SOLVED QUESTION & ANSWERS
Question:
Tarot Ltd. is engaged in providing consultancy in software engineering. It provided the taxable services of the value of Rs. 100 lakh in the financial year 2010-11 and of Rs. 50 lakh in financial year 2009-10. Tarot Ltd. is of the opinion that e-filing of return is optional for the assessees and it does not wish to file its return electronically. You are required to advice Tarot Ltd. Whether it should file the return electronically or otherwise for the financial year 2011-12.
Answer:
The facility of e-filing of returns was earlier optional for the assessees. Proviso inserted to rule 7(2) of the Service Tax Rules, 1994 has now made the electronic filing of returns mandatory for the assessee who has paid total service tax of Rs. 10 lakh or more including the amount of service tax paid by utilization of CENVAT credit in the preceding financial year. Service tax paid by Tarot Ltd. in the financial year 2010-11 is Rs. 10,30,000 ( 10.30% of Rs. 1,00,00,000). Therefore, it is mandatory for Tarot Ltd. to file the return electronically for the financial year 2011-12.
Question :
Some taxable services are provided by an oil rig of Global Oil and Natural Gas Company (GONC) established in the Continental Shelf of India, constructed for the purposes of prospecting or extraction or production of mineral oil and natural gas. The Department raised the demand for service tax on the said service.
Examine whether the demand raised by Revenue is valid in law.
Answer:
The demand raised by Revenue is valid in law. The provisions of Chapter V have been extended to any service provided or to be provided by or to the installations, structures and vessels within the continental shelf and the exclusive economic zone of India, constructed for the purposes of prospecting or extraction or production of mineral oil and natural gas vide Notification No. 14/2010-S.T. dated 27-2-2010. Therefore, GONC is liable to pay service tax in the given case.
Question :
Tarot Ltd. is engaged in providing consultancy in software engineering. It provided the taxable services of the value of Rs. 100 lakh in the financial year 2010-11 and of Rs. 50 lakh in financial year 2009-10. Tarot Ltd. is of the opinion that e-filing of return is optional for the assessees and it does not wish to file its return electronically. You are required to advice Tarot Ltd. Whether it should file the return electronically or otherwise for the financial year 2011-12.
Answer:
The facility of e-filing of returns was earlier optional for the assessees. Proviso inserted to rule 7(2) of the Service Tax Rules, 1994 has now made the electronic filing of returns mandatory for the assessee who has paid total service tax of Rs. 10 lakh or more including the amount of service tax paid by utilization of CENVAT credit in the preceding financial year. Service tax paid by Tarot Ltd. in the financial year 2010-11 is Rs. 10,30,000 ( 10.30% of Rs. 1,00,00,000). Therefore, it is mandatory for Tarot Ltd. to file the return electronically for the financial year 2011-12.
Question
A service provider provided taxable services, the gross amount charged in respect of which is Rs. 10,00,000 plus Rs. 1,03,000 towards service tax charged separately in the bill, the total bill amount being Rs. 11,03,000. Compute the amount of service tax payable by him, in the following cases –
(a)The client pays Rs. 11,00,000 in full and final settlement of the bill; or
(b) The client pays Rs. 10,00,000 in full and final settlement of the bill; or
(c) The client pays Rs. 9,00,000 in full and final settlement of the bill.
Answer:
(a) The sum of Rs. 11,00,000 so received is to be regarded as ‘gross amount inclusive of service tax’. Accordingly, the service tax payable will be = 11,00,000 X 10.3 / 110.3 = Rs. 102,720.
(b)Service tax payable = 10,00,000 X 10.3 / 110.3 = Rs.93,382
(c)Service tax liability = 9,00,000 X 10.3 / 110.3 = Rs.84,044.
Question
M/s. Modi Consultants are a labour contractor of manpower. They supply labour to various corporate.
In one case it was observed that they charged to a corporate for supply of labour Rs. 1,50,000 and their service charges of Rs. 42,000 for arranging the labour.
The issue is whether service is payable on the gross amount charged by them or only their charges for labour. Assume that you are the consultant.
Answer:
As per section 67, the value of taxable service is the gross amount charged by the service provider for the provision of service. Hence, the value of taxable service in this case = 1,50,000 + 42,000 = Rs. 192,000. It will not matter whether they issue a combined bill or a separate bill.
Question
In the course of providing a taxable service, a service provider incurs costs such as traveling expenses, postage, telephone, etc. to the tune of Rs. 50,000. He charges Rs. 110,000 for his services and indicates the said costs separately on the invoice issued to the recipient of service. Compute the amount of service tax to be billed by the service provider.
Answer
In this case, the service provider is not acting as on agent of recipient of service but procures such inputs or input service on his own account for providing taxable service. Such expenses do not become reimbursable expenditure merely because they are indicated separately in invoice issued by service provider to recipient of service. Hence, service tax = (110,000 + 50,000) X 10.30% = Rs. 16,480.
Question
Mr. X, a custom house agent, charges Rs. 100000 from a client. This sum includes Rs. 10000 towards payment of customs duty on behalf of the client. Compute the service tax to be charged from the client.
Answer :
‘Expenses incurred by the service provider in his capacity as pure agent do not form part of the value of taxable service. So, Rs. 10,000 paid towards customs duty on behalf of the client, which is an expenditure incurred by Mr. X in his capacity as ‘pure agent’. Since the sum of Rs. 10,000 doesn’t include any element of profit, the same will not form part of the value of taxable service. Hence, the value of taxable service = 1,00,000 – 10,000 = Rs. 90,000.
Service tax to be charged = 90,000 X 10.3% = Rs. 9,270.
Follow Us on
No comments:
Post a Comment