SPECIFIC SERVICES IN DETAIL

SPECIFIC SERVICES IN DETAIL

1. CUSTOMS HOUSE AGENT’S SERVICES

This service was introduced w.e.f. 15th June 1997.

Section 65(105) "taxable service" means any service provided or to be provided

(h) to any person, by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods.

Section 65 (35) “customs house agent" means a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act,1962.

Clarification

Circular No. 119/13/2009-ST, Dated: 21 December, 2009

Role of CHA.

While the principal job of a CHA is to get the import or export consignments cleared through customs. Generally these CHA also arrange services for packing, unpacking, loading, unloading, bringing or removing the goods to or from the customs area, vessels or aircrafts for the importers or exporters. These services are provided by different agencies such as Port Trust, Steamer Agents, Cargo Handlers, Warehouse-keepers, Packers, Goods Transport Agents. Normally the CHAs initially pay the service charges to these agencies and later recover these charges from the customer along with their own charges CHAs. Similar arrangement can occur for payment of statutory levies like Custom Duties, Port charges, Cesses etc. leviable on the said goods.

Issue

Whether the charges, which are said to be paid by the CHAs and later recovered from the customers (i.e. reimbursable charges) should be added to the value for charging service tax from CHAs.

Clarification

It is impossible to lay down any specific guidelines or issue any specific directions. However essentially, the exclusion should be allowed of such charges from the taxable value of CHA services, where all the following conditions are satisfied,-

1. a) The activity/service for which a charge is made, should be in addition to provision of CHA service;
2. b) There should be arrangement between the customer & the CHA which authorizes or allows the CHA to

(i) arrange for such activities/ services for the customer; and

(ii) make payments to other service providers on his behalf;

1. c) The CHA does not use the activities /services for his own benefit or for the benefit of his other customers;
2. d) The CHA recovers the reimbursements on ‘actual’ basis i.e. without any mark-up or margin. In case CHA includes any mark-up or profit margin on any service, then the entire charge (and not the mark-up alone) for that particular activity/ service shall be included in the taxable value;
3. e) CHA should provide evidence to prove nexus between the other services provided and the reimbursable amounts.
4. f) Each charge for separate service is to be shown separately
5. g) Any other miscellaneous or out of pocket expenses charged by the CHA would be includable in the taxable value for the purposes of charging tax on CHA services.

1. PRACTISING CHARTERED ACCOUNTANT’S SERVICES

This service was introduced w.e.f. 16th October 1998.

Section 65(105) "taxable service" means any service provided or to be provided

(s) to any person, by a practising chartered accountant in his professional capacity, in any manner;

Section 65 (83) "practising chartered accountant" means a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provision of the Chartered Accountants Act, 1949 (38 of 1949) and includes any concern engaged in rendering services in the field of Chartered accountancy;

 

Note:  Service tax is also levied on CA firms.

Exemption

Notification No. 25 / 2006-Service Tax, dated 13th July, 2006.

Services  rendered by a Practicing chartered accountant in his professional capacity, relating to representing the client before any statutory authority in the course of proceedings initiated under any law by way of issue of notice, is exempt from service tax.

VII.         CONSULTING ENGINEER’S SERVICES

This service was introduced w.e.f. 7th July 1997.

Section 65(105) "taxable service" means any service provided or to be provided

(g) to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering.

Explanation.— For the purposes of this sub-clause, it is hereby declared that services provided by a consulting engineer in relation to advice, consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under this sub-clause;
Section 65 (31) "consulting engineer" means any professionally qualified engineer or any body corporate or any other firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to any person in one or more disciplines of engineering.

 

Scope of services

Taxable service provided by a professionally qualified engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering.

These services rendered by any body corporate or any other firm would also be taxable.

As per CBEC Letter F. No.334/1/2008-TRU, dated 29-02-2008 all IT software services and IT related services are comprehensively covered under new category “Information Technology services”, so these services are no longer covered under this category.

Clarifications

Circular 96/7/2007-ST dated 23-8-2007

Self employed professionally qualified engineer’s are also liable to pay service tax under this category.

Exemption

Notification No.18/2002-Service Tax, dated 16th December, 2002

Taxable services provided by a consulting engineer to a client on transfer of technology is exempt from so much of the service tax, as is equivalent to the amount of cess paid on the said transfer of technology under the provisions of Section 3 of the Research and Development Cess Act, 1986.

In other words we can say that amount of cess paid would be reduced from service tax calculated under section 66 of Finance Act, 1994.

Illustration

Suppose on a transaction value of Rs. 100000, service provider is required to pay a service tax of Rs. 10000, however on the said transfer of technology he paid Rs. 2000 as R&D cess.

Then amount of service tax payable would be Rs. 8000(Rs. 10000- Rs.2000).

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