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CA Sandesh Mundra

Consult Us For Construction

Service Tax Updates - August, 2012

Posted by on in Service Tax
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Notifications and Circulars

1)       CBEC has vide notification Notification No. 44/2012-ST, dated 7-8-2012 extended service tax exemption to ‘slaughtering of all animals service; earlier this was available only for ‘slaughtering service of bovine animals’. As per wiki dictionary Bovine animal includes domestic cattle (Cow) , bison, buffalo and yaks.

2)       Notification No. 45/2012-ST dated 7-8-2012 has been issued, amending the Notification No. 30/2012-ST dated 20-6-2012 and it has expanded the scope of reverse charge mechanism. With effect from 7-8-2012, services provided by the director to the company will be covered under the reverse charge mechanism. Service provided by Managing and Whole-time Directors/ Executive Directors (those who are under employment with the Company) are governed by the exclusion clause contained in the definition of ‘service’ under Section 65B (44) (b) which provides that service provided by employees to their employers in the course of or in relation to employment are exempt from service tax. Service provided by Part-time/ Expert/ Independent/ Nominee directors, etc., (those who are not under employment with Company), are in the nature of providing their professional/expert services to the company. Hence, the said Services would be chargeable to Service tax under Reverse charge by the Company w.e.f 07.08.2012.

3)       Further the definition of Security services has been inserted vide Notification No. 46/2012-ST dated 7-8-2012 as Rule 2(1)(fa) of Service Tax Rules, 1994 which is given below: “Security services” means services relating to the security of any property, whether movable or immovable, or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity. Partial Reverse Charge for Security Services: – The service provider is liable to charge & pay full Service taxfor a period up to and inclusive of 6th August, 2012 and from 7th August, he is liable to pay 25% of service tax and a Body Corporate has to pay 75% service tax.

Important Judgements

1)       Hon’ble HC of HP in the case of Pearl Enterprises v. Union of India has held granted stay of demand, as there being inconsistent orders of Tribunal in case of different assesses similarly situated, Tribunal should consider the issue afresh.

2)       Hon’ble Chennai CESTAT Bench in the case of LCS City Makers (P) Ltd v. Comm of ST, Chennai has held that Joint Development agreements shall be liable to service tax.

3)       Hon’ble Banglore CESTAT Bench in the case of Ramky Infrastructure Ltd v. Comm of ST, Hyderabad has held that where EPPC contract was awarded prior to 1-6-2007, but payments received after 1-6-2007, the assessee was liable to pay service tax under “Works Contract Service”.  Further the retention money was only a deferred payment and no deduction would be allowed for the same in the “gross amount charged”.

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CA Sandesh Mundra, Consultant – Management Audit and Indirect Taxation - Chartered Accountant, Diploma in Information System Audit, Diploma in Insurance & Risk Management , Certificate from ICAI on International Financial Reporting Standards. Actively associated with clients in the industrial construction sector since last 9 years.He possesses special skills in structuring the indirect tax component of the works contracts and as management auditor, has visited several construction sites in various states like Orissa, Rajasthan, Gujarat, Maharasthra, Madhya Pradesh etc. During the course of said visits he has been to very large industrial complexes, refineries, power plants etc


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