Changes in Negative List & Service Tax Rules wef 01.10.2014

Service tax Notification no. 18/2014-ST & 19/2014- ST dated 25th Aug'14 Effective  date  of amendment-1st Oct'14

SERVICES PROVIDED BY RADIO TAXIS:

• Earlier,radio taxis were excluded from the purview of service tax by virtue of section 66D(o)(vi) of Finance Act,1994;
• However, in the Finance (No.2) Act, 2014, enacted on 6th  August, 2014, the said section was amended & the "radio taxis" got deleted,resulting in levy of service tax thereupon.  However, effective  date  wasn't  notified.    Now, the  same has been notified as 1st October,2014;
• At the same time, abatement of 60% shall be allowed in such cases, as provided in entry  no. 9/9A of  N/N  26/2012-ST, amended by N/N 08/2014-  ST, subject to the condition that no CENVAT is claimed.
• Hence, effective rate of service tax shall be 4.944%.

SERVICES PROVIDED BY RADIO TAXIS:

• As per the erstwhile provisions contained in section 66D(g) of Finance Act,1994, sale of space for advertisement, other than radio & television, used to remain excluded from the levy of service tax.
• In the Finance (no. 2) Act, 2014, all advertisements, other than in print media, were made  subject  to  service tax, though  effective  date  of  applicability  of  amended provisions, was not defined.
• Now,the same has been notified as 1st October, 2014.

DETERMINATION OF RATE OF EXCHANGE: 

• From 28-May-2012, section 67A was inserted to determine the rate of exchange to be opted  for the purpose of determination  of value of the taxable service & such rate  was  construed  to  be  the  rates  notified   by  CBEC  from  time  to  time,  in accordance with section 14 of Customs Act,1962.
• This had  led  to  various  practical  difficulties  in  the  industry,  since they  had  to separately maintain  a track record  as per CBEC rates for the  purpose of valuing import  or export of service, while in financial statements the rates were considered on a different basis(e.g. RBI rates, Bank TT buying/selling rate, etc.)
• Now, w.e.f. 1st October,2014,rule 11 has been inserted in Service Tax Rules,1994 to consider the rate of exchange as per GAAP on the date when Point of taxation arises in terms of the Point of Taxation Rules, 2011
• Post  this amendment, an ambiguity  may arise as to whether  the same rates may also be used for valuing export of services,or department may take the other view?

 t  This Article has been share by CA Sumit Grover. He can be reached at sumitgrover.ca@gmail.com