| Reference Code |
Issue |
Clarification |
| (1) |
(2) |
(3) |
| 002.01 / 23.08.07 |
Whether service tax
is liable on the
amount collected
as surcharge for
delayed payment
of telephone bills? |
An amount collected for delayed
payment of a telephone bill is not
to be treated as consideration
charged for provision of telecom
service and, therefore, does not
form part of the value of taxable
service under section 67 read with
Service Tax (Determination of Value) Rules, 2006. |
| 004.01 / 23.08.07 |
Persons / agencies canvass
advertisements for publishing,
on commission basis. Such
persons / agencies do
not provide any other
services like making,
preparation, display
or exhibition of
advertisement.Whether merely
canvassing advertisement
for publishing on a
commission basis by
persons / agencies is
classifiable as
Advertising Agency
service [section
65(105)(e)] or not? |
Merely canvassing advertisements
for publishing, on commission basis,
is not classifiable under the taxable
service falling under section 65(105)
(e).Such services are liable to service
tax under business auxiliary service
[section 65(105)(zzb)]. |
| 005.01 / 23.08.07 |
Some transporters undertake
door- to-door transportation
of goods or articles and
they have made special
arrangements for speedy
transportation and timely
delivery of such goods or
articles. Such services are
known as ‘Express Cargo
Service’ with assurance of
timely delivery.Whether such
‘Express cargo service’ is
covered under courier agency
service [section 65(105)(f)]? |
The nature of service provided by ‘Express
Cargo Service’ provider falls within the scope
and definition of the courier agency. Hence, the
said service is liable to service tax under courier
agency service [section 65(105)(f)]. |
| 005.02 / 23.08.07 |
Angadia” undertakes delivery
of documents, goods or
articles received from a
customer to another person
for a consideration.Whether
services provided by angadia
is liable to service tax under
courier agency service [section
65(105)(f)]? |
Angadias are covered within the definition
of ‘courier agency’ [section 65(33)]. Therefore,
such services provided by angadia is liable
to service tax under courier agency service
[section 65(105)(f)]. |
| 006.01 / 23.08.07 |
Whether a self-employed
professionally qualified
engineer can be considered
as ‘consulting engineer’
[section 65(31)] and
service provided by such
self-employed professionally
qualified engineer to a client
in relation to one or more
discipline of engineering is
liable to service tax under
consulting engineer service
[section 65(105)(g)]? |
Consulting engineers include self-employed
professionally qualified engineer, whether
or not employing others for assistance.Services
provided by such self-employed professionally
qualified engineer to a client in relation to
one or more discipline of engineering is
liable to service tax under consulting engineer
service [section 65(105)(g)]. |
| 010.01 / 23.08.07 |
Educational institutes such
as IITs, IIMs charge a fee
from prospective employers
like corporate houses /
MNCs, who come to the
institutes for recruiting
candidates through
campus interviews. Whether
services provided by such
institutions in relation to
recruitment of manpower
are liable to service tax under
‘manpower recruitment
or supply agency’ service
[section 65(105)(k)]? |
‘Manpower recruitment or supply agency’
is defined as “any person engaged in
providing any service, directly or indirectly,
in any manner for recruitment or supply
of manpower, temporarily or otherwise,
to a client” [section65(68)]. Educational institutes
such as IITs and IIMs fall within the definition
of ‘manpower recruitment or supply
agency’, and service tax is liable on services
provided by such institutions in relation
to campus recruitment under section 65(105)(k). |
| 010.02 / 23.08.07 |
Business or industrial organisations
engage services of manpower
recruitment or supply agencies
for temporary supply of manpower
which is engaged for a specified
period or for completion of
particular projects or
tasks.Whether service tax
is liable on such services
under manpower recruitment
or supply agency’s service
[section 65(105)(k)] |
In the case of supply of manpower, individuals
are contractually employed by the manpower
recruitment or supply agency. The agency
agrees for use of the services of an
individual, employed by him, to another
person for a consideration. Employer-
employee relationship in such case
exists between the agency and the
individual and not between the individual and
the person who uses the services of the
individual.Such cases are covered within
the scope of the definition of the taxable
service [section 65(105)(k)] and, since they
act as supply agency, they fall within
the definition of “manpower recruitment or
supply agency” [section 65(68)] and are
liable to service tax. |
| 012.01 / 23.08.07 |
“Mandap” is defined as any immovable
property as defined in section 3 of the
Transfer of Property Act, 1882 and
includes any furniture, fixtures,
light fittings and floor coverings
therein let out for a consideration
for organizing any official, social
or business function. [section
65(66)]“Mandap keeper” is defined
as a person who allows temporary
occupation of a mandap for a
consideration for organising
any official, social or business
function [section 65(67)].Whether
hotels / restaurants letting
out their halls, rooms etc.
for social, official or business
functions fall within the definition
of “mandap” and allowing
temporary occupation of
halls, rooms etc by such hotels
/ restaurants for organizing
any official, social or business
function is liable to service tax
under “mandap keeper service”
[section 65(105)(m)]? |
Halls, rooms etc. let out by hotels /
restaurants for a consideration for
organising social, official or business
functions are covered within the scope
of “mandap” [section 65(66)], and such
hotels and restaurants are covered within
the scope of “mandap keeper” [section
65(67)].Accordingly, service tax is leviable
on services provided by hotels and
restaurants in relation to letting out of halls,
rooms, etc. for organizing any official, social
or business function under mandap keeper
service [section 65(105)(m)]. |
| 012.02 / 23.08.07 |
Whether allowing temporary
occupation of a hall for the purpose
of holding dance, drama or music
programme or competitions is liable
to service tax under Mandap
Keeper Service? |
Dance, drama or music programme
or competitions are social functions
and allowing temporary occupation
of a hall for a consideration for
organizing such functions are
liable to service tax under Mandap
Keeper Service [section 65(105)(m)]. |
| 032.01 / 23.08.07 |
Whether Prasar Bharati Corporation
(Doordarshan and All India Radio)
are liable to pay service tax under
Broadcasting Service [section 65(105)
(zk)]? |
Prior to 1.3.2003, Prasar Bharati Corporation
did not pay service tax by virtue of erstwhile
section 22 of the Prasar Bharati (Broadcasting
Corporation of India) Act, 1990. However, the
said section 22 was omitted vide section 163
of the Finance Act, 2002 with effect from
1.4.2003.In view of the above statutory
changes, with effect from 1.4.2003
Prasar Bharati Corporation is liable to
pay service tax for the broadcasting services
provided like any other broadcasting agency
or organization engaged in providing service
in relation to broadcasting. |
| 034.01 / 23.08.07 |
Moneychangers are persons
authorized under section 7 of
Foreign Exchange Management
Act, 1973 to deal in foreign currency.
Explanation given under Section 7
of the said Act states that ‘dealing’
means purchasing foreign currency
in the form of notes, coins or
traveller’s cheques or selling
foreign currency in the
form of notes, coins or traveller’s
cheques.Whether services provided
by a money changer in relation to
dealing of foreign currency (buying
or selling), at specified rates, without
separately charging any amount as
commission for such dealing, is
liable to service tax as foreign
exchange broking under ‘banking and
other financial services’ [section 65(105) (zm)]? |
Moneychangers are authorized by RBI
to buy and sell foreign exchange at
the prevalent market rates. Buying
or selling of foreign exchange by
such persons without separately
charging any amount as commission
or brokerage does not fall within the
scope of foreign exchange broking
and is not liable to service tax under
section 65(105)(zm). |
| 034.02 / 23.08.07 |
‘Asset management and all
other forms of fund management’
are liable to service tax under
‘banking and other financial
service’ [section 65(12)].Whether
the amount charged as ‘entry
and exit load’ from the investor by
a mutual fund is liable to service
tax as asset / fund management
services under banking and other
financial services [section 65(105)(zm)]? |
Entry load and exit load charged by a
mutual fund are not for the purpose
of management of assets. Thus, amount
charged as “entry and exit load” are not
to be treated as consideration received
by an Asset Management Company for
asset management and hence not
liable to service tax under Banking
and other Financial service [section 65
(105)(zm)]. |
| 034.03 / 23.08.07 |
Whether depository services
and Electronic Access to
Securities Information (EASI)
services provided by Central
Depository Services (India) Ltd.,
(CDSL) is liable to service tax
under Banking and other Financial
Services[section 65(105)(zm)]? |
Definition of “Banking and other
Financial Services” specifically
includes “provision and transfer
of information and data processing
[section 65(12)(a)(vii)]”. Services
provided by CDSL falls within the
scope of “provision and transfer
of information and data processing”.
These services are not in the nature
of “on-line information and data
base access or retrieval services”.
Therefore, the depository services
provided by CDSL including Electronic
Access to Securities Information (EASI)
for a fee are liable to service tax under
Banking and other Financial Services.
[section 65(105)(zm)] |
| 034.04 / 23.08.07 |
Services provided by banking company or
a financial institution including a non-banking
financial company or any other body corporate
or commercial concern in relation to
asset management including portfolio
management, and all forms of fund
management, is leviable to service
tax under “banking and other
financial services” [section 65(105)
(zm) and section 65(12)]. The
said taxable service also
includes cash management services
provided.Services are provided in relation
to chit funds. Chit Funds are of two types,
namely:-(a) Simple Chit Funds: In this case,
members agree to contribute to the fund
a certain amount at regular interval. Lots
are drawn periodically and the member,
whose name appears, gets the
periodical collection. No separate
amount is charged from the members
.(b) Business Chit Funds: In this case,
there is a promoter known as foreman
who draws up the terms and conditions
of the scheme and enrolls subscribers.
Every subscriber has to pay his
subscription in regular installments.
The foreman charges a separate
amount for the services provided.
Some States prescribe a ceiling
limit for the amount to be charged
by such promoter for the services
provided. Commission amount
is retained by the promoter as
consideration for providing the
services in relation to chit fund.
Whether services provided in
relation to chit fund is leviable to
service tax under “banking and
other financial services” or not? |
Reserve Bank of India has clarified that the
business of a chit fund is to mobilize cash
from the subscribers and effectively cause
movement of such cash to keep it working
and, therefore, the activity of chit funds is in
the nature of cash management.(a) In the
case of Simple Chit Funds, no consideration
is paid or received for the services provided
and, therefore, the question of levy of service
tax does not arise.(b) In the case of Business
Chit Funds, cash management service is
provided for a consideration and, therefore,
leviable to service tax under “banking and other
financial services”. |
| 035.02 / 23.08.07 |
Management Committee of Paradeep
Port was constituted as per the
directions of Supreme Court of India.
The Committee operates under the
“Paradeep Port, Clearing, Forwarding
and Handling Workers (Regulation of
Employment) Scheme, 1994”. Officers
of the Paradeep Port Trust are associated
with the Committee. The Committee is
authorized by the Port Trust to provide
a number of services within the port
area for a consideration. Whether
services provided by the Management
Committee within the port area for a
consideration is liable to service tax
under Port Service? |
As the Management Committee
of Paradeep Port is authorized by
the Port Trust to provide services
within the port area at the prescribed
rates, such services provided by the
Committee are liable to service tax
under Port Service. [section 65(105)
(zn)] |
| 036.01 / 23.08.07 |
Authorized dealers of motor vehicles
provide to customers free servicing
of motor vehicles without charging
any amount as service charge
from the customers. The vehicle
manufacturer promises such a
facility to attract customers and
reimburses the service charges
to the authorised dealers, who
provide to customers free servicing
of motor vehicles. However, as per
agreement, consideration for the
service provider is not directly
paid by the customer but by the vehicle
manufacturer.Whether such ‘free services’
given to the customer free of cost by the
authorized dealers (for which they are
reimbursed by the vehicle manufacturers)
are liable to service tax under authorised
service station service [section 65(105) (zo)]? |
In this case, service is provided by
an authorised service station to a
customer and the service provider
receives the consideration for the
services provided from the manufacturer.
Service tax is liable on the amount
received from the vehicle manufacturer
for the purpose of servicing of vehicles. |
| 036.02 / 23.08.07 |
Whether servicing / repair of heavy
vehicles like trucks by authorized
service station is liable to service tax
under section 65(105)(zo)? |
Service tax is liable on services
provided by an authorised service
station to a customer in relation
to service, repair, reconditioning
or restoration of motorcars, light
motor vehicles or two-wheeled
motor vehicles [section
65(105)(zo)].Thus, servicing
of heavy vehicles like trucks,
not being one of the specified
categories of motor vehicles, is
at present not covered within
the scope of the said taxable service. |
| 036.03 / 23.08.07 |
Whether spare parts sold by a
service station during the
servicing of vehicles is
liable to payment of service
tax?Whether exemption can
be claimed on the cost of
consumables that get consumed
during the course of providing service? |
Service tax is not leviable on a transaction
treated as sale of goods and subjected
to levy of sales tax / VAT. Whether
a given transaction between the service
station and the customer is a sale or
not, is to be determined taking into
account the real nature and material
facts of the transaction. Payment of VAT
/ sales tax on a transaction indicates
that the said transaction is treated
as sale of goods.Any goods used in the
course of providing service are to be
treated as inputs used for providing
the service and accordingly, cost of
such inputs form integral part of the
value of the taxable service.Where
spare parts are used by a service
station for servicing of vehicles,
service tax should be levied on
the entire bill, including the value
of the spare parts, raised by the service
provider, namely, service stations.
However, the service provider is
entitled to take input credit of excise
duty paid on such parts or any
goods used in providing the
service wherein value of such
goods has been included in the bill.
The service provider is also entitled to
take input credit of service tax
paid on any taxable services used
as input services for servicing of vehicles. |
| 041.01 / 23.08.07 |
Organizers of Trade Fairs and
Exhibitions solicit participation
from the trade and industry
and provide space and other
facilities, including furniture,
cabins, security, electricity, etc.,
to display products and
provision of services.Whether
services provided by the
organizers of trade fairs /
exhibitions are covered within
the scope of event management
service [section 65(015)(zu)]? |
Trade fairs and exhibitions are organised
by persons. Such organisers of trade fairs
and exhibitions provide services to exhibitors
in relation to business exhibition. Services
provided by an organizer of trade fairs and
exhibitions to an exhibitor in relation to
business exhibition is liable to service
tax under “Business Exhibition Service
” [Section 65(105)(zzo)] w.e.f.
10.09.2004.In addition, an organiser
of the trade fair or business exhibition
may engage an event manager to
provide service to the organiser
in relation to organising trade fairs
and exhibitions. In such cases, the
event manager renders the service
of “Event Management” to the organisers
and is liable to pay service tax under
“Event Management Service”.The two
services, namely “Business Exhibition
Service” and “Event Management Service
”, and the two service providers of the
respective services are distinct. |
| 047.01 / 23.08.07 |
Whether services provided in
relation to handling / storage
and warehousing of empty
containers is liable to service
tax under storage and warehousing
service [section 65(105)(zza)]? |
Empty containers are covered
within the meaning of “goods”
[section 65(50)]. Thus, services
provided in relation to storage
and warehousing of empty
containers is liable to service
tax under storage and warehousing
service [section 65(105)(zza)]. |
| 048.01 / 23.08.07 |
Whether commission received
by distributors for distribution
of mutual fund units is liable
to Service Tax under business
auxiliary service? |
Distributors receive commission
from mutual fund for providing
services relating to purchase and
sale of Mutual fund units. Services
provided by such distributors
are in the nature of commission
agent and are, thus, liable to
service tax under business auxiliary
service [section 65(105)(zzb)]. |
| 053.01 /23.08.07 |
Services provided by any person
to a customer in relation to
management, maintenance
or repair is liable to service
tax [section 65(105)(zzg)].
“Management, maintenance
or repair” includes maintenance
or repair of any goods, excluding
motor vehicle [section 65(64)
].Whether maintenance or repair
of software is liable to service tax? |
Explanation to section 65(64)
provides that “goods” includes
computer software.Since, maintenance
or repair of any goods is liable to
service tax, services provided in relation
to maintenance or repair or servicing of
computer software is liable to
service tax under “management,
maintenance or repair” service
[section 65(105)(zzg)]. |
| 076.01 / 23.08.07 |
“Club or association” is defined
as any person or body of persons
providing services, facilities or
advantages, for a subscription or
any other amount, to its members,
but does not include such person
or body of persons engaged in any
activity having objectives which are
of a charitable nature.Whether a club
or association enjoying exemption under
the provisions of Income Tax Act as a publi
c charitable institution gets automatically
excluded from levy of service tax under
section 65(105)(zzze) read with section
65(25a) of the Finance Act, 1994? |
Exemption under the Income Tax Act on
the ground of being a public charitable
institution is of no consequence or relevance
for service tax purposes.Levy of service
tax is entirely governed by the provisions
contained in the Finance Act, 1994 and
the rules made thereunder.“Charity” is
defined as “aid given to the poor, the
suffering or the general community
for religious, educational, economic,
public safety, or medical purposes”,
and “charitable” is defined as “dedicated to
a general public purpose, usually for the
benefit of needy people who cannot pay
for the benefits received” [Black’s Law
Dictionary].Whether a club or association
is engaged in activity having objectives
which are of a charitable nature or not is
to be determined purely on the basis
of the facts and circumstances of the case. |
| 076.02 / 23.08.07 |
Services provided by a resident
welfare association to its members
under club or association service
[section 65(105) (zzze)] is exempted
from service tax vide notification
No.8/2007-Service Tax, dated
01.03.07, subject to the condition
that the total consideration received from
an individual member by the said
association for providing the said
services does not exceed three thousand
rupees per month.Whether a resident welfare
association registered as a co-operative
society with the Registrar of Co-operative
Societies is entitled for the benefit
of service tax exemption under notification
No.8/2007-Service Tax, dated 01.03.2007 or not? |
A resident welfare association, even if
it is registered as a co-operative society
with the Registrar of Co-operative Societies,
is eligible to avail of exemption from levy
of service tax vide notification No.8/2007
-Service Tax, dated 01.03.2007 provided
the following conditions are satisfied,
namely:-(i) The exemption is available
for the services specified under section
65(105)(zzze) of the Finance Act, 1994
and provided or to be provided by the
association to its members.(ii)
The sole criterion for membership of the
resident welfare association is the residential
status of a person in a residential complex
or locality i.e., membership of the association
is restricted to the residents of the complex
or locality.(iii) The value of total consideration
received from an individual member by the
association for providing the services
does not exceed Rs.3,000/- per month. |
| 079.01 / 23.08.07 |
Whether service tax is liable under
construction of complex service
[section 65(105)(zzzh)] on builder
, promoter, developer or any
such person,-(a) who gets the
complex built by engaging the
services of a separate contractor,
and(b) who builds the residential
complex on his own by employing direct labour? |
(a) In a case where the builder, promoter,
developer or any such person builds a
residential complex, having more than 12
residential units, by engaging a contractor
for construction of the said residential
complex, the contractor in his capacity as
a taxable service provider (to the
builder / promoter / developer / any such
person) shall be liable to pay service
tax on the gross amount charged for
the construction services under ‘
construction of complex’ service [section
65(105)(zzzh)].(b) If no other person
is engaged for construction work and the
builder / promoter / developer /
any such person undertakes construction
work on his own without engaging the services
of any other person, then in such cases,
-(i) service provider and service recipient
relationship does not exist,(ii) services
provided are in the nature of self-supply
of services.Hence, in the absence of service
provider and service recipient relationship
and the services provided are in the nature
of self-supply of services, the question of
providing taxable service to any person by
any other person does not arise. |
| 086.01 / 23.08.07 |
An international journey commencing
from an Indian airport involves stopover
/ transfer at intermediate airports
outside India before reaching the
destination (say Mumbai-Dubai-London
-New York).Whether service tax would
be liable in such case on the value
indicated in the ticket for the entire
journey or only on that part of the
value attributable to the first sector
(Mumbai-Dubai) of the journey? |
Aim of the passenger is to travel from
Mumbai to New York. Actual destination
of the international journey is the criterion
to decide the value of the service (in this
case, New York). Stopover / transfer
at intermediate airports, being merely
incidental and part of the main journey,
is of no relevance or consequence for
levy of service tax under section 65(
105)(zzzo) read with section 66.Service
tax in such cases is leviable on the total
consideration of a single composite service
relating to the entire journey. i.e., value
indicated on the ticket for the entire journey. |
| 086.02 / 23.08.07 |
An international journey (say Delhi-
Mumbai-London) includes travel in
a domestic sector (Delhi – Mumbai)
as part of the international journey.
Whether service tax is liable on
the value of whole journey or after
excluding the value attributable to
the domestic sector from the total
value of the ticket? |
In this case, the journey is a single
composite journey. The aim of the
passenger is to travel from India to
a place outside India. Part of the
travel in the domestic sector cannot
be segregated from the single
journey. Service tax is, therefore, leviable
on the total value of the ticket treating
the domestic sector as integral part
of the international journey without
excluding the value attributable, if any,
to travel in the domestic sector. |
| 086.03 / 23.08.07 |
An international journey commences
from an airport outside India and
completed at an airport outside India
but including a sector wherein
the passenger disembarks and
subsequently embarks at an Indian
airport as part of international
journey (say Sydney-Mumbai-Dubai-
Singapore-Sydney).Whether service
tax is liable for Mumbai-Dubai sector
only or on the total value of the ticket? |
In this case, the journey being a single
one and the aim of the passenger is
not to travel from India to a place outside
India, service tax is not leviable under
section 65(105)(zzzo). |
| 086.04 / 23.08.07 |
Whether ticket issued outside
India for an international journey
commencing from India (say Delhi
–London) is liable to service tax? |
Service tax is payable by the service provider,
namely aircraft operator, for the taxable service
provided. Place of purchase/ issue of ticket
is of no relevance or consequence to determine
the levy of service tax under section 65(105)
(zzzo) read with section 66. Service tax is leviable
as long as the passenger embarks in
India for an international journey, in any
class other than economy class. |
| 086.05 / 23.08.07 |
Whether service tax is liable on the
total value of the ticket or only half the
value of the ticket in the case of round
trip / return ticket (say Delhi-London-Delhi)? |
Service tax is leviable on the total
value of the ticket. |
| 097.01 / 23.08.07 |
Whether CENVAT credit of duty paid on
capital goods and service tax paid on input
services can be taken by a service provider
who opts to pay an amount equivalent to
two per cent. of the gross amount charged
for the works contract instead of paying service
tax at the rate specified in section 66, under
the Works Contract (Composition Scheme for
Payment of Service Tax) Rules, 2007,
notified vide notification No.32/2007-Service
Tax dated 22.05.07? |
Rule 3(2) of the Works Contract (Composition
Scheme for Payment of Service Tax) Rules, 2007
provides that the provider of taxable service opting
to pay service tax under the composition scheme
is not entitled to take CENVAT credit of duty on inputs,
used in or in relation to the said works contract,
under the provisions of the CENVAT
Credit Rules, 2004.There is no restriction
under notification No.32/2007-Service Tax
dated 22.05.07 to take CENVAT credit of
duty paid on capital goods and service tax
paid on input services. |
| 999.01 / 23.08.07 |
Sovereign/public authorities perform functions
assigned to them under the law in force, known
as “statutory functions”. For example, Regional
Reference Standards Laboratories (RRSL)
undertake verification, approval and calibration
of weighing and measuring instruments; Regional
Transport Officers (RTO) issue fitness certificate
to motor vehicles; Directorate of Boilers
inspects and issues certificates for boilers; or
Explosive Department inspects and issues
certificate for petroleum storage tank, LPG/CNG
tank in terms of provisions of the relevant
laws.Authorities providing such functions, required
to be performed as per law, may collect specific
amount or fee and the amount so collected is
deposited into government account.Whether
such activities of a sovereign / public authority,
performed under a statute, can be considered as
‘provision of service’ for the purpose of levy of
service tax and the amount or fee collected, if any,
for such purposes can be treated as consideration
for the services provided? |
Activities assigned to and performed by the
sovereign / public authorities under the
provisions of any law are statutory duties. The
fee or amount collected as per the provisions
of the relevant statute for performing such functions
is in the nature of a compulsory levy and are
deposited into the Government account.Such
activities are purely in public interest and are
undertaken as mandatory and statutory
functions. These are not to be treated as
services provided for a consideration.
Therefore, such activities assigned to and
performed by a sovereign / public authority
under the provisions of any law, do not
constitute taxable services. Any amount /
fee collected in such cases are not to
be treated as consideration for the purpose
of levy of service tax.However, if a sovereign
/ public authority provides a service, which
is not in the nature of statutory activity and
the same is undertaken for a consideration
(not a statutory fee), then in such cases, service
tax would be leviable as long as the activity
undertaken falls within the scope of a taxable
service as defined. |
| 999.02 / 23.08.07 |
Department of Posts provides a number of
services. What is the status of those
services for the purpose of levy of service tax? |
(i) Following services provided by Department
of Posts are not liable to service tax.
Basic mail services known as postal services
such as post card, inland letter, book post,
registered post provided exclusively by the
Department of Posts to meet the universal
postal obligations. Transfer of money
through money orders, operation of savings
accounts, issue of postal orders, pension
payments and other such services.
(ii) In addition to the services mentioned in
(i) above, Department of Posts also provides
a number of services such as courier services
(Speed Post), insurance services (Postal Life
Insurance), agency or intermediary
services on commission basis (distribution of
mutual funds, bonds, passport applications,
collection of telephone and electricity bills),
which are also provided by other commercial
organizations. Such services are liable to service
tax under appropriate taxable services. |
| 999.03 /23.08.07 |
A taxable service provider outsources a
part of the work by engaging another
service provider, generally known as sub-
contractor. Service tax is paid by the
service provider for the total work. In such
cases, whether service tax is liable to be
paid by the service provider known as sub
-contractor who undertakes only part of the whole work. |
A sub-contractor is essentially a taxable
service provider. The fact that services
provided by such sub-contractors are used by
the main service provider for completion of his
work does not in any way alter the fact of
provision of taxable service by the sub-
contractor.
Services provided by sub-contractors are in
the nature of input services. Service tax is,
therefore, leviable on any taxable
services provided, whether or not the services are
provided by a person in his capacity as a sub-
contractor and whether or not such services
are used as input services. The fact that
a given taxable service is intended for use
as an input service by another service provider
does not alter the taxability of the service provided. |