Bookmarks   Feedback   Annual Subscription   New User   Login  
Tax Management India .com   
   TMI - Tax Management India. Com   
Classification - Product prawn feed - The legislature providing for exemption of such product from payment of tax does not necessarily and by itself imply that the product was otherwise exigible to tax. - HC    *    Invokation of extended period of limitation - appellant has wrongly arrived at the valuation of the pipes cleared by them on the cost construction method rather the appellant should have paid duty on the value of pipes as indicated in the contract - Having failed to raise this issue at the material time it cannot be said that the appellants had suppressed or mis-declared anything to enable the revenue to invoke extended period of limitation - Tri    *    Refund claim - reduction in value - credit notes raised by the Assessee subsequent to the sale/removal of goods - trade discounts given to its buyers including the component of excise duty - refund allowed - SC    *    Duty liability - parts of dumpers and others imported, further repacked and labelled by the appellant and sold - whether the items/parts which are repacked are parts of automobiles to fall under Third Schedule and/or Section 4A Notification or not - held yes - Tri    *    Cenvat credit - excess electricity sold to state govt. - The factum of consumption of electricity generated within the factory partly and sold out partly is an accepted proposition in the law and cenvat credit cannot be denied is also decided by various case laws - Tri    *    Classification - Lever Ayush Poshak Rasayan and Lever Rakshak Rasayan - based on the quotes from Explanatory Notes to HSN, it is clear that the subject items are in the category of food supplements and are rightly classifiable under Chapter Heading 2106.90 99. - Tri    *    The process of mixing base paint with tinter amounts to manufacture and is liable to payment of duty at the depot. - Tri    *    Goods and GST Bill passed    *    Travelling expenses incurred outside India by on duty employee whether taxable?    *    Opinion for availment of Cenvat Credit on invoices provided by CHA against service received for Export and Import.    *    FM: Government to now focus on increasing the banks’ ability to support growth    *    service tax payament-reg    *    CBDT signs 20 Unilateral Advance Pricing Agreements with Indian taxpayers    *    CENVAT CREDIT ON CERTIFIED COPY OF BILL OF MISC. CHARGES ON FINALIZATION OF BOE    *    should i buy machinery after gst or before gst which will be benefit for me    *    Captive consuption to be shown in ER-1 Return filed through ACES system -reg    *    Rebate claim issue    *    DTA supplied goods at SEZ - Order receive in US $    *    Government to issue Fifth Tranche of Sovereign Gold Bonds: Applications for the Bonds will be accepted from 1st September to 9th September, 2016 and Bonds will be issued on 23rd September,2016    *    RBI Reference Rate for US $
 
Discussions Forum
Home Forum Service Tax
← Previous Next →

Service tax applicability on interest free security deposit - Service Tax

#1 Issue Id: - 1776
Dated: 13-2-2010
By:- sunil mehta
Service tax applicability on interest free security deposit

  • Forum

A co-op.bank provides safe deposit locker facilities toits members on token rent of Re.1/-per year.But it also takes interest free security deposits (say rs.5000/- or rs.10000/- for a 5/10year period) from members to whom safe deposit lockers are provided.Stax is paid on total rent collected (by way of re.1/-per year) during the year. Query:-1)whether stax suptd. can demand stax on 'interest free security deposit on notional amount of interest which the said deposits would have earned during the year.?(say at the average rate of F.D. rate borrowed by the bank during the period).This is hypothetical working of stax. 2)Since lockers are not provided entirely free can the suptd. take support of valuation rules(w.e.f.18/04/2006)? 2b)How can above locker services be valued? Note:-a)Security deposit is refundable whenever locker is vacated or agreement terminated by the customer. b)Token rent is charged and it is not entirely free. 3) Any case law in respect of above nature or similar nature ?Pl. quote judgements

Post Reply

Posts / Replies

 

#2 Dated: 16-2-2010
By:- DEV KUMAR KOTHARI
Service tax is charged on charges for services received by service provider. Therefore, any notional consideration should not be added to the value of service. Security deposit is a normal practice, and therefore, notional interest cannot be added to value of taxable service. On what terms other persons are provided can be a relevant fact, if the revenue claim some sort of tax avoidance.
#3 Dated: 4-3-2010
By:- Rama Krishana
Since the service tax valuation rules are not very old, the judicial pronouncements are yet to be seen on these complicated issues. But, in my view, your issue is complicated one but clearly visible from the facts that you are providing lockers at Rs.1 since you have obtained interest free securities. Had you not obtained interest free securities, you would not have let out the locker for such a nominal rate. Therefore, it is apparent that the value of consideration of renting out of a locker is involved in the interest portion of security. Though interest as such is exempt form service tax, but this issue is not levy of service tax on interest but the main issue is getting the consideration in some other form. Therefore, department may issue a show cause notice interpreting the same. You may choose to fight the issue and chose to become the first in the process of settling of an issue through judicial pronouncements.

Post Reply



 

← Previous Next →
what is new what is new

Advanced Search

Latest Updates

Forum

Featured

Experts

More Options

Communication




|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map || ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version