctrine of mutuality. The Court ruled that sales tax was not applicable on food and drinks sold to permanent members during the quarter ending June 30, 2002, as there was no sale between different persons under the mutuality doctrine. Post-July 1, 2012, the service tax definition became broader, but the mutuality principle still applied to member clubs where property is held for and on behalf of members, not antagonistically. The Court distinguished proprietary clubs where owners are separate from members. The Revenue's appeal was dismissed.
Constitutional validity of levy of service tax - Section 65 (105) (zzzzv) of the Finance Act 1994 (FA) whereby the provision to any person by a restaurant, by having the facility of air-conditioning in any part of its establishment serving food or beverage, including alcoholic beverages or both, in its premises has been made amenable to service tax. - constitutional validity of Section 65 (105) (zzzzw) of the FA whereby the provision by a hotel, inn, guest house, club or camp-site by whatever na... ... ...
Constitutional validity of Levy of entertainment tax and service tax on DTH Service - simultaneous levy - whether DTH services is not entertainment - Held that:- even though we have held that by reason of the imperfections pointed out as to the absence of chargeable event not being specified in explicit, unambiguous and clear terms in Section 4-I, the charge cannot be effectuated, yet, on the grounds of violation of Article 14 and the imperfection in the Section creating the impression as though... ... ...
Constitutional validity of amendment - discrimination within the works contractors - discrimination between the dealers who purchase goods within the State and outside the State/country - Constitutional Validity of amendment introduced by Act 21 of 2007 retrospectively with effect from 01.01.2007 to Section 6 of the Tamil Nadu Value Added Tax Act, 2006 (Act 32 of 2006) - ultravires Articles 14, 19 (1) (g), 20, 301 and 304 (a) of the Constitution of India or not - constitutional validity of Secti... ... ...
Temporary transfer or permitting the use or enjoyment of any copyright - except the rights covered under sub-clause (a) of sub-section (1) of Section 13 of the Indian Copyright Act for the period from 1.7.2010 to 31.06.2012 and the period from 01.4.2013 onwards since the levy of service tax on Copyright Services (Section 65(105)(zzzzt) is revived from 1.4.2013 with the exception of Section 13(1)(a) or Cinematograph films for exhibition in a cinema hall or a cinema theatre - assessee contested th... ... ...
Sale of goods or not? - deeming fiction - Whether the medicines supplied, implants carried out, the consumables used and surgical tools exclusively used in a particular procedure, as part of treatment of patients in a hospital, the price of which is recovered by way of bills from the patients are “sale of goods” as contemplated by the legislation levying such tax? - article 366(29A)(f) of the Constitution of India. Held that:- When the Constitution by a deeming fiction permitted only certain tra... ... ...
Levy of service tax along with interest and penalties - sale and supply of food as well as beverages in the multiplex theatre premises - declared services or not - Constitutional validity of the provision introduced under Section 66E of the Finance Act, 1994 - vires of Rule 2C of the Service Tax (Determination of Value) Rules, 2006 - extended period of limitation. HELD THAT:- A bare reading of sub sub-section (i) and (ii) of Section 65B(44)(a) would clearly indicate that transfer of goods by way... ... ...
Vires of the second explanation to Section 2(m) of the Delhi Entertainment and Betting Tax Act - The GNCT of Delhi amended Section 2 (m) of the Entertainment Tax Act by adding two explanations and took the position that these provisions were clarificatory; the amendments were inserted on 1 October 2012 but brought into force with effect from 01 April 1998. These amendments are the subject matter of challenge in the present writ proceedings - FDCI challenges the impugned amendment to the Explanat... ... ...
Taxability - Banking and other financial services - services rendered by ICICI Econet Internet and Technology Fund floated by the Settlor - trust is a legal entity or not - whether obtaining registration under any statute entails the trust to a Tax liability - Mutuality of Interest between Trust and Members - service provider-receiver relationship - tax liability on Carry Interest and performance fee - time limitation - computation errors - penalty - Revenue Neutrality - VCF established in the f... ... ...
Airport services - Intrepretation of term "any service provided" - whether the term "any service provided" covers only the taxable services" or it covers any service provided by AAI or person authorized by it in the Airport/ civil enclaves, or its scope is limited to the services with the AAI is expected to provide under Section 12 of the Airports Authority of India Act; - what is the meaning of "provided in the Airport or Civil Enclave" and whether a service transaction is involved in renting o... ... ...
The CESTAT Ahmedabad allowed the appeal, setting aside the impugned order. The Tribunal held that the appellant correctly discharged service tax on hall hire charges while paying VAT on the food component. Following precedent from CESTAT New Delhi, the Tribunal ruled that separate billing for banquet hall charges and food charges is permissible under Notification No. 12/2003-ST. The requirement for separate contracts was deemed legally inconsequential when invoices clearly indicated both parties agreed to segregate the components. Extended period of limitation could not be invoked as the matter involved interpretation of law.
Nature of Income – Income from PGBP or from other sources - Whether income from receipt of services fee assessable under the head Profits and Gains of Business or to be treated as ‘income from other sources’ – Held that:- The decision in Yum ! Restaurants (India) P. Ltd. Versus Additional Commissioner of Income-tax 2011 (5) TMI 852 - ITAT DELHI] followed - the word “business” is one of wide import and which means an activity carried out continuously and systematically by a person by the applicat... ... ...
Corporate Tax matter Service income - Income from other sources or not – Held that:- Following ITO, Ward 18 (4), New Delhi Versus Yum! Restaurants (India) Private Ltd. [2014 (4) TMI 532 - ITAT DELHI] - the word “business” is one of wide import and which means an activity carried out continuously and systematically by a person by the application of his labour and skill with a view to earn income - the assessee is receiving the income from parent company i.e. YRI and not making payment to it – the... ... ...
Levy of tax - KVAT Act - whether the medicines supplied, implants carried out, the consumables used and surgical tools exclusively used in a particular procedure, as part of treatment of patients in a hospital, the price of which is recovered by way of bills from the patients are sale of goods as contemplated by the legislation levying such tax? - Held that:- The three contracts - works contract, hire purchase contract and catering contract - along with other transactions (with which we are not ... ... ...
Budget
Dated:- 26-2-2013
The pre-budget memorandum for 2013-2014 by FICCI outlines key economic and fiscal recommendations aimed at addressing India's economic challenges. It emphasizes the need for stable tax policies to boost investor confidence and suggests implementing committee reports on tax reforms. FICCI opposes the introduction of inheritance tax, citing potential negative impacts on capital generation. The memorandum stresses the importance of dispute resolution mechanisms, efficient tax refund processes, and the removal of double taxation on overseas dividends. It advocates for maintaining current import duties to protect domestic industries until comprehensive GST implementation and highlights the need for infrastructure development, including the introduction of GST, to stimulate economic growth.
Budget
Dated:- 28-2-2013
The pre-budget 2013 recommendations by ICAI focus on various aspects of indirect taxation, particularly service tax, CENVAT credit rules, central excise duty, and customs duty. Key suggestions include refining definitions to reduce litigation, expanding exemptions for certain services, and aligning service tax laws with international practices. The recommendations also propose procedural simplifications, such as increasing the basic exemption limit for small service providers and streamlining the process for refunds and credits. Additionally, ICAI suggests enhancing the accountability of tax collectors, improving training for departmental personnel, and introducing measures to reduce litigation and enhance revenue collection.
By: - Dr. Sanjiv Agarwal
The article discusses the exemption of service tax on restaurant services, specifically focusing on the conditions under which restaurants are subject to this tax. Initially, restaurants with air-conditioning or central air-heating and a license to serve alcohol were taxed. However, since April 1, 2013, only those with air-conditioning or central air-heating are taxed, regardless of alcohol licenses. Non-air-conditioned establishments remain exempt. The article also covers temporary exemptions in Uttarakhand and clarifications issued by CBEC regarding service tax applicability in various scenarios. Legal challenges in Kerala and Bombay High Courts regarding the constitutional validity of such taxes are also highlighted.