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TAX5

Unit 2Returns Q1) Show liability for registration if the value of taxable services provided by A for five years are Rs. 800,000, Rs. 9,00,000, Rs. 15,00,000, Rs. 8,50,000 and Rs. 600,000 respectively. What will be his? A1) Year 1: there is no liability for payment of service tax and also for registration. Year 2: Service tax is not payable, but registration is necessary Year 3: After the basic threshold of Rs.10,00,000, service tax will be payable on Rs. 5,00,000 , which will Rs. 5,00,000*12.36/112.36 = Rs. 55,002, Since liability for registration arose in year 2, no further registration is necessary. Year 4: tax is payable on Rs. 8,50,000 even if it is below Rs. 10,00,000. Tax will be 8,50,000*12.36/112.36 - Rs 93,503. This is because in the previous financial year his turnover was above Rs 10 lakhs Year 5: A can apply for cancellation of registration and he has no liability to pay any service tax. Q2) Who is liable for registration and tax returns?A2) Section 139(1): - Obligation to File Return of Income. Every Persona) Being a company or a firm; or b) Being a person other than a company or a firm, if his total income or the total income of any other person in respect to which he is assessable under the income tax act during the previous year exceeded the maximum limit not chargeable to tax. shall on or before the due date, furnish a return of his income in the prescribed form and verified in prescribed manner. Provided that a person, other than not ordinarily resident in India who is not required to furnish the return of income and who during the previous year has any asset (including any financial interest) located outside India or signing authority in any account located outside India, shall furnish on or before due date a return in respect to his Income. Persons liable for registration:Following persons are liable to make application for Registration for service tax: i. Service Provider: Every service provider providing taxable services make an application for registration within 30 days of commencement of his business with the Service Tax Authorities. ii. Input service distributor Every input service distributor [as defined in clause (m) of rule 2 of the CENVAT Credit Rules, 2004 shall make an application for registration within a period of thirty days of the commencement of business. iii. Small service provider having turnover of Rs. 9 lakhs: Small service providers having turnover up to Rs. 10 lakhs are not liable for service tax but any provider of taxable service whose aggregate value of taxable service in a financial year exceeds nine lakhs rupees shall make an application for registration within a period of thirty days of exceeding the aggregate value of taxable service of nine lakhs rupees. “Aggregate value of taxable service” means the sum total of first consecutive payments received during a financial year towards the gross amount charged by the service provider towards taxable services but does not include payments received towards such gross amount which are exempt from the whole of service tax leviable thereon. iv. An unincorporated body of individuals is a person liable for service tax in respect of taxable services rendered to members or others v. Registration by a recipient of services Ordinarily, liability for payment of service tax is that of the service provider. In some cases an exception is made, and the liability is shifted to the recipient of the services. In such cases the recipient of the services is required to make an application for registration. some of such case are:

Importer of services from outside India is liable to pay in respect of the services imported by him in India. -S 66Ab. in case of services of a goods transport

agency, the liability for the payment of service tax on freight paid to transporter is on the consignee, if the consignee is a factory, or a company or a statutory corporation, or a cooperative society or a dealer registered under the central excise or a body corporate or a registered partnership firm. For other consignees like individuals the transporter will continue to be liable for payment of service tax.

The mutual fund or asset management company receiving business auxiliary service of distribution of mutual fund by distributors or agent is liable to pay service tax on the services received

The body corporate or the firm receiving any sponsorship services is liable to pay service tax on the sponsorship services received by them e.g. IPL

Q3) What is the Procedure for registration?A3) Registration is the starting point. It involves the following procedure: 1. Application for Registration is required to be filed within the prescribe time of 30 days of commencement of business on line by uploading Form ST-1 at www.aces.gov.in; 2. Within 15 days of uploading the application, the applicant has to file the required documents with the jurisdictional Superintendent of Central Excise. These documents are; Permanent Account Number (PAN) , proof of residence , constitution of firm , companies etc and a Power of Attorney in respect of authorized person(s). 3. Normally, the PAN based registration number is generated by system immediately. However, registration certificate is issued by Superintendent in form ST-2 after the documents are submitted. 4. Registration will be deemed to have been granted if not received within seven days of making the application. [Rule 4(5)] and the applicant can begin carrying on his activities. 5. If a person provides services from more than one places, following principles are followed: -a) Ordinarily, Separate application is required to be made for each place of business if bills are raised separately. b) If billing or accounting system is centralised in respect of all the places, and the bills are raised from a centralized place, premises or office, only one application needs to be made for such place from where the billing is done in respect of all types of services provides - [Rule 4(2)].Illustration-1: A mandap keeper has multiple offices in Mumbai, Delhi and Kanpur. He does his billing from Mumbai only. In that case he would require service tax registration in Mumbai only. Illustration-2: XYZ Coaching Classes have one regional and multiple branch offices but does billing from the regional office in respect of all the branches within that region the classes may be permitted to register his regional office only. 6. If a person provides multiple services from a single place, a common application needs to be made for all the services provided by the service provider from a single place. However, if multiple services are provided from multiple places and billing is done separately, separate application is required to be made for each such place needs.7. Input Service Distributors (ISD) are required to make application for registration at the Head Office, branch or depot as ISD and distribute credit to centres which are providing taxable services. 8. When a registered assessee transfers his business to another person, the transferee should obtain a fresh certificate of registration. 9. When a registered assessee ceases to carry on the service activity for which he is registered, he should surrender his registration certificate immediately to the department. 10. Any change in the particulars of the certificate, shall be intimated to the Service Tax Officer in Form ST-1 with in thirty days of change taking place, who, will issue a fresh certificate after making the necessary change within 4 days. There is no penalty if change is not notified. but in that case liability to file return will continue even if the tax payable in nil. Q4) What is Filing of returns?A4)  The service tax assessee shall furnish a return to the jurisdictional Superintendent of Central Excise in Form ST-3 of Form ST- 3A in triplicate on a half-yearly basis within 25 days after the close of the half year. in other words, the return for the half-years i.e. 'April-September', and 'October-March' of the year should be filed by 25th October, & 25th April of the year respectively.  Input service distributors have to file return in form St3 on half yearly before the end of next month after the end of the half year  The returns should include all copies of T-6 challans issued in the half year. Assessees filling the return for the first time should also furnish to the Department the list of all the accounts maintained by them, relating to the Service Tax.  If the assessee has not provided any taxable services during the half year, he should submit a NIL return within the prescribed time.  The records, including computerized data if any being maintained by an assessee as required under any other laws in force (Income tax, Sales) from time to time shall be acceptable to the Central Excise Department for the purpose of Service Tax. The assessee should also ensure that he keeps a separate register for the service tax credit as availed by him. A revised return can be filed within 90 days to correct any mistakes inthe original return.  Non filing of return on time attracts penalty of Rs 500 for delay of 15 days or less, and Rs. 1000 for delay of 15 days to 30 days.  If delay is beyond 30 days from the due date penalty will be Rs. 1000 plus Rs, 100 per day for every day beyond 30 days subject to a maximum of Rs. 20000  E-filing of service tax return is mandatory for assessee with liability of Rs 10 lakhs or more inclusive of CENVAT consumed. For others its optional. However, if an assessee does not succeed in filing of return electronically or is unable to generate acknowledgement number, he should file manual return to avoid penal provisionsTable : Due date of filing of return of income

Sr. No.	Status of the taxpayer	Due date
1.	who is required to furnish a report in Form No. 3CEB under section 92E (i.e., other than covered in 2 below)	the assessment year
2	Any person (may be corporate/non- corporate) who is required to furnish a report in Form No. 3CEB under section 92E	November 30 of the assessment year
3	Any person (other than a company) whose accounts are to be audited under the Income-tax Law or under any other law	September 30 of the assessment year
4	A working partner of a firm whose accounts are required to be audited under this Act or under any other law.	September 30 of the assessment year
5	Any other assessee	July 31 of the assessment year

Q5) What is the Payment process of service tax?A5) Following are some important points in relation to payment of service tax;

Service tax payable on receipt or arrear basis Service tax is not payable on basis of amounts charged in the bills/invoice, but only on amounts actually received during the relevant period, except in case of associated enterprises. If partial amount is received, tax will be payable on pro rata basis. With effect 01-05-2011 service tax is payable on receipt, accrual or raising of the bill, whichever point is earlier in time. Except in case of some professional, GTA, Individual and partnership with turnover of Rs 50 lakh etc.]

b. Associated Enterprises In case of service provided to associated enterprises, service tax is payable as soon as book entry is made in the books of service provider (when he is liable) or service receiver (when he is liable to pay service tax under reverse charge method). c. Time for payment-Monthly /Quarterly: The service tax on the value of taxable services received during any calendar month shall be paid to the credit of the Central Govt. by the 5th of the month immediately following the said calendar month.  Where the assessee is an individual or proprietary firm or partnership firm, the service tax on the value of taxable services received during any quarter shall be paid to the credit of the Central Government by the 5th of the month immediately following the said quarter. Those with liability for payment of Rs 10 lakh or more have to make payment electronically. In that case the due date is extended by one day i.e. 6th of next month / quarter. In the last month /quarter, tax has to be paid before 31 March. d. Procedure –Challan and payment  Tax is payable by GAR-7 challan using appropriate accounting code. (earlier TR-6 challan). E-payment is compulsory to those who are paying service tax of more than Rs 10 lakhs per annum.  For others, e-payment is optional. In such cases, tax can be deposited in any of the banks specified by the jurisdictional Commissionerate of Central Excise by the 25th of the following month or quarter as the case may be, in appropriate Form (yellow colour and in quintriplicate) which prescribes different heads of accounts for different taxable services. e. Mandatory interest If the payment is made after prescribed date, then assessee is liable to pay the interest at the simple rate of 1.5% per month or part of the month by which payment has been delayed under section 75. (1.25% for service providers upto turnover of Rs 60 lakhs. f. Advance payment of service tax A person liable to pay service tax can pay any amount in advance towards future service tax liability. After such payment he should inform Superintendent of Central Excise within 15 days [Rule 6(1A)]. When he adjusts the advance, he should indicate details in the subsequent return filed. Q6) What are Provisions?A6) Section 67 of Finance Act, 1994 contains provisions for valuation of taxable services for charging service tax. It provides that service tax is payable on "the gross amount charged by the service provider for such service provided or to be provided by him" and it includes "any amount received towards the taxable service before, during or after provision of such service"." Thus, service tax is payable when advance is received in respect of a taxable service to be provided. Gross Amount charged Under section 67(2)], with effect from 10.9.2004 , ‘gross amount charged’ is equal to value of taxable service’ plus service tax payable, where the gross amount charged is inclusive of service tax payable. Accordingly tax is calculated by making back calculations. In other words when charges for services are inclusive of service tax, the value of taxable service shall be arrived at as follows:

A Chartered Accountant raises a bill for audit service at a gross amount of Rs. 55,150 inclusive of service tax. Find out the value of taxable services rendered and the service tax payable on the services. Solution: Under explanation 2 to section 67, the value taxable service and the service tax are deemed to be equal to the gross amount charged. Since the service tax rate is 12.36%, the gross amount will be 100 + 12.36 = 112.36% inclusive of service tax. Therefore Value of Taxable service will be 55150/112.36% = Rs. 49,083 and service tax will be Rs. 6,067 being 12.36 on Rs. 49,083. Q7) What is the Registration process for Excise Duty? What are the Exemption from registration?A7) As per Sec. 6, any person who is engaged in –

Production (or) manufacture of specified excisable goods;

First stage dealers – wholesale dealers – purchase the goods directly from the manufacturer.

Second stage dealers – Commission agents – who purchased goods from a First stage dealer.

Importer.

Every manufacturer of excisable goods including Central /State Govt. undertakings.

Persons holding private warehouses.

Persons who obtain excisable goods for availing end-use based exemption.

Persons who wish to issue Cen vatable invoices is required to get registered. Separate registration is also required for each depot, godown, etc. in respect of persons issuing CENVAT invoices.

Fig Requirement for registration for excise dutyExemption from registration

Manufacture of excisable goods, which are chargeable to nil rate of excise duty (or) fully exempt from excise duty.

Dealers who carry on wholesale trade (or) deals in excisable goods except 1 st and 2 nd stage dealers.

SSI units availing the slab exemption based on value of clearances.

100% EOU (or) a unit FTZ (or) SEZ licensed (or) appointed under the Customs Act, 1962.

In the case of readymade garments and branded jewelry, the job-worker need not get registered if the principal manufacturer undertakes to discharge the duty liability

Persons manufacturing excisable goods by following the warehousing procedure under Customs Act, 1962.

Persons who use excisable goods for any purpose other than for processing or manufacture of goods availing benefit of CENVAT exemption.

A godown or retail outlet of a Duty-Free Shop licensed under the Customs Act, 1962.

Other units of manufacturers of recorded smart cards exempt from registration when premises from where centralized billing is done is registered.

Job worker who undertakes job work on behalf of any other person, who pays the excise duty on the said goods.

Unregistered premises used solely for affixing a sticker / reprinting / re-labeling / re-packing of pharmaceutical products with lower ceiling price.

Q8) What are Procedure of registration for excise duty?A8) The following procedure is followed by an assessee for obtaining certificate of registration. 1. They have to apply in revised form A-1 with a covering letter and enclosed the following documents. a. Application in form A-1 and have duly signed by the proper person. b. Submit copy of PAN card issued by the IT department. c. Ground plan of the factory/business premises depicting the boundaries position of exit gate, entrance gate, etc. d. Copy of ownership document or rental deed agreement. e. Copy of Shops and Establishment Act certificate. f. Brief manufacturing process of excisable goods along with their tariff classification. 2. The inspector will scrutinse the application and verifies the premises in respect of which the application has sought registration. 3. After proper verification the Registration Certificate in Form RC is granted. 4. Once RC is granted, it has permanent status unless it I suspended/revoked or surrendered by Registrant. The validity of the RC is indefinite and there is no need for renewal. 5. Separate registration is required if factories are located in different locations. 6. A single registration can be allowed for factories located in adjoining premises. 7. If the assessee ceases to carry on operations for which he is registered his RC will be cancelled. This is called De-registration. Penalty for non-registrationRegistration under central excise is required for a manufacturer, but not registered then, all such goods shall be liable to confiscation. Such manufacturer is supposed to face the punishment and penalty.Punishment1. If the duty leviable on the excisable goods exceeds ₹ 30 lakhs – a) Imprisonment up to 7 years and fine without any upper limit; b) 6 months minimum imprisonment unless there are special and adequate reasons for granting lesser punishment. 2. If the duty leviable on the excisable goods is less than ₹ 30 lakhs – a) Imprisonment up to 3 years or fine or both can be imposed; b) 6 months minimum imprisonment unless there are special and adequate reasons for granting lesser punishment. PenaltyThe penalty for non-registration is amount of duty of contravening goods (or) ₹ 2,000 whichever is higher. Excise Control Code (ECC)New ECC has been introduced from 1-2-2000 and will be used from 1-4-2000 by all central excise assessees and registered dealers. The 15-digit ECC number is alphanumeric.  First 10 digits – PAN number; Next 2 characters – XM for Manufacturer; XD for Dealers; Last 3 digits – 001, 002, 003 … represents registered place like factory, warehouse etc. of the same registered person. Example: ADYPR4319LXM001 – Person has a Manufacturer with one factory; ADYPR4319LXD002 – Person has a Dealer with two factories. Q9) What is VAT Return? Who Needs to File VAT Returns?A9) Value-added tax is a kind of tax levied on goods and services added at each stage of production or distribution cycle. Firstly, the value-added amount is identified, and then tax is levied accordingly on all the interstate purchases and sales. The introduction of VAT has helped traders, businessmen and the government by making the taxation process more efficient and transparent.VAT is to be paid by all enterprises an annual turnover of Rs. 5 lakh or more. To do so, you must apply for a VAT registration, which takes around 20 to 40 days for approval. Once the approval is done, you can both make e-payment online for the amount collected and e-file VAT returns on the Commercial Taxes website for your state. VAT returns must be filed once every month or quarter (depending on turnover or the state).VAT Returns must be filed by all producers of goods and services to the Government of India. Any dealer regardless of manufacturing or trading business, a partnership firm, sole proprietorship or a private limited company whose turnover annually is over Rs.5 lakhs will have to get registered with the VAT Department. However, this amount is a subject to State laws and can be modified by the State Government.However, dealers who are not under compulsion can also obtain registration and benefits of issuing tax invoice.VAT is collected at each phase of production, therefore, some of the amounts that have been collected by the customers will be retained by the producers and the rest will have to be paid to the government through designated banks every month.

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