Service Tax- Some common terms like taxable service, output service etc.
Dear professional friends in this blog I am trying to discuss few terms frequently used in Service Tax ( Act, Rules, CENVAT Credit Rules etc.). Many times we are getting confused in such terms and wasting our precious time in going through definition/ meaning of such terms. Some of terms I am talking about are Service, Taxable service, exempted service, output service etc.
Actually I am trying to define such terms in formula forms for easy understanding and ready reference. It may feel tough in first reading but on frequent reading of these, it would become very easy for us to memorise and even understand these terms.
These terms are most relevant in relation to provisions for CENVAT credit as there these terms are being used frequently. We'll use these terms in our coming blogs for discussion on topics of service tax.
These terms are most relevant in relation to provisions for CENVAT credit as there these terms are being used frequently. We'll use these terms in our coming blogs for discussion on topics of service tax.
Let us now define some terms we will use in formulas:
1. ALL ACTIVITIES - In Section 65A (44) Service has been defined as any activity carried out by one person for another for consideration except some exclusion ( mentioned below as exempted activities in point-2). So in our definition we'll use "ALL ACTIVITIES" for description meaning all activities including exempted activities and declared services ( mentioned in point 4 below).
2. EXEMPTED ACTIVITIES- in Section 65A (44) some activities are excluded from definition of service which means these activities are absolutely out of service tax coverage-
(a) an activity which constitutes merely,—
(i) a transfer of title in goods or immovable
property, by way of sale, gift or in any other manner; or
(ii) such transfer, delivery or supply of any goods
which is deemed to be a sale within the meaning of clause (29A) of
article 366 of the Constitution; or
(iii) a transaction in money or actionable claim;
(b) a provision of service by an employee to the
employer in the course of or in relation to his employment;
(c) fees taken in any Court or tribunal established
under any law for the time being in force.
some explanations also mentioned there, but we are not discussing those as of now because our purpose is to distinguished different terms used in service tax here not analysing all the provisions of the laws.
So in all our discussion and formulas we will call them as "EXEMPTED ACTIVITIES".
3. NEGATIVE LIST- as per Section 66D negative list comprise some services. These services are exempted in the Act itself . We'll define such list of services as "NEGATIVE LIST".
4. DECLARED SERVICES- under Section 66E some activities specifically mentioned as services. We'll call them "DECLARED SERVICES".
5. EXEMPTED SERVICES-NOT.25/2012 DTD.20.06.12- CBEC exempted many services vide Notification 25/2012 dated 20.06.12 ( amended by Not.44/2012 dtd.07.08.12, 49/2012 dtd.24.12.12, 3/2013 dtd.01.03.13 and 13/2013 dtd.10.09.13) . We'll call these services as "NOTIFIED EXEMPTED SERVICES-25/2012".
6. ABATED SERVICES- NOT.26/2012 DTD.20.06.12- CBEC has exempted ( provided abatement) for some services vide Notification No.26/2012 dtd.20.06.12 ( amended by Not. No.2/2013 dtd.01.03.13). In this Notification exemption given for specific services by a percentage from 10% to 70%. Also for some services some conditions are mentioned for availing such abatement. Such conditions are mainly non-availability of credit of input, input services and capital goods. So we can divide these into 2 parts-
6.1- Abated Services where no conditions for availability of credit of inputs/ Capital goods/ Input services. We'll call these services as "ABATED SERVICES-26/2012-FULL CREDIT"
6.2- Abated Services where there is conditions for non availability of credit of inputs/ Capital goods/ Input services. We'll call these services as "ABATED SERVICES-26/2012-NO CREDIT"
7. REVERSAL CHARGE- NOT.30/2012 DTD.20.06.12- CBEC has issued Not.No.30/2012 dtd. 20.06.12 by which for some services burden of payment of service tax has been passed on service recipients from 40% to 100%. We can divide these into 2 parts-
7.1- Services on which 100% reverse charge is applicable. We'll call these services as "FULL-REVERSE CHARGE SERVICES-30/2012" .
7.1- Services on which 100% reverse charge is applicable. We'll call these services as "FULL-REVERSE CHARGE SERVICES-30/2012" .
7.2- Services on which reverse charge is applicable in part ( less than 100%). We'll call these services as "PARTIAL-REVERSE CHARGE SERVICES-30/2012" .
Now let us define formulas-
(A) SERVICES-
ALL ACTIVIES
- EXEMPTED ACTIVITIES ( remarks- all activities also includes declared services).
ALL ACTIVIES
- EXEMPTED ACTIVITIES ( remarks- all activities also includes declared services).
(B) TAXABLE SERVICE-
SERVICES
- NEGATIVE LIST ( remarks- Services already includes declared services).
SERVICES
- NEGATIVE LIST ( remarks- Services already includes declared services).
(C) EXEMPTED SERVICES-
NEGATIVE LIST
+ EXEMPTED SERVICES-NOT.25/2012 DTD.20.06.12
+ ABATED SERVICES-26/2012 -NO CREDIT
- EXPORT OF SERVICE UNDER RULE 6A
(D) OUTPUT SERVICES-
TAXABLE SERVICES
+ FULL-REVERSE CHARGE SERVICES-30/2012
(E) PROVIDER OF TAXABLE SERVICE- It also include a person liable for paying service tax i.e. service recipient in several cases (reverse charge cases)
NEGATIVE LIST
+ EXEMPTED SERVICES-NOT.25/2012 DTD.20.06.12
+ ABATED SERVICES-26/2012 -NO CREDIT
- EXPORT OF SERVICE UNDER RULE 6A
(D) OUTPUT SERVICES-
TAXABLE SERVICES
+ FULL-REVERSE CHARGE SERVICES-30/2012
(E) PROVIDER OF TAXABLE SERVICE- It also include a person liable for paying service tax i.e. service recipient in several cases (reverse charge cases)
Dear friends, hope you''ll find this blog helpful for enhancing your professional knowledge. Please inform if you found any error/omission etc. or any suggestion which can make this blog much more helpful for all of us. All suggestion etc. will be updated in this blog time to time.
