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2014

Service Tax Updates – Dec-2014

Changes applicable in Service Tax w.e.f. 01/10/2014

  1. Advertisements in internet websites, out-of-home media, on film screen in theatres, bill boards, conveyances, buildings, cell phones, Automated Teller Machines, tickets, commercial publications, aerial advertising, etc. (sale of space for advertisements in print media would continue to be non-taxable) are leviable to Service Tax.
  2. Introduction of variable Rates of Interest u/s 75 of Finance Act, 1991:
    Extent of Delay Simple interest rate per annum (Revised) Simple interest rate per annum (Existing)
    Up to six months 18% 18%
    More than six months & up to one year 18% for first six months, and 24% for the period of delay beyond six months 18%
    More than one year 18% for first six months, 24% for second six months, and 30% for the period of delay beyond one year 18%

  3. Notification No 09/2014- ST amended to make mandatory E-payment of service tax irrespective of service tax amount for all assessee
  4. Partial Reverse Charge Mechanism – In Renting of motor vehicle, where the service provider does not take abatement, the portion of service tax payable by the service provider and service receiver is modified as 50% each;
  5. Service Tax on service portion in Works Contract – In Rule 2A of the Service Tax (Determination of Value) Rules, 2006, category B and C of works contracts are proposed to be merged into one single category, with percentage of service portion as 70%; (As per Notification No 11/2014)
  6. Point of Taxation in respect of reverse charge will be the payment date or first day that occurs immediately after a period of three months from the date of invoice, whichever is earlier. (As per Notification No 13/2014)
    Changes in the Provision of Service tax effected due to Notification and Circulars:-
  7. Section 80 of Finance Act granting relief to assessee from applicability of penalty can be understood as below:
    Section Type of Penalty Relief u/s 80
    76 Penalty for failure to Pay service Tax as per Provision of S. 68 or Payment Rule Relief available if assessee proves reasonable cause of failure to make payment
    77 Penalty for failure to take registration, Failure to keep, maintain or retain books of accounts, fail to furnish information, fails to pay tax electronically, issued incorrect or incomplete invoice. Relief available if assessee proves reasonable cause of failure to make payment
    78 (1) Service Tax has not been levied or paid or short levied or short paid or erroneously refunded for :- Fraud, collusion, willful mis- statement, Suppression of fact or intent to avoid duty Relief is not available.
    Proviso to 78 (1) Penalty applicable will be 50% only if true and correct details have been provided. Relief is not available, earlier it was available.

  8. Section 35F of central excise act has provided the mandatory pre-deposit before appeal is filled:
    Appeal Pre- Deposit Limit
    Appeal before Commissioner (Appeal) 7.5% of duty demanded or penalty imposed or both
    Appeal before Appellate Tribunal against the order passed by commissioner of central excise 7.5% of duty demanded or penalty imposed or both
    Appeal before Appellate Tribunal against the order passed by Commissioner (Appeal) 10% of duty demanded or penalty imposed or both

    • Provided that the amount required to be deposited as predeposit shall not exceed rupees ten crores.
    • Provided further that the provisions of this section shall not apply to the stay applications and appeals pending before any appellate authority prior to the commencement of the Finance (No.2) Act, 2014.
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