Wait...

  • >
  • >
  • >
  • >
  • Important Matters of Service Tax
  • Online India Export Import Data Search

    Sub: Amendment to Circular No. 96/7/2007-ST dated the 23rd August, 2007 – Clarification in respect of renting of immovable property service and works contract service – Regarding., Service Tax Circular No 98/2008(ST), 04-01-2008



    Date: 04-01-2008
    Notification No: Service Tax Circular No 98/2008(ST)
    Issuing Authority: Service Tax  
    Type: Circular
    File No: 345/6/2007 – TRU
    Subject: Sub: Amendment to Circular No. 96/7/2007-ST dated the 23rd August, 2007 – Clarification in respect of renting of immovable property service and works contract service – Regarding.

    Government of India
    Ministry of Finance
    Department of Revenue
    Tax Research Unit


    Circular No.98/1/2008-ST

    New Delhi, the 4th January, 2008


    To,

    Chief Commissioners of Central Excise (All)
    Chief Commissioners of Central Excise & Customs (All)
    Directors General (All)
    Commissioners of Service Tax (All)
    Commissioners of Central Excise (All)
    Commissioners of Central Excise & Customs (All)


    Sub: Amendment to Circular No. 96/7/2007-ST dated the 23rd August, 2007 – Clarification in respect of renting of immovable property service and works contract service – Regarding.


    In the Circular No.96/7/2007-ST dated the 23rd August, 2007,-

    1. after Reference Code 086.05 / 23.08.07, the following Reference Code and corresponding issue and clarification shall be inserted, namely:-


    Reference Code Issue Clarification
    (1) (2) (3)
    096.01 / 04.01.08 Commercial or industrial construction service [section 65(105)(zzq)] or works contract service [section 65(105)(zzzza)] is used for construction of an immovable property. Renting of an immovable property is leviable to service tax [section 65(105)(zzzz)].

    Whether or not, commercial or industrial construction service or works contract service used for construction of an immovable property, could be treated as input service for the output service namely renting of immovable property service under the CENVAT Credit Rules, 2004?
    Right to use immovable property is leviable to service tax under renting of immovable property service.

    Commercial or industrial construction service or works contract service is an input service for the output namely immovable property. Immovable property is neither subjected to central excise duty nor to service tax.

    Input credit of service tax can be taken only if the output is a ‘service’ liable to service tax or a ‘goods’ liable to excise duty. Since immovable property is neither ‘service’ or ‘goods’ as referred to above, input credit cannot be taken.
    1. after Reference Code 097.01 / 23.08.07, the following Reference Codes and corresponding issues and clarifications shall be inserted, namely:-


    097.02 / 04.01.08 Services provided in relation to execution of
    a works contract is leviable to service tax [section 65(105)(zzzza)].

    VAT / sales tax is payable on the transfer of property in goods involved in the execution of a works contract.

    Service tax is leviable on the value equivalent to the gross amount charged for the works contract less value of the transfer of property in goods involved in the execution of the works contract which is leviable to VAT / sales tax [Rule 2A of the Service Tax (Determination of Value) Rules, 2006].

    Whether or not, excise duty paid on goods, subjected to levy of VAT / sales tax under works contract service, can be taken as credit under the CENVAT Credit Rules, 2004?
    Value for the purposes of levy of service tax under works contract service does
    not include the value pertaining to transfer of property in goods involved in
    the execution of a works contract leviable to VAT / sales tax. Works contract
    service provider is, therefore, not eligible to take credit of excise duty paid on
    such goods involved in the execution of works contract.
    097.03 / 04.01.08 Services provided in relation to execution of works contract is leviable to service tax w.e.f. 01.06.07 [section 65(105)(zzzza)].

    Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 provides option to pay service tax @ 2% of the gross amount charged for the works contract. However, the service provider opting for composition scheme for payment of service tax should exercise the option prior to payment of service tax.

    The issue pertains to,-

    (i) contracts entered into prior to 01.06.07 for providing erection, commissioning or installation and commercial or residential construction service, and

    (ii) service tax has already been paid for part of the payment received under the respective taxable service.

    Whether in such cases, the service provider can revise the classification to works contract service from the respective classification and pay service tax for the amount received on or after 01.06.07 under the Composition Scheme?
    Prior to 01.06.07, service provider classified the taxable service under erection, commissioning or installation service [section 65(105)(zzd)], commercial or industrial construction service [section 65(105)(zzq)] or construction of complex service [section 65(105)(zzzh)], as the case may be, and paid service tax accordingly. The contract for the service was a single composite contract. Part of service tax liability corresponding to payment received was discharged and the balance amount of service tax is required to be paid on or after 01.06.07 depending upon receipt of payment.

    Classification of a taxable service is determined based on the nature of service provided whereas liability to pay service tax is related to receipt of consideration. Vivisecting a single composite service and classifying the same under two different taxable services depending upon the time of receipt of the consideration is not legally sustainable.

    In view of the above, a service provider who paid service tax prior to 01.06.07 for the taxable service, namely, erection, commissioning or installation service, commercial or industrial construction service or construction of complex service, as the case may be, is not entitled to change the classification of the single composite service for the purpose of payment of service tax on or after 01.06.07 and hence, is not entitled to avail the Composition Scheme.
    1. Trade and field formations may be informed accordingly.

    2. Hindi version will follow.

    (G.G. Pai)
    F. No. 345/6/2007 – TRU
    Under Secretary (TRU)

           

    DO YOU NEED HELP?







    Enquiry Form

    Fields marked with an asterisk * are required.
    +



    What is New?

    Date: 23-09-2016
    Trade Notice No. 18/2016
    Clarification in respect of definition of service provider under Common Service Providers (CSP) in Export Promotion Capital Goods (EPCG) scheme.

    Date: 23-09-2016
    Customs Notification No. 51/2016
    Seeks to further amend notification No.12/2012-Customs dated the 17th March, 2012, so as to: 1. Reduce import duty on potatoes from 30% to 10% up to 31.10.2016. 2. Reduce import duty on wheat from 25% to 10% up to 29.02.2017. 3. Reduce import duty on palm oil from 12.5% to 7.5% for crude palm oil of edible grade, and from 20% to 15% for refined palm oil of edible grade.

    Date: 23-09-2016
    DGFT Public Notice No. 33/2015-2020
    Amendment in ANF-5A [Applicationj for issue of EPCG Authorisation ] incorporating the guideline for designating/certifying a Common Service Provider (CSP) under Para 5.02 (b) of FTP 2015-20-reg.

    Date: 22-09-2016
    Customs Notification No. 122/2016 (NT)
    Rate of exchange of conversion of the foreign currency with effect from 23rd September, 2016

    Date: 22-09-2016
    Customs Circular No. 44/2016
    Regarding setting up of 'Custom Clearance Facilitation Committee' (CCFC) for Land customs stations and Inland Container Depots-reg

    Date: 22-09-2016
    Trade Notice No. 17/2016
    Refund of Terminal Excise Duty(TED) under Deemed Exports where Duty has been paid from CENVAT Credit and ab-initio waiver is not availabe.

    Date: 22-09-2016
    Customs Notification No. 50/2016
    Seeks to further amend notification No. 12/2012-Customs dated 17.03.2012

    Date: 22-09-2016
    Service Tax Notification No. 41/2016 (ST)
    Seeks to exempt taxable service provided by State Government Industrial Development Corporations/ Undertakings by way of granting long term (thirty years, or more) lease of industrial plots to industrial units from so much of service tax which is leviable on the one time upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for such lease.

    Date: 22-09-2016
    DGFT Public Notice No. 32/2015-2020
    Merchandise Exports from India Scheme (MEIS)-Additions/amendments in Table 2[containing ITC (HS) code wise list of products with reward rates] of Appendix 3B

    Date: 21-09-2016
    Instruction
    Instruction issued by Legal Cell, CBEC regarding non compliance of sub-section 2 of section 32K of Central Excise, Act, 1944 - Immunity granted to a person from prosecution, penalty and fine



    Exim Guru Copyright © 1999-2016 Exim Guru. All Rights Reserved.
    The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
    Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.

    EximGuru.com

    C/o Infodrive India
    E-2, 3rd Floor, Kalkaji Main Road
    New Delhi - 110019, India
    Phone : 011 - 40703001