IPCC Service Tax (FY 10 11)

Service TaxService TaxFinance Act 1994 (As amended by Finance Act 2010)Finance Act,1994 (As amended by Finance Act,2010)

The things to be considered for interpretationThe things to be considered….for interpretation

Trade Notices

Circulars / Court Orders

Notification

Rules

Act

Pinnacle Education 2

IntroductionIntroduction

P ti l I li tiParticulars Implication

Finance Act,1994 Applicable Law for Service Tax, pp

Chapter V (Finance Act) Act for Service Tax provisions

Chapter VA (Finance Act) Advance Ruling on Service Tax

Chapter VI (Finance Act) •Education Cess on Service Tax •S & H Ed. Cess on Service Tax


Administration of Service TaxAdministration of Service TaxParticulars Who can make it Implication

Service Tax Rules The Central Government

•To carry out the provisions ofthe Act•They cannot be contradictory,there-fore, cannot over-ride theAct

Notifications The Central •Providing rules for service taxNotifications The Central Government

Providing rules for service tax•Making amendments in them,•Providing or withdrawingexemptions from service taxexemptions from service tax•Dealing with any other matterthat would facilitate smoothoperation of service taxoperation of service tax•Enabling CBEC to makecompliance related relaxationPinnacle Education 4

Administration of Service TaxAdministration of Service Tax

P ti l Wh k it I li tiParticulars Who can make it Implication

Circulars or Letters on service

The Central Government and

•Define the scope of taxableservices and administration ofLetters on service

tax/ Orders of Service Tax

Government and Central Board of Excise and C t (CBEC)

services and administration ofservice tax- It interpretes the lawbut never defines the law.

Customs (CBEC)Trade Notices Central

Excise/Service •Issue of trade notice onreceiving instruction from/

Tax Commissionrates

gFinance Ministry or CBEC foreffective implementation andadministration of service taxadministration of service taxlaw


Person liable to Service taxPerson liable to Service taxPerson liable to Service taxPerson liable to Service tax

Who is Liable to pay tax?p y

Person liable to pay tax

Service ProviderSpecified persons as per Rule 2(1) (d) of Service Tax Rules, Service Provider 2(1) (d) of Service Tax Rules,

1994

Recipient of pServices


Person covered in Rule 2(1)(d)Person covered in Rule 2(1)(d)

Person Who is liable to tax

General insurance business Insurer / Re-insurer

Insurance auxiliary service providedby an insurance agent

Person carrying on generalinsurance/ life insuranceb ibusiness

Any taxable service provided by anyperson from a country other than

Recipient of such servicep yIndia and received by any person inIndia


Person covered in Rule 2(1)(d)Person covered in Rule 2(1)(d)Person Who is liable to tax

Goods transport agency The consignor or consignee ofgoods

Sponsorship service provided to any Recipient of such sponsorshipSponsorship service provided to anycorporate or firm

Recipient of such sponsorship

Business auxiliary service of The mutual fund or assetdistribution of mutual fund by amutual fund distributor or an agent

management company

Telecommunication Services •Director General of posts andTelegrams•MD of MTNL Delhi•MD of MTNL, Delhi•Licensee (authorised by CG)


Specific ExemptionsSpecific Exemptions

Services provided to United Nations or an InternationalpOrganization

Services provided to a developer or Units of Special EconomicZZone

Goods and materials sold by service provider to recipient ofserviceSmall service providers below limit of Rs.10 Lacs. [If in F.Y. 2009-10, the gross receipts is not exceeding Rs.10 Lacs, no service tax is

bl i FY2010 11 ill h l f i d R 10 Lpayable in F.Y.2010-11, till the value of services exceeds Rs.10 Lacs,once, it crosses the threshold limit, service tax is leviable on excessabove Rs.10 Lacs].Services provided by Reserve Bank of India (RBI)


Specific ExemptionsSpecific ExemptionsService provider being Technology Business Incubator (TBI), Scienceand Technology Entrepreneurship Park (STEP) and incubatesServices provided by a digital cinema service providerServices provided by a digital cinema service providerServices provided by Resident Welfare AssociationsTechnical Testing and Analysis Services (like clinical research)Service provided by a person for inter-state or intra-state transportationService provided by a person for inter-state or intra-state transportationof passengers in a vehicle bearing “Contract Carriage Permit” withspecified conditions.Services provided by Federation of Indian Export Organisations (FIEO)

d ifi d E P i iland specified Export Promotions councils.By Inter-bank purchase and sale of foreign currency betweenscheduled banks.Specific service provided to Goods transport AgenciesSpecific service provided to Goods transport AgenciesSpecific services in relation to / to enable Export of Goods – likeTransport by Road for enabling Export of material to Port, Commissionpaid to Agent etc.p g


Valuation of ServicesValuation of ServicesValuation of ServicesValuation of Services

Value of Taxable Service u/s 67Value of Taxable Service u/s.67

• “For the purpose of this chapter, the value of any taxablep p p , yservice shall be the gross amount charged by the serviceprovider for such service rendered by him.”

• The use of the expression ‘gross amount’ implies that, prima facie, nod d ti ill b ll d Th f th d ‘ h d’ k itdeductions will be allowed. The use of the word ‘charged’ makes itapparent that service provider must raise a bill on the service receiver,and that such a bill (by whatever name called) must indicate the gross( y ) gamount clearly.

Currently appx more than 105 services are defined as taxable service under the


Currently, appx. more than 105 services are defined as taxable service under the service tax net u/s. 65(105) of finance Act,1994.

Value of taxable services : Factors considerationValue of taxable services : Factors consideration

Identification of services to be considered, involving-g

• Service to be excluded• Service to be included

S il i l dibl / l dibl i (lik PAN S i T• Statutorily includible / excludible items (like PAN, Service TaxAssessee code)

• Items includible / excludible according to departmental clarificationsg p• Excluding reimbursement of out-of-pocket if expenses, if permissible• Inclusion of service tax element separately in the bills

G l i• General exemptions• Specific exemptions

The gross amount is required to be computed only in respect of ‘taxable service’


The gross amount is required to be computed only in respect of taxable service covered under section 65 (105) of the Act

Format of Service Tax InvoiceFormat of Service Tax InvoiceTAX INVOICE

Ref: _________ Date : ________

To, M/s. XYZ Ltd.

Address

Particulars Amount

Being Professional Fees rendered as Statutory Audit for F.Y.2009-2010 20,00,000

Out of Pocket Expenses in discharge of services 1,54,500

Add TAdd: Service Tax 10% 2,00,000

Add: Educational Cess 2% 4,000

Add: Secondary and Higher Education Cess 1% 2,000

PAN : AABPS 1234 Z

Service Tax Code: AABPS 1234 Z ST001

Total 23,60,500Total 23,60,500


Salient FeaturesSalient FeaturesRate of Service Tax = 10%

The service tax collected must be shown separately in Invoice/ Billraised by the person providing services [Sec.83- similar to Sec. 12Aof Central Excise Act,1944]

If service tax not shown separately, the amount charged by serviceprovider to his customer / clients will be treated as cum tax priceand back ward (Reverse) calculations will be made.

Value of taxable service = [Gross amount charged/(100+ rate of tax)] x 100Value of taxable service = [Gross amount charged/(100+ rate of tax)] x 100Service tax = [Gross amount charged/(100 + rate of tax)]x rate of tax Service tax = [Gross amount charged/(100 + rate of tax)]x rate of tax


Salient FeaturesSalient Features

Irrespective of method of accounting the service tax is payable toIrrespective of method of accounting, the service tax is payable tothe Government only when the value of taxable services is received.

S i bl f i f l f iService tax not payable on free services as for levy of service tax,consideration is necessary [Sec.67 (1)(iii) and Service Tax(Determination of value) Rules,2006]

Service tax liable on taxable services - to be paid even if not collectedfrom the client [Sec.68] by applying backward / reverse calculation.

No service Tax on out of pocket expenses, if incurred on behalf ofcustomer / client.


Salient FeaturesSalient FeaturesService Tax cannot be made applicable retrospectively [ProspectiveImpact] [Exception : Renting of Immovable property pronounced in Finance Act,2010 asapplicable w.e.f.01.04.2007]

Services performed prior to the date of levy not liable for payment ofp p y p yservice tax

Service tax is payable as soon as any advance is received as:Service tax is payable as soon as any advance is received as:

a. The taxable service includes “service to be provided”, andb. The payments received before, during, or after the provision of taxable

serviceservice

An assessee may adjust excess payment of service tax against hisli bili f i f b i d i l i lliability of service tax for subsequent periods in equal instalments.


Administrative Rules & ProceduresAdministrative Rules & ProceduresService tax collected from the recipient of service must be paid to the centralGovernment [Section 73A] in Form GAR-7.

A multiple service provider (a service provider rendering more than one taxable service)can use single GAR-7 challan for payment of service tax on different services

Interest for short payment / non payment : 13% p aInterest for short-payment / non-payment : 13% p.a.

Payment of Service Tax:For Company : For period April-February : 5th of next month

F M h 31 M hFor March : 31st MarchFor Others : For Quarter 1,2 and 3: 5th of next month after end of quarter

For 4th Quarter : 31st March

Return in Form : ST – 3 : Self Assessment

Provisional Assessment : ST 3A

Due Dates of submission of return: 25th October : April-September25th April : October -March


Calculation of Exemption Limit – Illustration 1Calculation of Exemption Limit Illustration 1Financial Year Amount of

Services (Rs.)Is Service Taxable?

Is Service Tax payable?

Remark

2009-2010 8,50,000 Yes No No

2010-2011 15,00,000 Yes Yes On balance above Rs.10L b l l tiLacs – by reverse calculation

2011-2012 18,00,000 Yes Yes Ideally, on entire amountfrom the first receiptonwards But if assesseeonwards. But, if assesseewants to avail benefit ofexemption, he has tocommunicate his intentionto Commissioner of ServiceTax (in Writing) aboutavailment of exemption tillRs.10 Lacs (Provided he is


s. 0 acs ( ov ded e snot collecting ServiceTax)($)

Calculation of Exemption Limit – Illustration 2Calculation of Exemption Limit Illustration 2

Financial Year Amount of Services (Rs.)

Is Service Taxable?


RemarkServices (Rs.) Taxable? Tax payable?

2009-2010 28,00,000 No No No

2010-2011 25 00 000 No No we f 28 02 2010-service2010-2011 25,00,000 No No w.e.f. 28.02.2010-serviceconsidered taxable

5,00,000 Yes No No, as exemption limit ofRs.10 Lacs is not yet crossedy

2011-2012 58,00,000 Yes Yes On balance above Rs.10Lacs ($) – by reversecalcualtion (if service tax isnot charged by Serviceprovider


Calculation of Exemption Limit – Illustration 3Financial Year Amount of Is Service Is Service RemarkFinancial Year Amount of

Services (Rs.)Is Service Taxable?


Remark

2009-2010 8,50,000 Yes No No, ,

2010-2011 15,00,000 (Receipt –14,00,000)

Yes Yes On balance above Rs.10 Lacs –by reverse calculation [on Rs.4Lacs]14,00,000) Lacs]

2011-2012 8,00,000 Yes No If assessee wants to avail benefitof exemption, he has tocommunicate his intention toCommissioner of Service Tax(in Writing) about availment ofexemption till Rs.10 Lacs ($)(Provided he is not collecting(Provided he is not collectingService Tax)

1,00,000 (of Yes Yes Pertains to last year, which got


P.Y. 2010-11) realized in this year, on whichservice tax was levied.

Examples on applicability of Service TaxExamples on applicability of Service Tax

Situations Solution

If an Interior Decorator raises a bill for services say, on15th December, 2010 for Rs. 1,10,300/- (includingservice tax (incl. of Ed. Cess and S & H Ed. Cess) of

The liability to pay service tax to theGovernment would arise only inFebruary 2011 on cash basis.

Rs. 10,300/-) and the client pays his bill only inFebruary 2011

Mr King provided consultancy to Ms Queen on 25th No service tax to be paid as service isMr. King provided consultancy to Ms. Queen on 25November,2010 but did not raise a bill out of love andaffection

No service tax to be paid as service is“Free Service”

If bill mo nt is Rs 50 000 nd ser i e t is not Ser i e t p ble sh ll be omp tedIf bill amount is Rs. 50,000 and service tax is notshown separately in invoice,

Service tax payable shall be computed as follows: 50,000/110.30 x 10.30 = Rs. 4,669.08 and not Rs.5,150/-


Examples on applicability of Service TaxExamples on applicability of Service TaxSituations Solution

If bill i i d b M Th 16 09 2010 S i bl h ll b dIf bill is raised by Mr. Thomas on 16.09.2010amounting to Rs. 1,00,000 + Service Tax @10.30% =1,10,300/-, but, out of this, client paid only Rs.50,000/- on 14.03.2011 and balance on 15.04.2011.

Service tax payable shall be computedas follows:On 31.03.2011 : 50,000/110.30 x10.30 = Rs. 4,669.08On 05.07.2011 : 60,300/110.30 x10.30 = 5,630.92

Service provided on 25.03.2010 worth Rs.5,00,000/-, No Service Tax leviable as the serviceout of which Rs.3,00,000/- received on 05.04.2010.From 01.05.2010, this service was made taxable,balance Rs.2,00,000 received after 01.05.2010

was not taxable at the time ofrendering the same.

Ad i d 01 04 2010 R 9 00 000/ f P ti t i t iAdvance received on 01.04.2010 Rs.9,00,000/- forwork to be carried out from April-June,10. On 1st

June,2010, this service is made taxable.

Proportionate service tax on servicesrendered from June:On 05.07.2011 : 3,00,000/110.30 x10.30 = Rs. 28,014.51


Examples on applicability of Service TaxExamples on applicability of Service TaxSituations Solution

If bill is raised by Ms. Forum on 16.09.2010 amountingto Rs. 1,00,000 + Service Tax @10.30% = 1,10,300/-,but, out of this, client paid only Rs. 50,000/- on14.03.2011 and balance was w/off by her.

Service tax payable shall be computedas follows:On 31.03.2011 : 50,000/110.30 x10.30 = Rs. 4,669.084.03. 0 a d ba a ce was w/o by e . 0.30 s. 4,669.08

Advance of Rs. 15,00,000/- received on July,2010 byM/s. Era Legal Firm for rendering Legal consultancyservices to M/s Globus Insurance Ltd

Service Tax is payable shall becomputed as follows:Total Service Value = 15 00 000services to M/s. Globus Insurance Ltd.

From 25.08.2010, this service was made taxable, thefirm performed this service on 31st August,2010(M/s. Era Legal Firm has never taken Service Tax

Total Service Value = 15,00,000Less: Exemption = 10,00,000Net Amount = 5,00,000

Registration in past, as it was rendering tax free servicestill 25.08.2010)

On 05.10.2010 : 5,00,000/110.30 x10.30 = Rs. 46,690.84


Summary of Provision for valuation of Service [S 67][Sec.67]

• Service Tax is payable on gross amount charged by services provider forservices provided or to be provided Thus, Tax is payable as soon as advance is

i dreceived.• Value of taxable services plus Services Tax payable is equal to Gross amount

charged.

• Where consideration for providing services is entirely in money terms, grossamount charged by Services Provider of taxable services provided or to beprovided by him, will be relevant for valuation.

• Where consideration is not wholly in term of money, Service tax is payableon the amount of money + money’s worth and along with Service Taxcharged is equivalent to the consideration

• Where consideration is not ascertainable, valuation will be based on valuationrules.

• If gross amount is charged by Services Provider is inclusive of Service Taxthen, by working out back-ward (Reverse) calculation amount of tax will beascertained.


CENVAT Rules applicable t S i Tto Service Tax

CENVAT on Service TaxCENVAT on Service Tax• Credit of duty paid on input and input Service and capital goods: The

CENVAT scheme is principally based on system of granting credit of dutypaid on inputs, input Services, and capital goods. A provider of taxableoutput Services has to charge Service Tax in his invoice as per normalprocedure. However he gets credit of a] duty paid on input and capital

d b S i T id i S i Thi i dgoods b] Service Tax paid on input Services. This is termed asCENVAT credit.

In case of Tour Operator

Service Tax collected 1,00,000Less: Duty on Capital Goods (Bus) 85,000y p ( ) ,Less: Service Tax paid to Contract fees 5,000

Net Payable 10,000


Input goods /Service , on which credit is availed shall be related to service being provided

CENVAT on Service TaxCENVAT on Service Tax

• Input Services eligible for credit: An output Services provider will be entitledto credit of service Tax paid by him on input Services, which are used by himdirectly or indirectly in or in relation to provision of output Services. All input Servicesrelating to all activities relating to business are eligible to CENVAT creditFor e.g. : In case of Clearing House Agent (CHA) providing service forclearing the import consignment, he can take credit of service tax paid onpayment made to Container Freight Station (CFS) for storage of ImportC ill l f dCargo till clearance on payment of duty.

• Input goods eligible for CENVAT to service provider: Credit will be availableof excise paid on inputs used for providing output Services, except High

d di l Oil [HSD] Li h Di l Oil [LDO] d i ispeed diesel Oil [HSD] Light Diesel Oil [LDO] and motor spirit[Petrol].

• One – to – one correlation not required: CENVAT rule do not require inputl i b bli houtput co-relation to be establish.


CENVAT on Service TaxCENVAT on Service Tax• CENVAT on capital goods:

– Credit of duty paid on plant machinery spare parts of machinery tools dies etcCredit of duty paid on plant, machinery, spare parts of machinery, tools, dies etc.however up to 50% credit is available in current year and balance in subsequent financial year.[100% credit in case of SSI units (covered by Micro, Small and MediumEnterprise Development Act)-w.e.f. FY 2010-11]

Suppose, on 15.05.2010, a CA (non SSI unit) purchases Computer worth Rs.50,000/- for rendering professional services, on which he pays Excise Duty of Rs.5,000/- , he can avail set off to the extent of Rs.2,500/- (i.e.50% of total dutyamount) in FY 2010-11 and balance in FY 2011-12amount) in F.Y. 2010-11 and balance in F.Y. 2011-12

– A service provider can take out capital goods from premises, provided he bringsbacks within 180 days. Period can be extended by Asst. / Dy. Commissioner ofExcise.

• Sale of old capital Goods: If old capital goods on which CENVAT wasavailed are sold as scrap, an amount equal to CENVAT credit availedshould be paid (i.e. Reversal of earlier credit). In above illustration, onsale of the computer in F.Y.2012-13, he has to pay Rs.5,000/- to Service Taxdepartment.



• No Credit on motor vehicles used to provide output Services: Motor vehiclesNo C ed o o o ve c es sed o p ov de o p Se v ces: o o ve c esare not capital goods under Service Tax act for the purpose. Hence, creditcannot be allowed to service provider – (Except some specific businesses like TourOperator, Rent-a-cab scheme operator, Cargo handling agency, etc.)

• Procedural Requirement:Credit on the basis of specified documents: CENVAT credit will be onlyCredit on the basis of specified documents: CENVAT credit will be onlyallowed on the basis on documents such as

(a) A proof of payment of tax or input Services (i.e payment to supplier ofgoods / Services) andgoods / Services) and

(b) production of Tax invoice showing separate disclosure of Service Taxcharged.



• Credit of input Services only after payment made to service provider: In case ofp y p y pinput Services, credit is available only after the amount of bill is paid to a personwho had provided Services.

• No CENVAT credit if output service is exempt from Service Tax: No creditunder this scheme is available if output service is exemptedunder this scheme is available if output service is exempted.

• Service provider providing exempted as well as non exempted (taxable) Services:– If the service provider uses common input for taxable as well exempted

output Services, he should maintain separate records for input Servicesoutput Se v ces, he shou d a ta sep e eco ds o pu Se v cesused for exempted output services and should not avail CENVAT onsuch input.

– A provider of both taxable and exempt services, who is not maintainingb k f f i h ll l 6% f hseparate books of accounts of inputs shall pay an amount equal to 6% of the

value of exempted services.– However, he can utilize CENVAT credit only up to 20% of Service Tax

payable on output Services.p y p



• No cash refund except the case of export: In some case it may happen, thatNo c s e d e cep e c se o e po : so e c se y ppe ,duty paid on input and Service Tax paid on input Services may be more thantax payable on output Services. There is no provision for refund of excessCENVAT credit. The exception is if output Services is exported, therefund can be claimed on input tax paid and utilized for such outputServices.

• Depreciation cannot be availed on CENVAT portion: Rule 4(4) of CENVATcredit Rules clarifies that manufacture cannot avail depreciation in respect ofexcise portion which is availed as CENVAT credit.

• Writing off credit taken: In case credit taken on inputs/capital goods on fullywritten off, the service provider shall pay back the amount of such credittaken (w.e.f. 01.04.09).


Export of ServicesExport of Services

Export of Services - FeaturesExport of Services Features

• Taxable Services exported are exempt: Taxable Services may be exportedT b e Se v ces e po ed e e e p : T b e Se v ces y be e po edwithout payment of Service Tax.

• What is export of Services? Services are categories as followsImmovable Property Category: In case of appx 10 selected ServicesImmovable Property Category: In case of appx. 10 selected Services

provided in relation to immovable property, the Services shall beconsidered as exported if the immovable property is situated outside India.

Performance based category: In case of appx 50 selected Services shallPerformance based category: In case of appx. 50 selected Services shallbe considered as exported if the Services are wholly or partly performed outsideIndia.

Location of Services recipient criterion: In case of appx 40 ServicesLocation of Services recipient criterion: In case of appx. 40 Servicesthe Services shall be considered as exported where the Services areprovided and used in or in relation to business or commerce, the Servicesshall be considered as exported if recipient of Services is located outside India.p f p f


Export of Services - RulesExport of Services Rules

• CONDITIONS APPLICABLE TO ALL CATEGORIES FORN NSERVICES TO BE CONSIDERED AS EXPORTED:

– The Services is delivered outside India and used outside India and– Payment for such Services provided outside India received by servicePayment for such Services provided outside India received by service

provider in convertible foreign exchange.• SERVICES NOT SUBJECTED TO EXPORT RULE:

Ai t t f b ki ( i ) i I di f– Air transport of passengers embarking (commencing) in India forinternational journey.

– Transport of persons by a cruise ship embarking (commencing) in anyp t i I diport in India.


Exemption or Rebate of service tax in case of exportExemption or Rebate of service tax in case of export– Export without payment of Services tax and utilize CENVAT Credit for payment

of Service Tax on other Services.– Export without payment of Service Tax and claim refund of Service tax paid on

input Services and excise duty paid on input– Pay service Tax on exported Services (after claiming CENVAT credit of service

t ) d cl im ref nd of f ll Ser ice Ttax) and claim refund of full Service Tax.Amendment by finance Act,2009:

• Two taxable services, namely, ‘Transport of goods through road’ and‘Commission paid to foreign agents’ to be exempted from the levy ofCommission paid to foreign agents to be exempted from the levy ofservice tax, if the exporter is liable to pay service tax on reverse charge basis.Thus there would be no need for the exporter to first pay the tax and laterclaim refund in respect of these services.

• For other services received by exporters, service tax exemption to be operatedthrough the existing refund mechanism based on self-certification of thedocuments where such refund is below 0.25 per cent of FOB value, andcertification of documents by a Chartered Accountant for value of refundcertification of documents by a Chartered Accountant for value of refundexceeding the above limit


Import of ServicesImport of Services

Import of Services - FeaturesImport of Services Features

SECTION 66 A – REVERSE CHARGE:SECTION 66 A REVERSE CHARGE:

Section 66 A provides for reverse charges mechanism as follows:Where any services specified in section 65 (105) is• Provided or to be provided by a person who has established a businesspermanent address in a country other than India.

• Received by a person who has his place of business in India. Such services shallReceived by a person who has his place of business in India. Such services shallfor the purpose of this section be taxable services and such taxableservices shall be treated as if the recipient had himself provided theservices in India and accordingly the section will apply If recipient hasservices in India and accordingly the section will apply. If recipient hasreceived the above services otherwise than for the purpose of use inany business or commerce than this section will not apply i.e. if theservices are used for self purposes it will not attract service taxservices are used for self purposes, it will not attract service tax.


Specific rules for Import of Services Specific rules for Import of Services

• The recipient in India is treated as a provider of services andThe recipient in India is treated as a provider of services andaccordingly all the provisions of the Act as they apply in relation to aprovider of taxable services would apply to him.

• When a recipient is an indi id al and s ch ser ices is recei ed• When a recipient is an individual and such services is receivedby him otherwise than for the purpose of use in any business orcommerce this provision will not apply.

• It is important to know from which country services are beingprovided. If a company has H.O. in U.S.A. and branch in Indiaproviding services from U.S.A. to an Indian Company withoutintervention of the branch in India, the provider shall be treated asproviding services from U.S.A., although it has establishment in India,and so reverse charges will be applicable.


Import of Services in case of Permanent E bl h f f E I dEstablishment of foreign Enterprise in India

• Where a person is carrying on a business through a permanentWhere a person is carrying on a business through a permanentestablishment in India and having another P.E. outside India, say inGermany, now if taxable services provided by Germany. P.E. to IndianPE than it is considered as separate person and section is applicableP.E. than it is considered as separate person and section is applicable.

• A branch or ‘agency’ is treated as business establishment.


Applicability of Sec 66AApplicability of Sec.66A

H.O.

(Outside India) Service rendered

Branch CustomerBranch

(Within India) (Within India)Correspondence


Non-applicability of Sec 66ANon applicability of Sec.66A

H.O.

(Outside India) Correspondence

CBranch

(Within India)

Customer

(Within India)

Service rendered


Service rendered

IPCC Service Tax (FY 10 11)

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Transcript of IPCC Service Tax (FY 10 11)