Indirect Taxes

By this notification CBEC has amended mega exemption notification to provide that that following services provided by Government or local authority to a business entity shall be taxable irrespective of the turnover of business entity:

a. Services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;

b. Service in relation to aircraft or a vessel, inside or outside the precincts of a port or an airport;

c. Transport of goods or passengers ;

d. Services by way of renting of immovable property.

Clarification on levy of Krishi Kalyan Cess (KKC)

Notification No. 27/2016-ST, 28/2016-ST, 29/2016-ST, 30/2016-ST all dated 26th May 2016

Notification No. 27/2016-ST :
KKC would have to be paid along with Service Tax on services covered under reverse charge or partial reverse charge. Provisions of the Reverse Charge Notification will be applicable mutatis mutandis for the purposes of KKC also.

Notification No. 28/2016-
ST KKC shall not be leviable on services which are exempt from Service tax by a Notification issued u/s. 93(1) or Special Order issued u/s. 93(2) of the Finance Act, 1994 or otherwise not liable to Service tax under Section 66B thereof.

Notification No. 28 further clarifies that KKC will be levied on value of taxable services after availing the benefit of abatements by way of an exemption provided vide Abatement Notification No. 26/2012-ST dated June 20,

2012 i.e. KKC would be computed on abated value of taxable services.

Notification No. 28 furthermore clarifies that value of taxable services for the purposes of KKC shall be the value as determined in accordance with the Service Tax (Determination of Value) Rules, 2006.

Notification No. 29/2016-ST
Vide this Notificaton, Notification No. 39/2012-ST dated June 20, 2012 (Rebate of the duty paid on excisable inputs or Service tax and cess paid on all input services used in providing service exported) has been amended to insert KKC under the definition of “service tax and cess”, to enable the provider of services to claim rebate of KKC paid on all the input services used in providing services exported in terms of Rule 6A of the Service Tax Rules, 1994.

Notification No. 30/2016-ST
This Notification has amended Notification No. 12/2013- ST dated July 1, 2013 (Exemption on services received by units located in a SEZ or Developer of SEZ and used for their authorised operation) to enable the SEZ Unit or the Developer for refund of the KKC paid on the specified services on which ab-initio exemption is admissible but not claimed.

Notification No. 31/2016-ST
As per sub-rules 7,7A,7B and 7C to Rule 6 of the Service Tax Rules, 1994, there is an optional alternative rate of Service tax for services, namely, air travel agents, insurance premium, purchase & sale of foreign currency and lottery distributor. The Central Government vide this Notification has amended the Service Tax Rules to insert sub-rule (7E) after sub-rule (7D), which prescribes that if Service tax is payable at an alternative rate, KKC would also be computed in proportion to such alternative rate, in similar manner as it was prescribed at the time of introduction of SB Cess, as under :

Service Tax liability calculated as per Rule 6 * Effective rate of KKC i.e. 0.5% / (rate of service tax specified in section 66B i.e. 14%)

Further, in sub-rule (7D), for the figures “0.5” the words “effective rate of Swachh Bharat Cess” and for the words, figures and brackets “14 (fourteen)”, the words and figures “rate of service tax specified in section 66B of the Finance Act, 1994” shall be substituted.

80. Services tax on senior advocates’ servicesimplications :

Notification No. 32/2016-ST, 33-2016-ST & 34- 2016-ST DTD 6th June 2016

The Legal Services provided by Senior Advocates has come under Forward Charge Mechanism with effect from 01-04-2016 against which various petitions were filed in various High Courts. To resolve the problem, the Central Government has partially rolled back in its decision and has issued following three notifications on 06th June 2016 :

1. Notification No. 32/2016-ST : Seeks to amend Notification No. 25/2012-ST, dated 20.6.2012 to exempt services provided by a Senior Advocate by way of legal services to any person other than a business entity; or a business entity with a turnover up to rupees ten lakh in the preceding financial year.

2. Notification No. 33/2016-ST : Seeks to amend Service Tax Rules, 1994 to stipulate reverse charge mechanism for services provided by senior advocates, that is tax is to be paid by the recipient of service and if the senior advocate is engaged by another lawyer, the Service Tax is to be paid by the litigant.

3. Notification No. 34/2016-ST : Seeks to amend Notification No. 30/2012-ST, dated 20.6.2012 to stipulate 100% payment of Service tax by a business entity as the recipient of the service provided by senior advocates.

MVAT UPDATES

VAT 1516/CR 77/Taxation-1 dated 31st May 2016

This notification amends Schedule D Entry 10 whereby any other kind of motor spirit rate gets increased by one rupees fifty paisa per litre w.e.f. 01.06.2016.