Budget 2007 - Service Tax – Changes in Procedures

Changed with immediate effect (i.e. From 1-3-2007)

·                    Registration - Amendment in Registration certificate: - Now the requirement of submitting original registration certificate for amendment has been dispensed with. The assessee is required to submit only a self-certified copy of the registration certificate.     Department will issue the amended registration certificate after cancelling the original registration certificate issued earlier. Sub Rule (5) and (5A) of Rule 4 [Notification No. 1/2007 ST dated 1-3-2007]

·                    Excess Payment of Service Tax: - Self Adjustment: - Sub Rule (4A) and (4B) of Rule 6 [Notification No. 1/2007 ST dated 1-3-2007]

Now the self adjustment is possible subject to the following conditions: -

-                     Self-adjustment of excess credit is allowed on account of reasons other than interpretation of law, taxability, classification, valuation or applicability of any exemption notification.

-                     Excess amount paid and proposed to be adjusted should not exceed Rs.50,000 for the relevant month or quarter.

-                     Adjustment can be made only in the succeeding month or quarter.

-                     The details of self-adjustment should be intimated to the Superintendent of Central Excise within a period of 15 days from the date of adjustment.

-                     However, assessees who have centralised registration can adjust the excess service tax paid on their own without any monetary limit provided the excess amount paid is on account of delayed receipt of details of payments from branch offices.

·                    Revision of Service Tax Return (ST-3): - Rule 7B - Now an assessee is eligible to file revised ST-3 return in triplicate to correct a mistake or omission. However, no revised return is to be filed after 60 days from the date of submission original return.  [Notification No. 1/2007 ST dated 1-3-2007]

Changed with effect from 1-4-2007

·                    Rule 2(1)(d)(vii) is being amended so that service tax is required to be paid under reverse charge method in relation to sponsorship service only if the recipient of service is located in India. In other words, if the recipient of sponsorship service is located outside India, in such cases, service tax is required to be paid by the service provider and not by the recipient. This change will come into effect from 1st April, 2007. [Notification No. 1/2007 ST dated 1-3-2007]

·                    Consequent upon the increase in the threshold exemption limit from Rs. 4 lakh to Rs. 8 lakh, the limit for obtaining service tax registration has also been increased from Rs. 3 lakh to Rs. 7 lakh by amending notification Nos.  26/2005-Service Tax and No.27/2005-Service Tax, both dated 07.06.05 [notification Nos.  5, 6 & 7/2007Service Tax, dated 01.03.07]