PROCEDURAL ASPECTS

PROCEDURAL ASPECTS

1. WHO IS THE PERSON LIABLE TO PAY SERVICE TAX?

General Provision

Section 68(1): Every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed.

Analysis

Service Provider shall pay service tax to government authorities.

Special Provision {REVERSE CHARGE}

Section 68(2): Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

Analysis

In following cases Government has notified following persons who would be required to pay service tax, i.e. Service Tax would not be paid by service provider.

Rule 2(1)(d) of Service Tax Rules, 1994:  Person liable to pay service tax shall be:

(i)          in relation to telecommunication service

(a)         Director General of Posts and Telegraphs, referred to in clause (6) of Section 3 of the Indian Telegraph Act, 1885; or

(b)         the Chairman-cum-Managing Director, Mahanagar Telephone Nigam Ltd, Delhi, a company registered under the Companies Act,1956; or

(c)         Any other person who has been granted a licence by the Central Government under the first proviso to sub-section (1) of Section 4 of the Indian Telegraph Act, 1885;

(ii)        in relation to general insurance business, the insurer or re-insurer, as the case may be, providing such service;

(iii)       in relation to insurance auxiliary service by an insurance agent, any person carrying on the general insurance business or the life insurance business, as the case may be in India;

(iv)       in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;

(v)        In relation to taxable service provided by a goods transport agency, where the consignor or consignee of goods is,-

1. any factory registered under or governed by the Factories Act, 1948 (63 of 1948)
2. any company formed or registered under the Companies Act, 1956 (1 of 1956)
3. any corporation established by or under any law
4. any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India.
5. any co-operative society established by or under any law
6. any dealer of excisable goods, who is registered under the Central Excise Act, 1944 or the rules made thereunder or

anybody corporate established, or a partnership firm registered, by or   under any law.any person who pays or is liable to pay freight either himself or through his agent for the transportation of such goods by road in a goods carriage;

(vi)       in relation to business auxiliary service of distribution of mutual fund by a mutual fund distributor or an agent, as the case be, the mutual fund or asset management company, as the case may be, receiving such service;

(vii)       in relation to sponsorship service provided to any body corporate or firm located in India, the body corporate or, as the case may be the firm who receives such sponsorship service;

  

1. WHEN TO PAY SERVICE TAX? DUE DATES?

1. When does liability to pay service tax arise?

It is to be noted that though the service provider charges service tax in his bill raised on his client as and when the service is provided, the service tax is payable to the Government only when the value of taxable services is ‘received’.

Example

If a chartered accountant raises a bill for auditing services say, on 15th December, 2009 for Rs.1,10,300/- (including service tax of Rs.10,300/-) and the client pays his bill only in February 2010, the liability to pay service tax to the Government would arise only in February 2010.

In case advance is received from the client, liability for payment starts from the day on which such advance is received. In other words, liability to pay service tax is based on receipt of money.

1. Due date for payment of service tax

Rule 6(1) of Service Tax Rules, 1994

The service tax shall be paid to the credit of the Central Government,-

(i) by the 6th day of the month, if the duty is deposited electronically through internet banking; and

(ii)    by the 5th day of the month, in any other case, immediately following the calendar month in which the payments are received, towards the value of taxable services:

Provided that where the assessee is an individual or proprietary firm or partnership firm, the service tax shall be paid to the credit of the Central Government by the 6th day of the month if the duty is deposited electronically through internet banking, or, in any other case, the 5th day of the month, as the case may be, immediately following the quarter in which the payments are received, towards the value of taxable services:

Provided further that notwithstanding the time of receipt of payment towards the value of services, no service tax shall be payable for the part or whole of the value of services, which is attributable to services provided during the period when such services were not taxable:

Provided also that the service tax on the value of taxable services received during the month of March, or the quarter ending in March, as the case may be, shall be paid to the credit of the Central Government by the 31st day of March of the calendar year.

 Explanation.- For the removal of doubts, it is hereby declared that where the transaction of taxable service is with any associated enterprise, any payment received towards the value of taxable service, in such case shall include any amount credited or debited, as the case may be, to any account, whether called ‘Suspense account’ or by any other name, in the books of account of a person liable to pay service tax.

Analysis

1. In case assessee is an Individuals, proprietary concerns and partnership firms

Quarters	Due Dates when paid electronically	Due Dates when paid through other modes
1st April – 30th June	6th July	5th July
1st July – 30thSeptember	6th October	5th October
1st October – 31st December	6th January	5th January
1st January to 31st March	31st March	31st March

1. In case other assessees

Quarters	Due Dates when paid electronically	Due Dates when paid through other modes
April	6th May	5th May
May	6th June	5th June
June	6th July	5th July
July	6th August	5th August
August	6th September	5th September
September	6th October	5th October
October	6th November	5th November
November	6th December	5th December
December	6th January	5th January
January	6th February	5th February
February	6th March	5th March
March	31st March	31st March

1. Manner of Payment

Rule 6(2) of Service Tax Rules, 1994.

The assessee shall deposit the service tax liable to be paid by him with the bank designated by the Central Board of Excise and Customs for this purpose in Form TR-6 or in any other manner prescribed by the Central Board of Excise and Customs.

“Provided that where an assessee has paid a total service tax of rupees ten lakh or more including the amount paid by utilisation of CENVAT credit, in the preceding financial year, he shall deposit the service tax liable to be paid by him electronically, through internet banking.”[This has been amended vide Notification No. 1/2010 dated 19.02.2010]

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