5th Knowledge Master Class

1. Presents
5th Knowledge Master Class
On
“Service Tax Law Simplified”
Conducted by
Dr. Sanjiv Agarwal
FCA, FCS
Wednesday,
20th March, 2013
Gurgaon © Dr. Sanjiv Agarwal
1

2. SESSION – III
Service Tax
Negative list of
services, Reverse charge and
Abatements
2

3. This Presentation Covers –
 What is Negative List
 Sectors in Negative List
 Analysis of Negative list of Services
 Reverse charge including partial reverse charge
 Abatements in Service Tax
3

4. Services on which no Service Tax shall be payable comprise of :
• Service which are specifically excluded from the scope of
definition of service itself u/s 65(44).
• 17 broad services specified in the negative list of services
u/s 66D.
• Services which are exempt from levy of Service Tax under N.
No. 25/2012-ST dated 20.06.2012.
• Specified services otherwise exempt under specific
notifications.
• Activities where service provider and service receiver are in
non –taxable territory
4

5. What is Negative List
• Defined in new section 66D
• Section 66D specifies seventeen 17 broad categories of services.
• Effective from 1-7-2012
• If an activity meets the characteristics of ‘ service ‘, it is taxable unless
specified in Negative List.
 Based on socio-economic–tax criterion drawn from seven sectors, viz.
financial sector, transportation , construction & real
estate, education, health care, Government services
5

6. Services by Government or a local authority excluding the following
services to the extent they are not covered elsewhere
• Services by the Department of Posts by way of speed post, express
parcel post, life insurance and agency services provided to a person
other than Government;
• Services in relation to an aircraft or a vessel, inside or outside the
precincts of a port or an airport;
• Transport of goods or passengers; or
• Support services provided to business entities
contd…..
6

7. • Services by government as sovereign functions (grant of
licensing rights or government audit, passport etc.)
• Excludes corporations formed under Central Acts or State
Acts or various Government companies registered under
Companies Act, 1956 or autonomous institutions set up by
a Special Acts
• Government Department needs to be registered and to pay
tax on support services of
 Renting of immovable properties
 Speed post, express parcel, life insurance.
 Transport of goods and/ or passengers
 Services in relation to vessel or aircraft
contd…..
7

8. • For other services, Government not liable to pay
service tax as tax paid by service recipient in reverse
charge (N. No. 30)
Business Entity
• Any person ordinarily carried out activities relating to
business / commerce/ profession /industry
8

9. “Support services" means
 infrastructural,
 operational,
 administrative,
 logistic,
 marketing or
 any other support of any kind comprising functions that
entities carry out in ordinary course of operations themselves
but may obtain as services by outsourcing from others for any
reason whatsoever
 shall include advertisement and promotion, construction or
works contract, renting of immovable
property, security, testing and analysis;
• Services provided by Government Security agencies are covered
under support service - under reverse charge, Service Receiver is
liable to tax.
9

10. • All services provided by RBI are in Negative List
• Service Provided to RBI is taxable unless covered
in negative list.
• Service provided by banks to RBI taxable unless
covered in Negative List or exempted services
10

11. • Services by diplomatic mission of any country located in
India
• Does not cover services provided by any office or
establishment of an International organization (Section 3
of United Nation Privileges & Immunities Act ,1947)
• Example- UNESCO, UNICEF, IMF, IBRD etc.
• Notification No. 27/2012-ST dated 20.6.2012 conditionally
exempts service provided by any person
 for the official use of a provision of a foreign diplomatic mission or
consular post in India
 for personal use or use of the family member of diplomatic agents or
career consular officers posted in India
11

12. services relating to agriculture by way of—
(i) agricultural operations directly related to production of any agricultural
produce including cultivation, harvesting, threshing, plant protection
or seed testing;
(ii) supply of farm labour;
(iii) processes carried out at an agricultural farm including tending,
pruning, cutting, harvesting, drying, cleaning, trimming, sun drying,
fumigating, curing, sorting, grading, cooling or bulk packaging and
such like operations which do not alter the essential characteristics of
agricultural produce but make it only marketable for the primary
market;
(iv) renting or leasing of agro machinery or vacant land with or without a
structure incidental to its use;
(v) loading, unloading, packing, storage or warehousing of agricultural
produce;
(vi) agricultural extension services;
(vii)services by any Agricultural Produce Marketing Committee or Board or
services provided by a commission agent for sale or purchase of
agricultural produce;
contd…
12

13. Agriculture -Section 65 B(3)
Cultivation of plants and rearing of all life-forms of animals
except the rearing of horses, for food, fiber, fuel, raw
material or other similar products
Agriculture Produce -Section 65B(5)
any produce of agriculture on which either no further
processing is done or such processing is done as is usually
done by a cultivator or producer which does not alter its
essential characteristics but makes it marketable for
primary market (E.g. Plantation crops like rubber, tea or
coffee but does not include potato chips or tomato
ketchup)
Scope of testing to include all types of testing, not just seeds
(After 2013 enactment )
13

14. • Trading of goods is not a taxable service, it being a sale and
not a service.
• If a transaction is a sale, it is not a service and vice versa
• Transfer of title in goods is crucial
• Activities of a commission agent / clearing and forwarding
agent who sells goods on behalf of another for a
commission are not trading of goods (Title of goods does
not pass)
• Forward contracts are in the nature of trading of goods.
• Future contracts are not trading of goods
contd …….
14

15. Goods - Section 65B(25)
“goods" means
• every kind of movable property
• other than actionable claim, and
• money
• includes securities, growing crops, grass, and
things attached to or forming part of the land
which are agreed to be severed before sale or
under the contract of sale
15

16.  “process amounting to manufacture or production of goods" means a process
on which duties of excise are leviable under section 3 of the Central Excise
Act, 1944 or the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 or
any process amounting to manufacture of alcoholic liquors for human
consumption, opium, Indian hemp and other narcotic drugs and narcotics on
which duties of excise are leviable under any State Act for the time being in
force.
 Covers manufacturing activity carried out on contract or job work basis where
 Transfer of title of goods is not involved
 Duties of excise are leviable on such process under the respective Acts
 After 2013 enactment , will cover perfumery, cosmetics etc.
16

17. What is Excisable Goods
 “excisable goods” means goods specified in the First Schedule
and the Second Schedule to the Central Excise Tariff Act, 1985
as being subject to a duty of excise and includes salt
 Mobility and marketability are essential conditions
 Goods includes any article, material or substance which is
capable of being bought and sold for a consideration and such
goods shall be deemed to be marketable.
17

18. Exemption to Service - Clause 30 (N. No. 25/2012-ST)
Carrying out an intermediate production process as job work in relation
to -
(a) agriculture, printing or textile processing;
(b) cut and polished diamonds and gemstones; or plain and studded jewellery of
gold and other precious metals, falling under Chapter 71 of the Central Excise
Tariff Act ,1985 (5 of 1986)
(c) any goods on which appropriate duty is payable by the principal manufacturer
or
(d) processes of electroplating, zinc plating, anodizing, heat treatment, powder
coating, painting including spray painting or auto black, during the course of
manufacture of parts of cycles or sewing machines upto an aggregate value of
taxable service of the specified processes of one hundred and fifty lakh rupees in
a financial year subject to the condition that such aggregate value had not
exceeded one hundred and fifty lakh rupees during the preceding financial year
18

19. Selling of space or time slots for advertisements other than
advertisements broadcast by radio or television
This entry in negative list should qualify the following tests –
• involves selling of space (in case of print media)
• involves selling of time slots ( in case of electronic media)
• purpose of selling time slots / space to be for advertisements
(publicity / sales promotion, awareness etc.)
• excludes broadcast by radio or television ( i.e. broadcast will be
taxable)
contd …….
19

20. Taxable Non-taxable
Sale of space or time for Sale of space for advertisement in
advertisement to be broadcast on print media
radio or television
Sale of time slot by a broadcasting Sale of space for advertisement in bill
organization boards, public places (including
stadia), buildings, conveyances, cell
phones, automated teller machines,
internet
Aerial advertising
Presentation made in person
20

21. Not covered in Negative List Covered In Negative List
Printing & Publishing of yellow pages, Spaces allotted in buses and public
business directory and trade catalogues transport system public transport system
etc. to run display of advertisement
Advertisement services to Government Private circulation of magazines / journals
departments
Purchase of time slots from broadcaster Telephone directories
and sold to advertising agency
Preparing advertisement for display Clubs, associations, professional bodies
during a movie in theatre etc. member's list / directories
Services provided by advertisement Internal directories / business information
agencies in relation to preparation of
advertisement
Commission received by advertisement
agencies from broadcasting or publishing
companies
21

22. Advertisement means
• any form of presentation for promotion of,
• or bringing awareness about,
• any event,
• idea,
• immovable property,
• person, service,
• goods or actionable claim through
• newspaper, television, radio or any other means
• but does not include any presentation made in person;
• Services provided by advertisement agencies relating to preparation
/ designing etc of advertisements are taxable.
• Print media includes newspaper and books.
22

23. • Only covers toll charges for access to road and bridge
• Includes National highways or state highways
• Toll on other roads not in negative list
• Collection charges or service charges paid to any toll
collection agency are not covered under negative list
• Does not include services used for providing such service
23

24. Betting or Gambling means
• putting on stake something of value,
• particularly money,
• with consciousness of risk and hope of gain on the outcome of a game
or a contest,
• whose result may be determined by chance or accident, or on the
likelihood of anything occurring or not occurring
• Betting is a form of wagering contract in which money or money’s worth is
made payable by the parties on the result of an uncertain event, usually a
game or sport
• Gambling means playing game of chance for money or risky action
undertaken with the hope of success
• Lottery is a game of chance (e.g. lottery, bingo, lotto etc.) which may
include online games
contd …….
24

25. • Auxiliary services for organizing or promoting betting or
gambling events are not covered in negative list
• State subject covered in list II
• Actionable claim
• In Union of India & Others v. Martin Lottery Agencies Ltd
(2009) 14 STR 593 (Supreme Court), it was held that service tax
can not be levied on sale of lottery ticket
• In Martin Lottery Agencies Ltd. v. Union of India (2007) 8 STR
561 (Sikkim), it was held that petitioner was not rendering
services in relation to promotion of client’s goods and service
tax liability did not arise
25

26. ‘Entertainment event’ if it is intended (may not
necessarily provide) to provide any one or more of
the following to the recipients / viewers / audience
• recreation
• pastime
• fun , or
• enjoyment
contd …….
26

27. This could be by way of –
• exhibition of cinematographic film
• circus
• concerts
• sporting events
• pageants
• award functions
• dance performance
• musical performance
• theatrical performances – drama, ballets or any such
event / programme.
contd …….
27

28. Amusement facility means
• a facility where fun
• recreation is provided by means of rides
• gaming devices
• bowling alleys in amusement parks
• amusement arcades
• water parks
• theme parks
• such other places
• but does not include a place within such facility where
other services are provided
contd …….
28

29. • Amusement means
entertainment, diversion, pastime, sport etc.
• Theatrical performances need not be performed in
theatre
• Standalone amusement ride in a mall – fun or recreation by
means of ride – covered under amusement – excluded
• Membership of club which provides amusement facilities -
excluded
• Event manager for organizing an entertainment event or
entertainment is not covered in this category
29

30. • Provided by Electricity Transmission or
Distribution utility
• Covers both –
• Transmission
• Distribution
• Installation of gensets or similar equipment by
private contractor for distribution - taxable
• Charges collected by developer or a housing
society for distribution of electricity within a
residential complex - taxable but excluded if it acts
as a licensed authority
30

31. • Service by way of -
i. Pre-school education and education up to higher
secondary school or equivalent
ii. Education as a part of a prescribed curriculum for
obtaining a qualification recognized by law
iii. Education as a part of an approved vocational education
course
• Conduct of degree courses by colleges, universities
or institutions which lead to grant of
qualifications recognized by law
contd …….
31

32. Approved vocational education course
 a course run by an industrial training institute or an industrial training
centre affiliated to the National / State Council for Vocational Training,
offering courses in designated trades as notified under the Apprentices Act,
1961 , or
 a Modular Employable Skill Course, approved by the National Council of
Vocational Training, run by a person registered with the Directorate
General of Employment and Training, Ministry of Labour and
Employment, Government of India, or
 a course run by an institute affiliated to the National Skill Development
Corporation set up by the Government of India
to be contd …….
32

33. • Education upto higher secondary school or equivalent are
in negative list.
• Services provided to or by an educational institution for
Auxiliary educational services and renting of immovable
property – exempted under mega notification
Negative list will not include –
• Private tuitions
• Education as a part of prescribed curriculum for
obtaining qualification recognized by law of a foreign
country
• Services provided to educational institutions
• Placement services
contd …….
33

34. Education related services not in negative list but exempt
from tax under Notification No. 25/2012-ST dated
20.06.2012
• Transportation of students to / from institutions
• Provision of mid-day meal in schools
• Admission related services to educational institutes where
education services are exempt.
• Coaching / training in recreational activities of arts, culture
or sports.
34

35. Exemption upto 31.03.2013 –
Service Provider Service Receiver Taxability
Educational Institution Educational Institution Exempt
Educational Institution Non Educational Institution Exempt
Non Educational Institution Educational Institution Exempt
Non Educational Institution Non Educational Institution Taxable
Exemption w.e.f. 01.04.2013 -
Educational Institution Educational Institution Exempt
Educational Institution Non Educational Institution Taxable
Non Educational Institution Educational Institution Exempt
Non Educational Institution Non Educational Institution Taxable
35

36. Renting coves all types of arrangements in relation to
immovable property with or without its transfer of
possession or control and whether wholly or partly. It
would cover / include –
• allowing
• permitting
• granting access / entry / occupation
• use of facility
• letting
• leasing
• licensing, or
• other similar arrangements
(such as right to use, sub-lease, space sharing etc.)
contd …….
36

37. Renting of certain kinds of property already covered in
the negative list
• renting of vacant land, with or without a structure
incidental to its use, relating to agriculture.
• renting of residential dwelling for use as residence
• renting out of any property by Reserve Bank of India
• renting out of any property by a Government or a local
authority to non-business entity
contd …….
37

38. • Residential dwelling not defined but includes residential
accommodation
• Does not include hotel, motel, inn, guest house, camp
site, lodge, house boat or other place meant temporary stay
• Residential dwelling used partly as a residence and partly for
non residential purpose- treated as bundled service
• Residential unit – independent residential unit with specific
facilities for living, cooking and sanitation
contd …….
38

39. Services by way of—
(i) extending deposits, loans or advances in so far as the
consideration is represented by
way of interest or discount;
(ii) inter se sale or purchase of foreign currency amongst
banks or authorised dealers of foreign exchange or amongst
banks and such dealers;
contd …….
39

40. • Transactions in money outside the ambit of ‘service’
• Any activity related to a transaction in money by way of its
use or conversion by cash or by any other mode, from one
form , currency or denomination to another form, currency
or denomination would not be treated as a transaction in
money if a separate consideration is charged for such an
activity
• Service tax levied on service charges for transactions in
money including of charges for making of drafts, letter of
credits issuance charges, service charges relating to
issuance of CDs/ CPs etc
• Interest rate swaps and foreign exchange swaps are
excluded being securities.
contd …….
40

41. • Only interest and discount are in negative list
• Interest on
 Money borrowed
 Debt incurred
 Deposit
 Claim / obligation/ similar right
• Service charge / fee/ commission not covered (e.g. pre
payment fee, late fee, cheque bounce charges)
• interest on credit facility not utilized (commitment charges
) not covered in negative list
• Bill discounting – only discount covered
contd …….
41

42. • Any charges over and above interest/ discount taxable
• Purchase/ sale of foreign currency between banks and
authorized dealers under negative list
• Examples of services in negative list-
 Fixed deposits or saving deposits or any other such deposits in a
bank for which return is received by way of interest
 Providing a loan or over draft facility for in consideration for
payment of interest
 Mortgages or loans with a collateral security to the extent that the
consideration for advancing such loans or advances are represented
by way of interest
 Corporate deposits to the extent that the consideration for
advancing such loans or advances are represented by way of interest
or discount
42

43. Services by-
• a stage carriage;
• railways in a class other than
(i) first class; or
(ii) an AC coach; ( exempt upto 30.9.2012)
• metro, monorail or tramway;
• inland waterways;
• public transport, other than predominantly for tourism
purpose, in a vessel, between places located in India;
and
• metered cabs, radio taxis or auto rickshaws.
contd …….
43

44. Covered under negative list Not Covered under negative list
Motor vehicles on hire to state Motor vehicles to state transport
transport undertaking (more taken undertaking (upto 12 passengers)
12 passengers)
Exemption to Transport of No exemption for Tourism,
passengers by a contract carriage conducted tours, chartered or hire
44

45. services provided in relation to transportation of
goods is specified in the negative list
• by road except the services of
(i) a goods transportation agency or
(ii) a courier agency
• by aircraft or vessel from a place outside India up to the
customs station of clearance in India; or
• by inland waterways (but agents covered)
contd …….
45

46. Services provided by GTA taxable except under
separate exemption available for
• fruits, vegetables, eggs, milk, food grains or pulses in a goods
carriage / Agricultural produce
• goods where gross amount charged on a consignment
transported in a single goods carriage does not exceed one
thousand five hundred rupees; or
• goods where gross amount charged for transportation of all such
goods for a single consignee in the goods carriage does not
exceed rupees seven hundred fifty.
• Foodstuff excluding alcoholic beverages
• Chemical fertilizers and oil cakes / Newspapers / relief material
/ defence items
• Courier services – Express cargo service, angadia – taxable
contd …….
46

47. • Funeral
• Burial
• Crematorium
• Mortuary
• Transportation of deceased
47

48. Changes in Reverse charges
 Authority for reverse charge u/s 68(2) of Finance Act, 2012
 Person liable to pay tax – Rule 2(1)(d) of Service Tax Rules, 1994
 W.e.f. 1.7.2012, a new scheme of taxation is applicable whereby the
liability of payment of service tax shall be both on the service
provider and the service recipient (Notification No. 30/2012-ST,
dated 20.6.2012 )
 The extent to which tax liability has to be discharged by the service
receiver specified in the notification.
48

49.  Credit of tax paid can be availed by service
recipient if it is input service
 The credit of tax paid by the service recipient
under partial reverse charge would be available
on the basis on the tax payment challan (but
invoice required)
 Service provider under RCM may claim refund
of tax paid under rule 5(b) of CCR, 2004
49

50. Under Partial Reverse Charge (Proportional)
 Renting of motor vehicles
 Manpower supply & security services
 Works contracts
Under Full Reverse Charge (100%)
 Insurance related services by agents
 goods transportation by road
 sponsorship
 arbitral tribunals
 legal services
 company director's services
 services provided by Government / local authority excluding
specified services
 services provided by persons located in non-taxable territory to 50
persons located in taxable territory.

51.  Governed by Notification No. 30/2012-ST dated 20.06.2012 w.e.f.
1.7.2012
 Liabilities of both the service provider and service receiver are
independent of each other
 Reverse charge will not apply where the service receiver is
located in non-taxable territory
 For three specified services provided by business entities being
company, society, cooperative society, trust etc, reverse charge
will not apply.
 Reverse charge will also not apply where the service recipient is
any person or business entity not being a body corporate in case
of three specified services
 Small scale benefit is available only to service provider (not to
service receiver), if entitled
51

52.  Service receiver under reverse charge cannot avail
exemption of Rs. 10 lakh under Notification No. 33/2012-ST
dated 20.06.2012
 Valuation of services by services provider and service
receiver can be on different principles, if permitted by law
(e.g. works contract - Refer Notification No. 30/2012-
ST, explanation II)
 Liability to pay Service Tax for ongoing contracts will be as
per Point of Taxation Rules, 2011
 Reverse charge shall not be applicable if provider of service
was liable before 1.7.2012
 Service Tax will not be payable by service receiver under
reverse charge, if service was provided prior to
1.7.2012, even if payment is made after 30.06.2012
52

53.  In case of proportional reverse charge (manpower supply &
security, works contract and motor vehicle hire to carry
passengers), it is advisable that service provider should
charge Service Tax only on his portion of Service Tax in the
invoice and mention that Service Tax on balance amount is
payable by service receiver.
 It is the statutory obligation on the service recipient to pay
Service Tax, whether under full or proportional reverse
charge
 Service Tax under reverse charge has to be paid by cash vide
GAR Challan No. 7 and it cannot be paid by way of
utilization of Cenvat Credit.
53

54.  In case of renting of motor vehicles to carry passengers where
abatement is also available, reverse charge basis is proportional
depending upon the abatement on the condition that no Cenvat
Credit has been availed. The service provider should provide a
certificate, either in the invoice itself or separately.
 In case of renting of motor vehicle to carry passengers, reverse
charge applies only where the motor vehicle is provided with
driver and service receiver is not engaged in same business.
 In case of director's services, the service provider should not be
employed (whole time) director. Employees are not covered
under the scope of Service Tax.
54

55.  In respect of manpower supply and security services, works contract services
and renting of motor vehicles to carry passenger, reverse charge shall be
applicable only when following two conditions are satisfied –
 service receiver is a business entity registered as a body corporate, and
 service provider is any one of the following entities –
 Individual
 Hindu undivided family (HUF)
 Firm (including limited liability partnerships)
 Association of persons
If both the above conditions are not satisfied in respect of these three services,
Service Tax shall be payable by the service provider in ordinary course.
 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
55

56. Service Provider Service Receiver
Individual Advocate / Firm / LLP **Business entity with turnover > Rs 10
lakhs in preceding financial year
Arbitral Tribunal **Business entity with turnover > Rs 10
lakh in previous financial year
** Business entity may be an individual also
56

57. Sr. No Description of Service Service provider Service receiver
1. Services provided by an insurance Nil 100%
agent to any person carrying on
insurance business
2. Services provided by a goods Nil 100%
transport agency in respect
of transportation of goods by road
3. Services provided by way of Nil 100%
sponsorship
57

58. Sr.No Description of Service Service provider Service receiver
4. Services provided by an arbitral tribunal Nil 100%
5. Services provided by individual advocate or Nil 100%
a firm of advocates by way of legal services
5A. in respect of services provided or agreed Nil 100%
to be provided by a director of a company
to the said company ( w.e.f 7.08.2012)
6. Services provided by Government or local Nil 100%
authority by way of support services
excluding,-
(1) renting of immovable property,
(2) postal services
(3) transport of goods / passengers
(4) air craft or vessel
58

59. Sr.No Description of Service Service provider Service receiver
7. Hiring of Motor Vehicle Nil 100 %
(a) renting of a motor vehicle
designed to carry passengers on
abated value to any person not
engaged in the similar line of
business 60% 40%
(b) renting of a motor vehicle
designed to carry passengers on non
abated value to any person who is
not engaged in the similar line of
business
8. Services provided by way of supply 25% 75 %
of manpower for any purpose or
security services ( w.e.f 07.08.2012)
59

60. Sr.No Description of Service Service provider Service receiver
9. Services provided in service portion
in execution of works contract 50% 50%
10. Services provided by any person who
is located in a non-taxable territory Nil 100%
and received by any person located in
the taxable territory
60

61. Service Provider Service Receiver Service Tax Payable by
Individual /HUF/ Business entity – Joint
Partnership firm body corporate
/AOP
Individual /HUF/ Individual /HUF/ 100 % by service
Partnership firm partnership firm provider
/AOP /AOP
Business entity – Individual /HUF/ 100 % by service
Body Corporate / Partnership firm provider
Company /AOP
Business entity – Business entity – 100 % by service
Body Corporate Body Corporate provider
61

62. • Besides full exemption to 39 categories of services vide
Notification No. 25/2012-ST dated 20.06.2012
• Earlier there were a number of exemption notifications that
prescribed the abatements for various categories of services
(including 1/2006)
• Abatements merged into a single Notification No 26/2012 - ST
dated 20/6/12
• Valuation rules contain abatement for Works Contract and
Supply of Food Services
62

63. Sl. No. Description of taxable service Taxable Conditions
value(%)
1 Financial leasing services including 10 Nil
equipment leasing and hire purchase
2 Transport of goods by rail (exempted upto 30 Nil
30.9.2012)
3 Transport of passengers, with or without 30 Nil
accompanied belongings by rail ( exempted
upto 30.9.2012)
4 Supply of food or any other article of 70 CENVAT credit on any
human consumption or any drink, in a goods classifiable under
premises, including hotel, convention chapter 1 to 22 of the
center, club, pandal, shamiana or any place Central Excise Tariff Act,
specially arranged for organizing a function 1985 has not been taken
under the provisions of the
63
CENVAT Credit Rules, 2004.

64. Sl. Description of taxable service Taxable Conditions
No value(%)
5 Transport of passengers by air, with 40 CENVAT credit on inputs or capital goods,
or without accompanied belongings used for providing the taxable service, has
not been taken under the provisions of the
CENVAT Credit Rules, 2004.
6 Renting of hotels, inns, guest 60 Same as above.
houses, clubs, campsites or other
commercial places meant for
residential or lodging purposes
7 Transport of goods by road by 25 CENVAT credit on inputs, capital goods
Goods Transport Agency and input services, used for providing the
taxable service, has not been taken under
the provisions of the CENVAT Credit
Rules, 2004.
8 Services provided in relation to chit 70 Same as above.
64

65. Sl. Description of taxable service Taxable Conditions
No value(%)
9 Renting of any motor vehicle 40 Same as above.
designed to carry passengers
10 Transport of goods in a vessel from 50 Same as above.
one port to another
11 Tour operator services 25 (i) CENVAT credit on inputs, capital
(i) provided by a tour operator in relation goods and input services, used for
to a package tour providing the taxable service, has not
been taken under the provisions of the
CENVAT Credit Rules, 2004.
(ii) The bill issued for this purpose
indicates that it is inclusive of charges
for such a tour.
65

66. Sl. No Description of taxable Taxable Conditions
service value(%)
(ii) provided by a tour operator in 10 (i) CENVAT credit on inputs, capital goods
relation to a tour, solely arranging and input services, used for providing the
or booking accommodation taxable service, has not been taken under
the provisions of the CENVAT Credit Rules,
2004.
(ii) The invoice, bill or challan issued
indicates that it is towards the charges for
such accommodation.
(iii) This exemption shall not apply in such
cases where the invoice, bill or challan
issued by the tour operator, in relation to a
tour, only includes the service charges for
arranging or booking accommodation for
any person and does not include the cost
of such accommodation.
66

67. Sl. No Description of taxable service Taxable Conditions
value(%)
(iii) Services, other than 40 (i) CENVAT credit on inputs, capital
services specified above in (i) goods and input services, used for
or (ii) providing the taxable service, has not
been taken under the provisions of the
CENVAT Credit Rules, 2004.
(ii) The bill issued indicates that the
amount charged in the bill is the gross
amount charged for such a tour.
67

68. Sl. No Description of taxable service Taxable Conditions
value(%)
12. Construction of a complex, 25 (upto (i) CENVAT credit on inputs
building, civil structure or a 28.02.2013) used for providing the taxable
part thereof, intended for a service has not been taken
sale to a buyer, wholly or under the provisions of the
partly except where entire CENVAT Credit Rules, 2004.
consideration is received after
issuance of completion (ii) The value of land is
certificate by the competent included in the amount
authority - charged from the
service recipient.
(i) For residential unit having 25 ( w.e.f.
carpet area upto 2000 sq. 1.03.2013)
ft. or where the amount
charged is less than
rupees one crore; 30 ( w.e.f.
1.03.2013)
(ii) For other than the (i) above
68

69. Draft Circular F. No.354 /146/2012 – TRU dated 27.09.2012 (Air Travel)
Charges which are directly related to journey such as re-confirmation fee, date
change fee, seat upgrade fee, preferred seat charges etc. will be covered by
abatement
Charges which are not related to journey such as meal charges, escort charges
etc. will not be covered by abatement.
Excess baggage charge may be leviable to service tax without abatement
Pet charges may be leviable to service tax without abatement
For cancellation charges billed separately as administrative charge, abatement
will not be applicable
25