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OVERVIEW of GOODS AND SERVICES TAX

INDEX
Chapter Page No

1. Service Tax 1-28

2. Cenvat Credit 29-32

3. Central Excise 33-34

4. Customs + FTP 35-39

5. Common Chapters 40-40


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Updates in Service Tax


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Service Tax Valuation Rules, 2006
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1. Retrospective amendment to Rule 2-A of STVR, 2006 making it applicable to ‘building contracts’ making allowance for deduction of
value of land or undivided share of land
N/N 5/2017-Central Excise (N.T.), Dated: February 2, 2017
Rule 2-A has been retrospectively amended w.e.f. 01.07.2010 to provide for following:
• Under Rule 2A(i), value of land or undivided share of land shall be excluded and
• In respect of Rule 2A(ii) if the amount charged includes value of land or undivided share of land, the value of taxable service shall be 30% of TOTAL AMOUNT CHARGED
(which is exactly the same as specified under abetment Notification no. 26/2012-ST- Entry No 12)
• Note: This amendment in Rule 2-A has been given retrospective effect vide section 94 of Finance Act, 1994 inserted vide Sec 129 of FA, 2017.

Rule 2-A : Determination of value of services involved in the execution of a WORKS CONTRACT.

Subject to the provisions of section 67,


 the value of SERVICE PORTION in the execution of a WORKS CONTRACT (referred to in Sec 66-E (h) of FA, 1994) shall be determined in the
following manner, namely:

(i) Value of service portion in the execution of a works contract shall be equivalent to
the Gross Amount Charged for the works contract
.

less the VALUE of property in


… Goods and
… land or undivided share of land, as the case may be, [Insertion in Rule 2-A (i)]
transferred in the execution of the said works contract.

(1)
(ii) Where the value has not been determined under clause (i),the person liable to pay tax on the service portion involved in the execution of the works contract
shall determine the service tax payable in the following manner, namely:—
In case of- ST shall be payable on
(A) Works contracts entered into for execution of ORIGINAL WORKS, 40% of the Total Amount
Charged for the works contract
.

[Insertion of proviso in Rule 2-A (ii)]


Provided that
… where the amount charged for works contract includes the value of goods as well as land or undivided share of land,
… the service tax shall be payable on 30% of the total amount charged for the works contract.
.
(B) All other works contract including the works contract entered into for: 70% of the Total Amount
(i) Maintenance or Repair or Reconditioning or Restoration or servicing of ANY GOOD Charged for the works contract

(ii) Maintenance, repair, completion and finishing services such as glazing, plastering, floor and wall tiling,
installation of electrical fittings of an immovable property.

Reason of Amendment Crux of Amendment


.

Hon. Delhi High Court in the case of Suresh Kumar Bansal v. Works Contract Works Contract
Union of India dated 03.06.2016 has held that (other than Building Contract) in nature of ‘Building Contract’
• Levy of ST under ‘building contracts’ is constitutionally valid Elements in total amount Material Land
(it is not levy on immovable property and thus, no infringement of charged Labour Material
legislative field reserved for State)
Labour
• Measure of tax : Levy would fail if it does not provide for
mechanism to ascertain the value. Taxability Material – as deemed sale Land- as immovable property
o The provisions of Rule 2A of the Service Tax (Determination of
value) Rules, 2006, as it stood, shall not apply when the Labour – as declared service Material – as deemed sale
consideration for a composite works contract includes the value Labour – as declared service
of land. ST liability Labour component Labour Component
o ST is on value of service. As Rule 2A(i) as well as Rule 2A(ii) do
not provide for exclusion of value of land. Computation
o Machinery provision for exclusion of all components Rate 15% 15%
other than service components was required to be
Value Rule 2-A of STVR, 2006 Rule 2-A of STVR, 2006
provided by way of Act / Rules.
o The abatement notification providing for the same cannot Method-1: Rule 2-A (i) Actual [TAC – Value of goods] [TAC – Value of goods – Value of
substitute the lack of machinery provision to ascertain the value Value immovable property]
of services. Method-2: Rule 2-A (ii) Notional [TAC * 40%] (Being original W/C) [TAC * 30%] (Being original W/C)
.
Value
Amendment in Rule 2-A seeks to cure the defect pointed out by Delhi HC
in case of SURESH KUMAR BANSAL.

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Related Case-law
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SURESH KUMAR BANSAL V. UOI 2016 (DEL.) [Writ Petition]


Facts Assessee = Builder engaged in activity of construction of complex intended for sale.
It enters into agreement to sell flats in unfinished stage itself. For that purpose, it entered into a composite agreement for sale of an unfinished flat.
• Such activity of construction of complex has been declared as service under ST law.
Sec 66-E (b)
The following shall constitute declared services, namely
(b) CONSTRUCTION of a complex, building, civil structure or a part thereof,
including a complex or building intended for sale to a buyer, wholly or partly, except where the Entire Consideration is received after issuance of
Completion Certificate by the competent authority.

Assessee: Challenge to validity of ST provisions seeking to levy ST on such activity


• State list empowers State legislature to tax immovable property [List II: State List (Entry No 49: Tax on Land & Buildings] ; thus, the levy of service tax on
agreements for purchase of flats was beyond the legislative competence of the Parliament.
• The agreement with the builder was a composite contract for purchase of immovable property and in the absence of specific provisions for ascertaining the
service component in the said agreement, the levy would be beyond the legislative competence of the Parliament.
Revenue:
 Entry No 49 of State (Tax on land and buildings) deals with altogether different aspect. The tax on land or building is charged because such land and/or building
exist. Their existence is taxed and not development activity. Thus, the levy of service tax on agreements for purchase of flats was not beyond the legislative
competence of the Parliament
 Development of a project results in the substantial value addition on bare land and includes various services such as consulting services, engineering services,
management services, architectural services, etc. Since the gross charges include value of land and construction material, only 30% of the Base Selling Price
(BSP) charged by a builder from the ultimate consumer is subjected to levy of service tax.
Issue Whether levy of ST is constitutionally valid?
Held 1) Levy of ST – Constitutionally valid to tax service element in the composite construction contract
2) However, such levy is not sustainable in absence of clear valuation provisions in statute.
Discussion …
1) The contract between a buyer and a builder/promoter/developer in development and sale of a complex is a composite one.
• The arrangement between the buyer and the developer is not for procurement of services simplicitor. Instead, an agreement between a flat buyer and a
builder/developer of a complex - who is developing the complex for sale is, essentially, one of purchase and sale of developed property.
 However, by a legislative fiction, such agreements, which have been entered into prior to completion of the project and/or construction of a unit, are imputed
with a character of a service contract; the works involved in construction of a complex are treated as being carried by the builder on behalf of the buyer.
 However, indisputably the arrangement between the buyer and the builder is a composite one which involves not only the element of services but also goods and
immovable property. It is apparent that service tax cannot be levied on the value of undivided share of land acquired by a buyer of a dwelling unit or on the
value of goods which are incorporated in the project by a developer. Levying a tax on the constituent goods or the land would clearly intrude into the legislative
field reserved for the States under List-II of the Seventh Schedule to the Constitution of India.
 The Court noted that there is no machinery provision for ascertaining the service element involved in the composite contract. In order to sustain the levy of
service tax on services, it is essential that the machinery provisions provide for a mechanism for ascertaining the measure of tax, that is, the value of
services which are charged to service tax.
 For the purposes of ascertaining the value of services, the Central Government has prescribed Service Tax (Determination of Value) Rules 2006 (hereafter referred
to as ‘Valuation Rules’). However, none of the Valuation Rules provides for any machinery for ascertaining the value of services involved in relation to
construction of a complex*.
 Whilst rule 2A of the Valuation Rules provides for mechanism to ascertain the value of services in a composite works contract involving services and
goods, the said Rule does not cater to determination of value of services in case of a composite contract which also involves sale of land. The gross consideration
.
charged by a builder/promoter of a project from a buyer would not only include an element of goods and services, but also the value of undivided share of land
which would be acquired by the buyer.
 In the present case, neither the Act nor the Rules framed therein provide for a machinery provision for excluding all components other than service components
for ascertaining the measure of service tax. The abatement provided by a notification or a circular cannot substitute the lack of statutory machinery
provisions to ascertain the value of services involved in a composite contract.

CRUX:
• Levy of ST under ‘building contracts’ is constitutionally valid (it is not levy on immovable property and thus, no infringement of legislative field reserved for State)
• Measure of tax : Levy would fail as Act/ Rules not providing for mechanism to ascertain the value.
.

.
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Author :
Legislative history of taxation of ‘building contracts’: THE WHOLE STORY:
 The fight started under VAT.
o Department demanded VAT on sale of under-construction flat, treating such contracts as ‘works contract’
o Assessee sought to distinguish ‘building contracts (contract entered into by builder by prospective purchaser of immovable property)’ from ‘works contract (contract entered into by
contractor for construction of immovable property during course of execution of which property in goods involved in such construction gets transferred to the contractee)’.
o VAT levy was upheld by SC in case of K. RAHEJA-SC / LARSON AND TURBO LTD. –-SC.
 ST department religiously followed development in VAT.
o It justified levy of ST on ‘building contracts’ on ground that when VAT is justified on such contract, then ST is also justified. In other words, if building contract can be construed as works
contract for purposes of levy of VAT, then it shall also be considered as works contract for levy of service tax on service portion involved therein.
o HOWEVER, THEY MESSED UP WHOLE ISSUE?
 Execution of works contract has been declared as separate service (vide Sec 66-E (h) of FA, 1994)
 Construction of service in complex intended to be sold has been declared as a separate service (vide Sec 66-E (b) of FA, 1994)
 Rule 2-A of Service Tax Valuation Rules, 2006 is providing for determination of value of service involved in execution of works contract referred to in Sec 66-E (h) of the
FA, 1994. Thus, impliedly, it is not applicable to ‘building contracts (which are also works contract but taxed separately vide Sec 66-E (b) of FA, 1994).
Now, how to handle valuation of such ‘building contracts’?
• CG issued abatement notification [E/N 26/2012]
• Entry No 12 of E/N 26/2012 of such notification provides for valuation in such cases @30% of TOTAL AMOUNT CHARGED FOR CONTRACT (which will be inclusive of land
value).
• The intent seems to provide for value of service element out of total sale value of immovable property (flat).
• However, but then abatement is exemption and not valuation mechanism. Thus, this entry cannot be applied for value determination.
• Disputes rose again.
.
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REVERSE CHARGE
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1. Aggregator: ‘Accommodation Aggregator’ shall not be liable be liable to pay service tax
Rule 2(1)(aa) of Service Tax Rules amended w.e.f. 22-1-2017.
Rule 2(aa): AGGREGATOR
Aggregator means a person, who
… owns and manages a web based APPLICATION SOFTWARE, and
… by means of the application and a communication device, enables a potential customer to connect with persons providing service of a particular
kind under the brand name or trade name of the aggregator.

Provided that
aggregator shall not include such person who enables a potential customer to connect with persons providing services by way of renting
of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes subject to following
conditions, namely:-
(a) the person providing services by way of renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for
residential or lodging purposes has a service tax registration under provision of these rules;
AND
(b) whole of the consideration for services provided by such service provider is received directly by such service provider and no
amount, which forms part of the consideration of services of such service provider, is received by the aggregator directly from either
recipient of the service or his representative.
.
Author:
• Aggregator is not liable in case of booking of hotels if customer makes payment directly to hotel. However, he will be liable to pay service tax on commission received by him from
hotel.
.

2. SP located in non-taxable territory: Service of ocean transportation of goods to recipient located in non-taxable territory
-- Importer made liable to pay ST
Rule 2(1)(d)(EEC) of Service Tax Rules inserted w.e.f. 22-1-2017, further amended w.e.f. 23rd April, 2017
.

In relation to services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable
territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India,
… the person in India who complies with sections 29, 30 or 38 read with section 148 of the Customs Act, 1962 with respect to such goods
shall be the person liable liable to pay ST.
… the importer as defined in Sec 2(26) of Customs Act, 1962 of such goods shall be the person liable to pay ST.

- Separate detailed discussion [Ocean Transport – import Freight]

3. OIDAR Services (Service of online information and database access or retrieval services)
Rule 2(1)(d) of Service Tax Rules amended to the following effect:
• B2C supplies of OIDAR services to NOR (Non-assessee online recipient) by service provider located in Non-TT has been put under forward
charge (i.e., now such SP in Non-TT shall be liable to pay ST)

- Separate detailed discussion [OIDAR Services]


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EXEMPTIONS
Mega Exemption – 25/2012
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1. Exemption to services provided 'to' an educational institution restricted, w.e.f 01.04.2017, to institution providing pre-school and higher
secondary school education or equivalent
Entry No. 9 amended we.f. 8th March, 2017
Entry No 9 Services by / to "Specified Educational Institutions"
Services provided
.

(a) "by" an EDUCATIONAL INSTITUTION* "to" its Students, Faculty, and Staff,

(b) (any person) "to" an EDUCATIONAL INSTITUTION*, by way of

(i) TRANSPORTATION of Students, Faculty, and Staff;


(ii) CATERING (Hkkstu izcU/k) Including, mid-day meals scheme sponsored by the Government;
(iii) SECURITY (lqj{kk) Services performed in such educational institution;
CLEANING or HOUSE KEEPING
(iv) Services relating to ADMISSION TO (nkf[kyk), or CONDUCT OF (lapkyu) EXAMINATION by, such institution.

Provided that nothing contained in clause (b) of this entry shall apply to an educational institution other than an institution providing
services by way of pre-school education and education up to higher secondary school or equivalent; (… 1st April, 2017)

EDUCATIONAL INSTITUTION [Para 2(oa)]:


Educational institution means an institution providing services by way of :
(i) PRE-SCHOOL EDUCATION and
Education Up To Higher Secondary School or equivalent;

(ii) Education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force;
.
(iii) Education as a part of an approved VOCATIONAL EDUCATION COURSE* (O;olkf;d 'kS{kf.kd ikB~;Øe)*;
.
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APPROVED Vocational Education Course [Para 2(ba)]:


Approved VEC means
i) A COURSE run by an Industrial Training Institute (ITI) or an Industrial Training Centre (ITC) affiliated to
… National Council for Vocational Training or
… State Council for Vocational Training
offering courses in designated trades notified under the Apprentices Act, 1961 or

ii) a Modular Employable Skill Course (MESC), approved by the National Council of Vocational Training, run by a person registered with the
Directorate General of Employment and Training, Union Ministry of Labour and Employment;

APPROVED Vocational Education Course


Course Running Institute Affiliation
Courses in designated trades (as notified under Apprentices Act, 1961) ITI (industrial Training Institute) National Council for Vocational Training or
[e.g., ITC (industrial Training Centre) State Council for Vocational Training
• Sheet Metal Worker, Welder, Motor Vehicle Body Builder
• Electrician, Lineman, Wireman
• Carpenter, Plumber, Mason, Sports goods maker
• Tool & Die Maker
• Refrigeration & AC Mechanic]

Modular Employable Skill Course (MESC) Person registered with DG (Employment & Training) -----------
[These are basically short term courses decided in consultation with
Industry – flexible delivery mechanism (part time / weekends/ full time)]
.
.

..
Author: Applicability of exemptions
Educational Institution Exemption – applicable or not Remarks
• EI as defined in Para 2(oa) .
• Category (i) Institutes • Specified Output services exempted
• Specified input services exempted
Category (ii) Institutes • Specified Output services exempted
• Specified input services not exempted
Category (iii) Institutes • Specified Output services exempted
• Specified input services not exempted.
.
.

2. Exemption extended to NON-RESIDENTIAL 2 Year full time PGPM (Post Graduate Programmes in Management) of IIM
Entry No. 9-B amended w.e.f. 2nd February, 2017
Entry No 9-B Specified Educational programmes of IIMs

Services provided by the Indian Institutes of Management (IIM), as per the guidelines of the CG, to their students, by way of the
following educational programmes, except Executive Development Programme,—
.

(a) 2- Year full time residential Post Graduate Programmes in Management for the Post Graduate Diploma in Management, to
which admissions are made on the basis of Common Admission Test (CAT), conducted by IIM;
(… 2nd Feb, 2017)
(b) Fellow Programme in Management;

(c) 5- Year Integrated Programme in Management.


.

..
Author: Services provided by IIMs by way of two year full time residential Post Graduate Program in Management for the post graduate diploma in Management (PGDM) to which
admissions are through Common Admission Test (CAT) by IIM were being exempted earlier. This entry has been amended omitting the word "residential" from the said
exemption and grant the benefit of exemption to all the apprentices whether staying off campus or on campus.
.

.
3. Services provided to Government for transportation of passengers to and from Regional Connectivity Scheme Airport
Entry No. 23-A inserted we.f. 2nd February, 2017
Entry No 23-A Services provided to Government for transportation of passengers to and from RCS Airport

Services provided to the Government by way of transport of passengers, with or without accompanied belongings, by air, embarking from or
terminating at a Regional Connectivity Scheme Airport, against consideration in the form of Viability Gap Funding (VGF):
.

Provided that nothing contained in this entry shall apply on or after the expiry of a period of one year from the date of commencement of
operations of the Regional Connectivity Scheme Airport as notified by the Ministry of Civil Aviation;
.
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Author:
• Viability Gap Funding –VGF:
The main constraint in India’s infrastructure sector is the lack of source for finance. More than the overall difficulty of securing funds, some projects may not be financially
viable though they are economically justified and necessary. This is the nature of several infrastructural projects which are long term and development oriented.
For the successful completion of such projects, the government has designed Viability Gap Funding (VGF). Viability Gap Finance means a grant to support projects
that are economically justified but not financially viable.

• Regional Connectivity Scheme (RCS):


o Air transport is a quite critical imperative for the Government while drifting the overall economic growth of the country. To ensure this, a regional air connectivity was
desirable from a public policy perspective which may require financial support in the initial periods to trigger participation of players.
o National Civil Aviation Policy (NCAP) has in this regard announced a Regional Connectivity Scheme (RCS) wherein a financial (viability gap funding or VGF) support
shall be provided to the airline operators to meet the gap between the cost of airline operations and expected revenues on such routes.
o Exemption has been granted to these services provided by the selected airline operator under the Regional Connectivity Scheme for a period of one year.

4. Service of life insurance to defence personnel exempt w.e.f. 10-9-2004


Entry No. 26-D inserted w.e.f. 2nd February, 2017
Entry No 26-D Services of life insurance business provided to defence personnels (Army/ Naval / Air Force)

Services of life insurance business provided or agreed to be provided by the Army, Naval and Air Force GROUP INSURANCE FUNDS to
members of the Army, Navy and Air Force, respectively, under the Group Insurance Schemes of the Central Government;

Author: Exemption granted to life insurance services provided or agreed to be provided by Army, Naval and Air Force Group Insurance Funds to the Army, Naval and Air Force
respectively. However, Insurance must have been provided under the Group Insurance Schemes of the Central Government in order to claim the exemption.
.

* Note: This exemption has been given retrospective effect from 10-9-2004 vide section 105 of Finance Act, 1994 inserted vide FA, 2017. Further, refund shall be granted of such service tax collected
during this period (which should not have been collected) provided the application for refund is filed within a period of 6 months from the date on which the Finance Bill, 2017 receives the assent of the
president.

5. Services provided by business facilitator to banks in rural area


Entry No. 29(g) as amended w.e.f. 12 Jan, 2017
Entry No 29. INTERMEDIARY SERVICE + CERTAIN OTHER SERVICES
Services by the following persons in respective capacities –

(g) Business facilitator* or a Business Correspondent* to A Banking Company


… with respect to a Basic Savings Bank Deposit Account* covered by Pradhan
Mantri Jan Dhan Yojana (PMJDY)
… in the banking company's rural area branch,
.

… by way of account opening, cash deposits, cash withdrawals, obtaining e-life


certificate, Aadhaar seeding**;
.

**Author: ‘Seeding is a process whereby UID (Unique Identification Number – Aadhaar) is added to the database of beneficiaries.
.

… with respect to ACCOUNTS in its rural area branch


.
. .

(ga) Any person as an intermediary to a Business facilitator* or


a Business Correspondent* ,
with respect to services mentioned in clause (g);

(gb) Business facilitator* or Business Correspondent* to an Insurance Company in a rural area;


.

Business Facilitator/  "Business Facilitator or Business Correspondent"


Business means an intermediary appointed under business facilitator model or the business correspondent model by a banking company or an insurance company under the
Correspondent guidelines issued by RBI.
[Para 2(g)]
Basic Saving Bank  “Basic Saving Bank Deposit Account (BSBDA)”
Deposit Account means an account opened under the guidelines issued by RBI relating thereto.
.

[Para 2(ga)]
Author:
• The ‘Basic Savings Bank Deposit Account’ should be considered a normal banking service available to all.
• This account shall not have the requirement of any minimum balance.
.

Post amendment in exemption, this definition is no longer required.


.
.

Analysis
Entry No 29(g)
Author: Concept of Business Correspondent and Business Facilitator
• In January 2006, RBI allowed banks to employ two categories of intermediaries - Business Correspondents (BCs) and Business Facilitators (BFs) - to expand their outreach.
Logic: RBI intends to promote FINANCIAL INCLUSION.
• Financial inclusion is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society.
• CG recently announced “Pradhan Mantri Jan Dhan Yojna,” a national financial inclusion mission which aims to provide bank accounts to 7.5 Crores people.

• 2 Models
Business Under the “Business Facilitator” model, banks may use intermediaries, such as, NGOs/Farmers’ Clubs, cooperatives, community based organizations, Post Offices, insurance agents, well-
Facilitator functioning Panchayats, Village Knowledge Centres, Agri Clinics/ Agri Business Centres, Krishi Vigyan Kendras and KVIC/ KVIB units, depending on the comfort level of the bank, for
Model providing facilitation services. Such services may include identification of borrowers and fitment of activities, collection and preliminary processing of loan applications, creating awareness
about savings and other products and education and advice on managing money and debt counselling, processing and submission of applications to banks, promotion and nurturing Self Help
Groups/ Joint Liability Group, post-sanction monitoring, monitoring and handholding of Self Help Groups/ Joint Liability Groups/ Credit Groups/ others; and follow-up for recovery
Business Under the “Business Correspondent” model, NGOs/ MFIs (micro finance institutions) were set up under Societies/ Trust Acts, societies registered under Mutually Aided Cooperative Societies Acts
Correspon or the Cooperative Societies Acts of States, Sec 25 companies, registered NBFCs not accepting public deposits and Post Offices may act as Business Correspondents.
dent Model In addition to activities listed under the Business Facilitator model, the scope of activities to be undertaken by the Business Correspondents will include disbursal of small value credit,
recovery of principal /collection of interest, collection of small value deposits, sale of micro insurance/ mutual fund products/ pension products/ other third party products; and receipt and delivery
of small value remittances/ other payment instruments.

• What is being exempted by Entry no 29(g)


Pre-Amendment:
In order to promote financial inclusion, the CG has exempted services
provided by a business facilitator or a business correspondent to a
banking company with respect to BASIC SAVINGS BANK
DEPOSIT ACCOUNTS covered by Pradhan Mantri Jan DhanYojana
(PMJDY) by way of account opening, cash deposits, cash withdrawals,
obtaining e-life certificates and Aadhar seeding, in the rural area
branches of banking companies, from Service Tax. The services
provided by any person as an intermediary to a business facilitator or a
business correspondent with respect to the above mentioned services,
have also been exempted from ST.
.

Post-Amendment:
In order to promote financial inclusion, the CG has exempted
services provided by a business facilitator or a business
correspondent to a banking company with respect to ANY
ACCOUNTS in rural area branch.
.

6. Services provided from outside India to Government or charitable organizations exempt, except OIDAR service
Service received from service provider in non-taxable territory to person in non-taxable territory exempt, except in case of ocean freight
Entry No. 34 as amended w.e.f. 22 jan, 2017
Entry No 34. SERVICES FROM A PERSON LOCATED IN NON-TAXABLE TERRITORY

Services received from a provider of service located in a non- taxable territory by


(a) Government, A Local Authority, A Governmental authority in relation to any purpose other than commerce, industry or any
.
other business or profession;
or AN INDIVIDUAL

(b) an entity registered u/s 12AA of the Income tax Act, 1961 for the purposes of providing CHARITABLE ACTIVITIES; or

(c) a person located in a Non-Taxable Territory;

Provided that the exemption shall not apply to*


(i) online information and database access or retrieval services (OIDAR Services) received by persons specified in clause (a) or clause (b); or
.

(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India received by
persons specified in clause (c);

OIDAR Services  "Online information database access or retrieval services"


[Para 2(xab)] has the same meaning as assigned to it in Rule 2 (1) (ccd) of the Service Tax Rules, 1994;
.
.

Author:
Service provided by a SP located in Non-TT (USA / J&K) Service Exempt in following cases Exemption shall not be applicable to following services:
(1) SR is located in Non-TT (USA / J&K) : Service exempt in all cases Import freight: Ocean freight

(2) SR is located in TT (anywhere in India except J&K) Service exempt when provided to following SR OIDAR Services
1) SR = Charitable Entity (Reg u/Sec 12-AA of Income Tax)
--- and service is for purposes of providing charitable activities:
2) SR = Government, Local Authority, Governmental Authority / Any individual
-- and service is not for purposes of commerce/industry or business/profession
Illustration:
 Mr X, an individual residing in Delhi, has received interior decoration service from foreign architect in relation to his residential house in Delhi. Is he required to pay ST under reverse charge?
- POPS of interior decoration = Place where immovable property is located = Delhi = TT
- ST leviable. [SP being located outside India, such service will be subject to full reverse charge)
- But, the services have been received for purposes other than in relation to commerce, industry or any other business or profession. Thus, such service stands exempted. – E/N 34 (a)
.

 Mr X, a resident in J&K, is planning to construct a property in Delhi. He has got the architectural drawings made from an architect who is also resident in J&K. Is he liable to pay ST on architect services?
POPS = Delhi (intended location of immovable property) = TT  thus, Service is taxable service (Sec 66-B) , But ST Exempt -- E/N 34 (c)

Author: Impact of Amendments have been discussed separately.


.
7. Service by Acquiring Bank in relation to settlement of amount upto Rs 2000.
Entry No. 64 as inserted w.e.f. 8 Dec, 2016
Entry No 64:.
Services by an acquiring bank*, to any person in relation to settlement of an amount upto Rs 2000 in a single transaction transacted through
credit card, debit card, charge card or other payment card service;
.

Explanation: For the purposes of this entry, "Acquiring Bank" means any banking company, financial institution including non-banking financial
company or any other person, who makes the payment to any person who accepts such card.

Author:
An acquiring bank (also known simply as an acquirer) is a bank or financial institution that
processes credit or debit card payments on behalf of a merchant. The acquirer allows merchants
to accept credit card payments from the card-issuing banks within an association. The best-
known (credit) card associations are Visa, MasterCard, Discover, Indian Rupay, American
Express, Diners Club, Japan Credit Bureau and China Union Pay.

.
Illustration:
Mr A makes purchases of grocery of total value of Rs 1300 from Big Bazaar. He has option to pay
by cash or through card.
• In case, Big Bazzaar aceepts payment by card, it needs to pay charges to ‘acquiring bank’ for
processing/settlement of transaction. Let say, charges are 2% of transaction amount. Thus,
Big Bazaar will be paying Rs 26 plus applicable ST to ‘acquiring bank’.
• To promote digital transaction, ST on such charges has been exempted.
.
.

Other Exemptions: Applicability / inapplicability liked to enactment of FA, 2017


• In Author’s opinion, these shall not be asked in Exams as these amendments are linked to FA, 2017 which is inapplicable to Nov, 2017 Attempt.
• So, Student may either skip these or read it just for sake of knowledge.
.

1 Exemption on upfront amount paid on grant of long-term lease of Industrial Plots – Retrospective exemption & refund
.

E/N 41/2016 Exemption on upfront amount paid on grant of long-term lease of Industrial Plots
Exemption to Taxable service provided by State Government Industrial Development Corporations/ Undertakings to industrial units by way of
granting long term (thirty years, or more) lease of industrial plots
from so much of service tax leviable thereon u/Sec 66-B of FA, 1994, as 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.

Illustration State IDC rented industrial plot to Industrial Unit for period of 50 years
o Consideration: One time upfront payment (salami) of Rs 300 lakhs + Monthly payment of 1,00,000 p.m.
ST Liability:
… One time upfront payment (called salami) shall be exempt from payment of ST
… However, ST shall be payable on subsequently monthly rentals of Rs 1,00,000.
Section 104 of Finance Act, 1994 inserted vide FA, 2017
Author: Previously, the one-time upfront amount (called as premium, salami, cost, price, development charges or by any other name) payable for grant of long-term lease of
Industrial Plots (30 years or more) by State Government industrial development corporations/undertakings to industrial units was exempted with effect from 22nd Sep, 2016.
It has been decided to outspread this benefit with retrospective effect from 1 June, 2007 [Sec 104 of FA, 2017]
st

o Further, refund shall be granted of such service tax collected during this period (which should not have been collected). An application for claim of refund of service tax
shall be made within a period of six months from the date on which the Finance Bill, 2017 receives the assent of the President.
.

2 Exemption to extent of R&D Cess: Now omitted


.

E/N 14/2012 Service involving import of technology – exempt to extent of R&D Cess already paid under R&D Cess Act, 1986
The taxable service involving import of technology, is exempt from so much of ST leviable thereon u/Sec 66-B of FA, 1994, as is
equivalent to the amount of cess payable on the said import of technology under the Provisions of Sec 3 of R & D Cess Act, 1986.
[Exemption will be available subject to fulfillment of certain conditions]
.

Illustration: If the value of taxable service (involving import of technology)= 1,00,000, R&D cess on these = 5,000
Basic ST @14%: ST liability = [(14% of 1,00,000) less Rs 5,000] = 9,000
SBC: 0.5% of 1,00,000 = 500 KKC: 0.5% of 1,00,000 = 500
.

Author: *The R&D Cess levied under the Research and Development Cess Act, 1986 which has been repealed vide FA, 2017 (w.e.f. 1 April, 2017). Thus,
st

presently there is no R&D cess. Hence, question of its deduction/exemption will not arise in service tax payable on technology related or IPR services.
.
.

Abatement – 26/2012
.

1. Increase in service tax liability of tour operators


Entry No. 11 inserted we.f. 22 Jan, 2017
E/N 26/2012
.
[Partial Exemption (Exemption by way of Abatement of Value)]
Sl. Description of taxable service Abatement Taxable Portion Eligibility of Cenvat Credit on
No. [Chargeable to ST] Input CG IS
(used in providing the taxable service)
11. Services by a TOUR OPERATOR in relation to
I. a tour, if the tour operator is providing services solely 90% 10% No No No
of arranging or booking accommodation for any [However, credit of ‘input service of
person in relation to a tour. tour operator’ shall be available]
Associated conditions
Invoice shall clearly indicate that it is towards charges for such
accommodation.
This exemption shall not apply in such cases where invoice issued
by the tour operator, in relation to a tour, includes only the service
charges for arranging or booking accommodation for any person but
does not include the cost of such accommodation.**
(In other words, amount recovered covers up both service charges
for arranging accommodation and cost of accommodation)
.

II Tours other than (i) above* 70% 30%* No No No


[However, credit of ‘input service of
tour operator’ shall be available]

11. Services by a TOUR OPERATOR 40% 60% No No YES


Associated condition
The bill issued for this purpose indicates that
… it is inclusive of charges of accommodation and
transportation required for such a tour
and
… the amount charged in the bill is the gross amount
charged for such a tour including the charges of
accommodation and transportation required for
such a tour
.

Author:
ST liability of tour operator providing tour services (other than mere room booking services)
Now, w.e.f. 22-1-2017, service tax is payable on 60% of bill amount (against earlier 30%), but Cenvat credit of all input services is available (thus, if a tour
operator engages a motor cab, maxi cab or contract carriage, or avails services of another tour-operator, credit of all these and others input services shall also be available).

ST liability of tour operator providing only room booking service


[Hotel raising bill in name of ‘tour operator’. Tour operator raising his own bill in name of tourist]

Pre-Amendment
ST was payable on 10% of value. Tour operator cannot take input tax credit of service tax charged to him by the hotel.

Post-Amendment
View-1: Literally interpretated, abatement is not available
View-2: Intention of legislature is to allow abatement. ST is payable on 60% of value. Tour operator can take input tax credit of service tax charged to him by the hotel.

Special Notes:
Room booking service by Tour Operator- where Tour Operator acting as AGGREGATOR (Accommodation Aggregator)
• If the tour operator provides web based service of hotel booking as aggregator and if the customer makes direct payment to the hotel, then tour operator will not be
liable to pay any service tax w.e.f. 22-1-2017.
• Of course, tour operator is liable to pay service tax on commission received by him from hotel.
.
Mega Exemption: Entry No. 34(c)

Entry No. 34 as amended w.e.f. 22 Jan, 2017


Entry No 34. Services From A Person Located In Non-Taxable Territory

Services received from a provider of service located in a non- taxable territory by


(a) Government, A Local Authority, A Governmental authority in relation to any purpose
.
other than commerce,
or AN INDIVIDUAL industry or any other
business or profession;

(b) an entity registered u/s 12AA of the Income tax Act, 1961 for the purposes of providing
CHARITABLE ACTIVITIES; or

(c) a person located in a Non-Taxable Territory;

Provided that the exemption shall not apply to*


(i) online information and database access or retrieval services (OIDAR Services) received by persons
specified in clause (a) or clause (b); or
(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs station
of clearance in India received by persons specified in clause (c);

.
TRANSPORTATION OF GOODS

Overseas transportation (transport of goods in vessel)= Taxable Service

SP = Located in Non-TT (Foreign Shipping Company)


SR = Located in Non-TT (Exporter)

Exemption withdrawn – Entry No 34(c) E/N 25/2012 amended

Person liable to pay ST N/N 30/2012 amended


• Neither SP nor SR (Amended w.e.f. 22th Jan, 2017, then further amended w.e.f.
• Importer shall be liable to pay ST 23rd April, 2017)

POT
PoT = Date of issuance of Bill of Landing of such goods Rule 8B inserted (effective from 22nd Jan, 2017)

Computation of Tax liability


• Rate = 14% (SBC & KKC extra) CBEC Clarification: Abatement shall not be
• Value = Full Value applicable

Alternative method of computation of ST liability


• ST = CIF Value * 1.4% (SBC & KKC extra) Rule 6(7A) inserted (effective from 22nd Jan, 2017)

Admissibility of Cenvat Credit


• Eligibility as ‘input service’ Rule 2(l) amended (effective from 23rd April, 2017)
• Credit only after ST has been paid Rule 4(7) amended (effective from 23rd April, 2017)
• Supporting Document = Payment Challan Rule 9(1) amended (effective from 23rd April, 2017)

Miscellaneous: CBEC Clarification on ‘Transshipment of Goods: Taxability’


.

OCEAN FREIGHT: IMPORT OF GOODS


SP = Foreign Shipping Company SR = Foreign Exporter

• Pre-Amendment: Such service was exempt vide Entry No. 34(c) (being provided by person location in non-TT and received by a person located in Non-TT)
.

• Post Amendment: Exemption in respect of overseas transportation has been withdrawn and thus, making such service chargeable to ST.
Related Issues:
• Who shall be liable to pay such ST?
• What shall be the POT?
• How liability shall be computed?
• Whether cenvat credit shall be admissible?

.
REVERSE CHARGE + POT + Composition Scheme + CENVAT credit
1. Person liable to pay service tax in respect of services of inward ocean freight from out of India
Rule 2(1)(d)(EEC) of Service Tax Rules inserted w.e.f. 22-1-2017, further amended w.e.f. 23rd April, 2017
In relation to services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory
by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India,
… the person in India who complies with sections 29, 30 or 38 read with section 148 of the Customs Act, 1962 with respect to such goods
shall be the person liable liable to pay ST.
… the importer as defined in Sec 2(26) of Customs Act, 1962 of such goods shall be the person liable to pay ST.
.
Author:

.
.

* Notes: Different Situations:


Situation Person liable to pay ST
1. Indian Shipping Company providing goods transportation service to Indian Importer The Indian shipping company is liable to pay service tax as forward
charge.
2. Foreign Shipping Company providing goods transportation service to Indian Importer The Indian Importer is liable to pay service tax under reverse charge.

3. Foreign Shipping Company providing goods transportation service to Foreign Exporter ST is payable by the PIC / Steamer Agent by the importer of such goods.
(who has sold goods to Indian Importer on CIF Basis - sea freight is paid by foreign person who
is exporting goods from his country to India)
.

2. Point of Taxation
.

POT Rules, 2011 has also been amended [N/N 14/2017-ST, Dated 13-4-2017- made effective from 22 Jan, 2017]
Special POT for this service
Rule 8 -B: Determination of point of taxation in case of services provided by a person located in non-taxable territory to a person in non-
taxable territory
Notwithstanding anything contained in these rules,
the point of taxation in respect of services provided by a person located in non-taxable territory to a person in non-taxable territory by way of
transportation of goods by a vessel from a place outside India up to the customs station of clearance in India,
… shall be the date of BILL OF LADING of such goods in the vessel at the port of export.


CIRCULAR NO 206/4/2017-Service Tax, Dated: April 13, 2017
No service tax is leviable if the bill of lading is of date prior to 22nd January, 2017.
.
3. Computation of ST liability
Normal Manner of computation of liability
• Rate: 14% (SBC & KKC Extra)
• Value: Sec 67 (Generally), GROSS AMOUNT CHARGED for the service (transportation charges)

CIRCULAR NO 206/4/2017-Service Tax, Dated: April 13, 2017
.

Vessel Transportation: Abatement benefit as provided under E/ N 26/ 2012 not available to such cases (as foreign shipping company is not fulfilling the
related condition), thus full value is chargeable to ST
.

Under notification No. 26/2012-ST (Sl. No. 10), there is an exemption on 70% of value of services of transportation of goods in a vessel
subject to the fulfillment of the condition that Cenvat credit on inputs and capital goods used for providing the taxable service, has not
been taken under the provisions of the CCR, 2004.
… This conditional exemption has been extended for the reason that out of the full value of such services, the exempted value of service has
already suffered taxes (Central Excise) which would have been available as Cenvat credit to set off service tax on full value of service. In
effect, service tax is levied on the value added only.
… However, in case of foreign shipping lines, their services being exports from their home country, are zero-rated in their home country and
thus have suffered no taxes. Further the foreign shipping lines do not get registered in India and do not follow the provisions of Cenvat Credit
Rules.
… Thus, the condition for availing exemption under notification No. 26/2012-ST (Sl. No. 10), is not fulfilled by the foreign shipping lines. Hence,
benefit of conditional exemption will not be available to them and service tax will be paid on full value of services.

Alternative Manner of computation of liability – COMPOSITION SCHEME provided


.

STR, 1994 has been amended [N/N 16/2017-ST, Dated 13-4-2017 - made effective from 22 Jan, 2017]
Composition Scheme for this service
Rule 6 (7CA):
The person liable for paying service tax for the taxable services provided or agreed to be provided by a person located in non-taxable territory to
a person in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance
in India,
… shall have the option to pay an amount calculated @ 1.4% of the sum of cost, insurance and freight (CIF) value of such imported
goods.
.

Further:
Rule 6 (7D) (which provides for optional method of computation of SBC by person paying ST under composition scheme)
Rule 6 (7E) (which provides for optional method of computation of KKC by person paying ST under composition scheme)
Have also been amended to incorporate reference of new composition scheme provided under Rule 6(7CA) of STR, 1994.

Illustration:
Mr A of India enters into contract with Mr E of USA for import of certain goods. The Contract is CIF Contract for a total value of Rs 50,00,000.
Mr E of USA enters into contract with XIOM Shipping Company of USA for transporting goods to Gujarat Customs Port of India.
The service of transportation of goods is taxable service (POPS= Destination = Customs Station of Clearance in India).
• Person liable for paying ST = Importer = Mr A of India
• ST liability:
o Basic ST liability under composition scheme provided under Rule 6(7CA) shall be [50,00,000 * 1.4%] = 70,000
o SBC liability as per Rule 6(7D) of STR, 1994 = 70,000 * 0.5/14 = 2,500
o KKC liability as per Rule 6(7E) of STR, 1994 = 70,000 * 0.5/14 = 2,500
.

4. Admissibility of Cenvat Credit



.

CIRCULAR NO 206/4/2017-Service Tax, Dated: April 13, 2017


Importer of goods: Eligible to book/ avail cenvat credit post payment of ST of such service [Supporting Document = Challan]
The importer of the goods has been allowed to avail Cenvat credit on the basis of the challan of payment of service tax by the said
importer on the services provided by a foreign shipping line to a foreign charterer with respect to goods destined for India. This change
shall come into effect from 23rd April, 2017.

Rule 2, 4 and 9 of CCR, 2004 have been amended by N/N 10/2017 – w.e.f. 23 April, 2017
rd

Rule 2 (l): Definition of INPUT SERVICE has been amended to include this service
‘Input Service’ means
(i) services provided or agreed to be provided by a person located in non-taxable territory to a person in non-taxable territory by way of
transportation of goods by a vessel from a place outside India up to the customs station of clearance in India,
… where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for
paying service tax for the said taxable services AND the said imported goods are his inputs or capital goods; or
(Inserted – made effective from 23rd April, 2017)
(ii) any service used by a provider of output service for providing an output service; or
.

(iii) any service used by a manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products
upto the place of removal,’;

Rule 4 (7): Conditions for availment of cenvat credit INPUT SERVICE has been amended
Provided also that in respect of services provided or agreed to be provided by a person located in non-taxable territory to a person in non-
taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India,
… where service tax is paid by the manufacturer or the provider of output service being importer of goods as the person liable for paying
service tax for the said taxable services
… credit of service tax paid by the person liable for paying ST shall be allowed after such service tax is paid:

Rule 9 (l): List of supporting documents amended to include Challan for payment of ST
The CENVAT credit shall be admissible only on the basis of following documents, namely:
…..
(ea) A Challan evidencing payment of service tax by the manufacturer or the provider of output service being importer of goods as the person liable for
paying service tax for the services provided or agreed to be provided by a person located in non-taxable territory to a person in non-taxable
territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India
.

CIRCULARS
1. Ocean freight: Goods destined to foreign country, but transshipped through Indian Customs Station shall not be liable to any ST

CIRCULAR NO 204/2/2017-Service Tax, Dated: February 16, 2017


Sub:- Applicability of service tax on the services by way of transportation of goods by a vessel from a place outside India to the customs station in India w.r.t. goods
intended for transhipment to any country outside India - reg.
.

Author: Illustration
Vessel carrying goods from USA to Sri Lanka
- Goods unloaded at Customs Station in India
- Then transshipped to Sri Lanka without payment of any customs duty in India
.

Whether first leg of journey of vessel (USA to customs Station in India) will attract ST?
- Service is not into negative list
- POPS = Rule 10 = Destination of Goods = (Customs Station in India) or (Sri Laka) = it is Sri Lanka (Circular) = Non-TT
Thus, no ST leviable
.
Transshipment under Customs: No Customs Duty payable (being destination of goods is outside India)
- In this regard, it is mentioned that the goods landing at Indian ports which are destined for any other country are allowed to be transshipped through Indian
territory without payment of Customs duty in India. This is subject to the condition that such goods imported into a customs station are mentioned in the import
manifest or the import report, as the case may be, as for transshipment to any place outside India. [Section 54(2) of the Customs Act, 1962]. Further, Goods
Imported (Conditions of Transshipment) Regulations, 1995 have been prescribed for the procedure to be followed for transhipment of such goods.

POPS as per Rule 10 = Destination of goods = Outside India = Non-TT (& thus, ST not leviable)
- It is pertinent to mention that as per the charging Section 66B of FA, 1994, service tax is leviable on services provided or agreed to be provided in the taxable
territory. Whether a service is provided or agreed to be provided in the taxable territory or not, is determined as per Section 66C of the Finance Act,
1994 and the Place of Provision of Services Rules, 2012 made thereunder. In terms of the applicable rule 10 of the Place of Provision of Services Rules,
2012, the place of provision of services of transportation of goods by air/sea, other than by mail or courier, is the destination of the goods.
o Thus, with respect to goods imported into a customs station in India intended for transshipment to any country outside India, the destination of goods is
not a place in taxable territory in India but a country other than India if the same is mentioned in the import manifest or the import report as the case
may be and the goods are transshipped in accordance with the provisions of the Customs Act, 1962 and rules made there under. Hence, with respect
to such goods, services by way of transportation of goods by a vessel from a place outside India to the customs station in India are not taxable in India
as the destination of such goods is a country other than India.
OIDAR Services
OIDAR Services

OIDAR Services - redefined


• New Definition of OIDAR Sr (meaning widened) Rule 2(1)(ccd) of STR, 1994
- w.e.f. 1 Dec, 2016
st

• Old Definition of OIDAR Service (which was under POPS Rules) – also
substituted.

POPS
• POPS of OIDAR to be determined as per Rule 3 (default rule) POPS rules amended
- w.e.f. 1 Dec, 2016
st

• Old Definition of OIDAR Service (which was under POPS Rules) – also
substituted.
• Even definition of ‘telecommunication service’ amended to exclude ‘OIDAR
Services’.

Exemption vide Entry No 34 (a) & (b) (E/N 25/2012) withdrawn


Person located in Non-TT providing OIDAR Services to following shall E/N 25/2012 amended
no longer be entitled to ST exemption: - w.e.f. 22 Jan, 2016
nd

• Govt, Local Authority or Governmental Authority or Individual (receiving


service for use in relation to non-business purpose)
0r
• Entity registered u/sec 12-AA of Income tax Act (receiving services for use
in providing charitable activities)

Person liable to pay ST N/N 30/2012 amended


• SP (located in Non-TT) providing OIDAR services to NOR (Non- - w.e.f. 1 Dec, 2016
st

assessee online recipient in TT) shall be liable to pay ST (Reverse (Earlier, OIDAR Sr was not taxable as POPS
charge shall not be applicable) = Location of SP = Non-TT)

Registration
• Registration Application: Form ST-1A Rule 4 of STR, 1994 amended
• Registration Certificate: Form ST-2A - Forms inserted w.e.f. 1 Dec, 2016
st

Invoicing
• Special dispensations allowed in issuance of invoice Rule 4-A of STR, 1994 amended

Return
• Special Return: Form ST-3C Rule 7 of STR, 1994 amended
- Forms inserted w.e.f. 1 Dec, 2016
st

Payment of ST
• Dec & Jan Month: Due Date extended to 6th March, 2017 Rule 6 of STR, 1994 amended
- w.e.f. 30 Jan, 2017
th

• Online Payment procedure PRESS RELEASE

POT
• Rule 3 shall be applicable

Computation of Tax liability


• Rate = 14% (SBC & KKC extra)
• Value = Full Value

Alternative method of computation of ST liability


• No composition scheme
OIDAR Services

OIDAR Services – meaning thereof

Pre amendment: Defined in Rule 2(l) of POPS Rules, 2012


.
Rule 2(l) of POPS Rules, 2012
"OIDAR services"
means providing data or information, retrievable or otherwise, to any person, in electronic form through a
.
computer network;"

Post amendment: Defined in Rule 2(1)(ccd) of STR, 1994


.

Rule 2 (1) (ccd): [N/N 46/2016 –inserted w.e.f. 1st Dec, 2016]
"OIDAR services"
means services
… whose delivery is mediated by information technology over the internet or an electronic network
and
… the nature of which renders their supply essentially automated and involving minimal human
intervention, and impossible to ensure in the absence of information technology
and
.

includes electronic services such as,—


(i) advertising on the internet;
(ii) providing cloud services;
(iii) provision of e-books, movie, music, software and other intangibles via telecommunication networks or
internet;
(iv) providing data or information, retrievable or otherwise, to any person, in electronic form through a
computer network;
(v) online supplies of digital content (movies, television shows, music, etc.);
(vi) digital data storage; and
(vii) online gaming;
POPS R
ULES
Remarks
Significant Change: Expansion in Scope of OIDAR Services
There has been a significant change in the definition of OIDAR services. The earlier definition has been explained in an
Education Guide published by CBEC as services in relation to online information and database access or retrieval or both,
in electronic form through a computer network. As per the Education Guide, the earlier definition covers services such as web-
based services providing access or download of digital content, social networking sites, digitized content of books, subscription to
online newspapers and journals, online news, flight information and weather reports, etc.

However, after amendment, potentially all automated services involving minimal human element provided over
internet would come under the blanket of OIDAR services, which as per the new definition also specifically includes
“advertising on the internet”. Further, the old definition of OIDAR only forms one of the 7 items of the inclusive list [item
(iv)] provided in the new definition, which includes additional services such as online gaming, cloud services, digital data
storage, online supplies of digital content, etc. Moreover, as per the Circular, while purchase and automated delivery of digital
content would be an OIDAR service, supply of tangible goods where the order and processing is done electronically will not be
covered under OIDAR services.

The expansion of service tax net is in line with the recommendations for addressing indirect tax challenges in a digital economy
suggested by the Organization for Economic Co-operation and Development (OECD) for Base Erosion and Profit Shifting (BEPS)
Action 1 (Addressing the Tax Challenges of the Digital Economy
Analysis of new definition

1. OIDAR (online Information and database access or retrieval services):


OIDAR services covers services which are automatically delivered over the internet, or an electronic network, where there is
minimal or no human intervention. In practice, this can be either:
i. where the provision of the digital content is entirely automatic eg, a consumer clicks the ‘Buy Now’ button on a website and
either:
… the content downloads onto the consumer’s device, or
… the consumer receives an automated e-mail containing the content
ii. where the provision of the digital content is essentially automatic, and the small amount of manual process involved doesn’t
change the nature of the supply from an OIDAR service
All ‘electronic services’ that are provided in the ways outlined above are OIDAR services.
Indicative list of non-OIDAR services
1) Downloaded Services
2) Supply of distant teaching (lectures stored over server)

2. Non-OIDAR Services: In general the use of the Internet or other electronic networks by parties to communicate with respect to
transactions or to facilitate trading does not, any more than the use of a telephone or fax, mean that a business is providing
OIDAR Services. For example, where parties simply use the internet to convey information in the course of a business
transaction (e.g., mail), this does not change the nature of the transaction. This differs from a supply that is completely
dependent on the Internet in order to be carried out (e.g., searching and retrieving information from a database with no human
intervention).
Indicative list of non-OIDAR services
3) Supplies of goods, where the order and processing is done electronically
4) Supplies of DVD, game on DVD, other tangible media
5) Supplies of printed matter, such as books, newsletters, newspapers or journals
6) Services of lawyers and financial consultants and so on, who advise clients through email
7) Booking services or tickets to entertainment events, hotel accommodation or car hire
8) Offline physical repair services of computer equipment
9) Advertising services in newspapers, on posters and on television
10) Intenet and worldwide web access services
11) Teaching services, where the course content is delivered by a teacher over the Internet (online coaching)

Service Examples of services whether or not OIDAR services


Whether Provision of service Whether it is Automated and OIDAR
mediated by information technology impossible to ensure in the service
over the internet or an electronic absence of information
network technology
Pdf document manually emailed by Yes No No
provider
Pdf document automatically emailed Yes Yes Yes
by providers system
Pdf document automatically Yes Yes Yes
downloaded from site
Stock photographs available for Yes Yes Yes
automatic download
Online course consisting of pre Yes Yes Yes
recorded videos and downloadable
pdfs
Online course consisting of pre Yes No No
recorded videos and downloadable
pdfs plus support from a live tutor
Individually commissioned content Yes No No
sent in digital form eg, photographs,
reports, medical results
* OIDAR Service: Inclusion part (with clarification as to some exclusions):
OIDAR Services (includes) Non-OIDAR Services
Online advertising Banner ads, pop-up ads, sponsored ads, Preparation of content for online display like
E.g. Google etc. production, distribution and services of
intermediaries

Cloud services Webhosting



 E.g. Amazon Web services Data warehousing

e-books, movies, music, Access to content permitted only Supply of physical books, newsletter,
software and other ‘online’ newspaper or journals (
which are purchased
intangibles 
 -- even if stored in cache on user-end over internet)
E.g. Gaana.com & Netflix device but not allowing (official)
permanent download Booking services or tickets to entertainment
events, hotel accommodation or car hire 


Educational or professional courses, where


the content is delivered by a teacher over the
internet or electronic network

Online data or information Websites that provide information 
 Net banking where banking information is

 E.g. LinkedIn, accessed online but merely incidental to offline
Taxindiaonline.com banking transactions

Online supply of digital TV programs and movies supplied over Auditors report sent to client via email. It is
content 
 the internet like monitored by issuing user merely a form in which the offline services are
E.g. Setmax online, YouTube login / password communicated. Services of auditor is not the
email of report issued but the opinion
expressed about the financial position of the
auditee 


Online order processing in respect of offline


supply of goods 


Services of lawyers and financial


consultants who advise clients through
email 

Data storage Webservers – shared or dedicated, Lease of server with redundancy
E.g. Amazon with/without support,

Online gaming Live-gaming 
 Computer / mobile games to be used after


E.g. Zapak.com Collaborative gaming downloading to user-end device
.

.
Determination of POPS

Pre amendment: Rule 9 of POPS Rules, 2012 was applicable rule [POPS = Location of SP]

Rule 9 of POPS Rules, 2012


The POPS of following services shall be ‘location of provider of service’:
.

.
-- OIDAR services **

Rule 2(l) of POPS Rules, 2012


"OIDAR services" means providing data or information, retrievable or otherwise, to any person, in
electronic form through a computer network;"
.
Post amendment: Rule 3 of POPS Rules, 2012 is the applicable rule [POPS = Location of SR]
.

Rule 3: [Proviso Amended – N/N 46/2016]


The place of provision of a service shall be the location of the recipient of service

Provided that in case of services other than OIDAR services, where the location of the service receiver is
not available in the ordinary course of business, the place of provision shall be the location of the
provider of service.
POP

Related amended in definition provided in Rule 2


Rule 2(l) of POPS Rules, 2012
"OIDAR services" has the same meaning as assigned to it in Rule 2(1)(ccd) of Service Tax Rules, 1994.

Rule 2 (q): [Amended – w.e.f. 1st Dec, 2016]


"Telecommunication Service"
means service of any description (including electronic mail, voice mail, data services, audio text services,
video text services, radio paging and cellular mobile telephone services) which is made available to
users by means of any transmission or reception of signs, signals, writing, images and sounds or
intelligence of any nature, by wire, radio, visual or other electro-magnetic means
but shall not include broadcasting and online information and database access or retrieval services
ULES
.
Remarks

Services POPS in terms of Rule 3


OIDAR Sr = Location of SR (in all cases)
Other Sr = Location of SR (generally)
However, where location of SR is not available in ordinary course of business, then POPS = Location
of SP.
.

Thus,
• PoPS of Telecommunication Service = Rules 3 = Generally, location of SR
• PoPS of OIDAR Service = Rules 3 = Always, location of SR R
Reason of Changing POPS: It is in line with the recommendations for addressing indirect tax challenges in a digital economy
suggested by the OECD (Organisation for Economic Co-operation and Development). It suggests that cross-border digital
services should be taxed in accordance with the destination principle in the country in which the consumer is located. Hence,
this confirms to global consensus at taxing online services in the destination jurisdiction.
Taxability of OIDAR Services

Pre amendment: In general taxable, however benefit of E/N 25/2012 (Entry No 34(a)/(b)) was available
.
.

Entry No 34. Services From A Person Located In Non-Taxable Territory

Services received from a provider of service located in a non- taxable territory by


(a) Government, A Local Authority, A Governmental authority in relation to any purpose
.
other than commerce,
or AN INDIVIDUAL industry or any other
business or profession;

(b) an entity registered u/s 12AA of the Income tax Act, 1961 for the purposes of providing
CHARITABLE ACTIVITIES; or
.

(c) a person located in a Non-Taxable Territory;


.
.

Post amendment: In general taxable, however benefit of E/N 25/2012 (Entry No 34(a) / (b)) has been
withdrawn
.

Entry No 34. Services From A Person Located In Non-Taxable Territory

Services received from a provider of service located in a non- taxable territory by


(a) Government, A Local Authority, A Governmental authority in relation to any purpose
.
other than commerce,
or AN INDIVIDUAL industry or any other
business or profession;

(b) an entity registered u/s 12AA of the Income tax Act, 1961 for the purposes of providing
CHARITABLE ACTIVITIES; or
.

(c) a person located in a Non-Taxable Territory;

Provided that the exemption shall not apply to*


(i) online information and database access or retrieval services (OIDAR Services) received by
persons specified in clause (a) or clause (b); or

(ii) services by way of transportation of goods by a vessel from a place outside India up to the customs station
of clearance in India received by persons specified in clause (c);
.

Definition [Para 2(xab)]:


"OIDAR services" has the same meaning as assigned to it in Rule 2 (1)(ccd) of the Service Tax Rules, 1994.
.
Remarks
Why exemption has been withdrawn in respect of OIDAR services?
The CG has significantly widened the scope of service taxes for online activities by including an array of services provided with
the use of technology into the definition of OIDAR and by bringing online services provided by overseas suppliers within the tax
ambit.
These changes are in line with the recommendations made by OECD In the report released by OECD addressing tax
challenges of digital economy in cross border transactions, it had emphasized the requirement for nonresident
suppliers, to register, collect and remit tax in the jurisdiction of the consumer, particularly for B2C supplies.
Person liable to pay ST: in relation to earlier exempted service, now chargeable to ST

Pre amendment: SP located in Non-TT: Any Sr (including OIDAR) was under Reverse Charge
STR, 1994
Rule 2(1)(d) of STR, 1994
Reverse Charge:
In relation to any taxable service , provided or agreed to be provided by any person which is located in a
non-taxable territory and received by any person located in the taxable territory,
.
… person liable to pay ST shall be the recipient of such service;
.

Post amendment: SP located in Non-TT: OIDAR Sr provided to Non-Assessee online recipient shall not
be under reverse charge – SP shall be liable to pay

STR, 1994
Rule 2(1)(d) of STR, 1994 (N/N 47/2016)
Reverse Charge
 In relation to any taxable service other than OIDAR services, provided or agreed to be provided by any
person which is located in a non-taxable territory and received by any person located in the taxable
territory,
… person liable to pay ST shall be the recipient of such service;

 In relation to services provided or agreed to be provided by way of OIDAR services, by any person
which is located in a non-taxable territory and received by any person located in the taxable territory
other than NON-ASSESSEE ONLINE RECIPIENT,
… person liable to pay ST shall be the recipient of such services.
.
Forward Charge
Provided that in relation to services provided or agreed to be provided by way of OIDAR services, by any
person located in a non-taxable territory and received by non- assesse online recipient,
… person liable to pay ST shall be the provider of service located in a non-taxable territory.

Explanation :—For the purposes of this notification, "non-assessee online recipient" has the same meaning as assigned to it
in clause (ccba) of sub-rule (1) of rule 2 of Service Tax Rules, 1994.
.

Rule 2 (ccba) of STR, 1994:


.

“non-assesse online recipient” means Government, a local authority, a governmental authority or an individual
receiving online information and database access or retrieval services in relation to any purpose other than
commerce, industry or any other business or profession, located in taxable territory;
.

Explanation.-
For the purposes of this clause, “governmental authority” means an authority or a board or any other body :
(i) set up by an Act of Parliament or a State legislature; or
(ii) established by Government,
with 90% or more participation by way of equity or control, to carry out any function entrusted to a municipality under article
243-Wof the Constitution.

Author
Article 243W of Constitution of India: Municipal functions
.

• Urban planning including town planning; • slum improvement and upgradation;


• Roads and bridges; • provision of urban amenities and facilities such as parks,
• Water supply for domestic, industrial and commercial gardens, playgrounds burials and burial grounds;
purposes; • cremations, cremation grounds; and
• Public health, sanitation conservancy and solid waste • electric crematoriums;
management; • Public amenities including street lighting, parking lots, bus
• fire services; stops & public conveniences, etc.
.

Provisioning of OIDAR Services: Involvement of intermediary

Provided further that in case of OIDAR services provided or agreed to be provided by any person
located in a non-taxable territory and received by non- assesse online recipient,
… an intermediary located in the non- taxable territory including AN ELECTRONIC
PLATFORM, a broker, an agent or any other person, by whatever name called, who arranges or
facilitates provision of such service but does not provides the main service on his account shall
be deemed to be receiving such services from the service provider in non-taxable territory
and providing such services to the non-assesse online recipient
except when such intermediary satisfies all the following conditions, namely :-
(a) the invoice or customer’s bill or receipt issued or made available by such intermediary taking part in the
supply clearly identifies the service in question, its supplier in non-taxable territory and the service tax
registration number of the supplier in taxable territory;
(b) the intermediary involved in the supply does not authorize the charge to the customer or take part in its
charge i.e. intermediary neither collects or processes payment in any manner nor is responsible for the
payment between the non-assesse online recipient and the supplier of such services;
(c) the intermediary involved in the supply does not authorize delivery;
(d) the general terms and conditions of the supply are not set by the intermediary involved in the supply but by
.
the service provider:
.

Author: CBEC has clarified that


… if an overseas intermediary successfully establishes that he is merely acting as an intermediary (by
satisfying all the prescribed conditions), the actual OIDAR service provider will be required to register and
discharge the ST provisions.
… However, if the intermediary does not satisfy the conditions, he will be deemed to be provided OIDAR
Services.
For example,
Mr John, USA has created a web application (say, gaming application).
Situation Person liable to pay ST
He is directly providing these applications to individual Mr John (SP/content creator) shall be responsible
consumers in India via his/her website. for taking registration and payment of ST.
He contracts with applications stores or platforms Here, application store or platform (= Intermediary)
(aggregator- owner of market place – say, Apple shall be responsible for taking registration and
Stores) from where customers purchase these collection of service tax from customers and
applications by paying to the store or the platform via payment of the same to the Government of India.
which the applications was bought.
.

Provided also that by any person located in a non-taxable territory and received by non- assesse online
recipient,
… any person located in taxable territory representing such service provider for any purpose in the
taxable territory shall be the person liable for paying service tax:

Provided also that in case of OIDAR services provided or agreed to be provided by any person located in a
non-taxable territory and received by non- assesse online recipient,
… if the service provider does not have a physical presence or does not have a representative for any
purpose in the taxable territory,
… the service provider may* appoint a person in the taxable territory for the purpose of paying service tax
and such person shall be liable for paying service tax:
.
.

Author: Any person in taxable territory who represents an overseas SP will be the person liable to pay ST. If the SP
does not have any physical presence or doesn’t have a representative for any purpose in India, the SP may appoint a
person for the purpose of paying ST.

Receiver of OIDAR Service = Deemed location in TT, if certain conditions fulfilled


.
Provided also that in case of OIDAR services provided or agreed to be provided by any person
located in a non-taxable territory and received by ANY PERSON located in the taxable
territory,
… person receiving such services shall be deemed to be located in the taxable territory if
any two of the following non- contradictory conditions are satisfied, namely :-
(a) the location of address presented by the service recipient via internet is in taxable territory;
(b) the credit card or debit card or store value card or charge card or smart card or any other card by
which the service recipient settles payment has been issued in the taxable territory;
(c) the service recipient's billing address is in the taxable territory;
(d) the internet protocol address of the device used by the service recipient is in the taxable territory;
(e) the service recipient's bank in which the account used for payment is maintained is in the taxable
territory;
(f) the country code of the subscriber identity module (SIM) card used by the service recipient is of
taxable territory;
(g) the location of the service recipient's fixed land line through which the service is received by the
person, is in taxable territory:
.
.

Author: The person receiving OIDAR services will be deemed to be located in taxable territory if he satisfies
any of the following 2 non-contradictory conditions:
1) Address of Recipient is in TT
2) Billing address of recipient is in TT

3) Card used by recipient for payment has been issued in TT


4) Bank Account of recipient (used for payment) is maintained in TT.

5) Fixed land line (through which service is received) used by recipient is in TT.
6) Country code of SIM card used by recipient is in TT.
7) IP address of device used by recipient is in TT.
.
If explanation is applicable to the recipient, then
- Location of SR = TT
- PoS = Location of SR = TT – thus, ST applicable.
.

.
Receiver of OIDAR Service = Deemed Status of NOR, if unregistered under ST

Provided also that in case of OIDAR services provided or agreed to be provided by any person located in a
non-taxable territory and received by non- assesse online recipient,
… a person receiving such services shall be DEEMED to be a non-assesse online recipient, if such
person does not have service tax registration under these rules (i.e., STR, 1994)
.
.

Author: It has been specified that the service recipient shall be deemed to be a non-assessee (B2C) online
recipient, if the person does not have service tax registration.
.
.

Remarks
Why special provisions has been made as to person liable to pay ST?
These changes are in line with the recommendations made by OECD In the report released by OECD addressing tax challenges
of digital economy in cross border transactions, it had emphasized the requirement for nonresident suppliers, to register,
collect and remit tax in the jurisdiction of the consumer, particularly for B2C supplies.
PRACTICE:

.
Case-A: SP (Non-TT) ---- OIDAR ---- SR (Non-TT)
Supporting
POPS Non-TT SR being in Non-TT
[Rule -3 (Location of SR)]
Taxability No Service being provided in Non-TT.
[u/Sec 66-B]
Person liable to pay N.A. In absence of attraction of charge, this question
[Sec 68 read with STR, 1994] is irrelevant.

.
Case-B: SP (TT) ---- OIDAR ---- SR (TT)
Supporting
POPS TT SR being in TT
[Rule -3 (Location of SR)]
Taxability Yes Service being provided in TT.
[u/Sec 66-B]
Person liable to pay SP Reverse charge is not applicable.
[Sec 68 read with STR, 1994]
.
Case-C: SP (TT) ---- OIDAR ---- SR (Non-TT)
Supporting
POPS Non-TT SR being in Non-TT
[Rule -3 (Location of SR)]
Taxability No Service being provided in Non-TT.
[u/Sec 66-B]
Person liable to pay N.A. In absence of attraction of charge, this question
[Sec 68 read with STR, 1994] is irrelevant.
* This service transaction may qualify as ‘export of service’ if all conditions of Rule 6-A of STR, 1994 is satisfied.

Case-D: SP (Non-TT) ---- OIDAR ---- SR (TT)


Supporting
POPS TT SR being in TT
[Rule -3 (Location of SR)]
Taxability Yes Service being provided in TT.
[u/Sec 66-B]
Person liable to pay SP (forward charge) If SR is NOR (non-assessee online recipient)
[Sec 68 read with STR, 1994] SR (reverse charge) If SR is other than NOR
Determination of person liable to pay ST (i.e., forward charge / reverse charge):
Step-1 Determine status of SR
a) Whether he is in TT? [related proviso shall be considered (check fulfillment of conditions)]
b) Whether he is NOR? [Definition of NOR + related proviso shall be considered] – [only B2C supplies]
Step-2 Determine whether intermediary [If intermediary is not fulfilling certain conditions (as mentioned in proviso), then
(aggregator/ e-commerce platform/ is such intermediary will step into shoes of SP.
involved?
.

.
Further discussion with Case-D

Case-D: SP (Non-TT) ---- OIDAR ---- SR (TT)


Supporting
POPS TT SR being in TT
[Rule -3 (Location of SR)]
Taxability Yes Sr being provided in TT.
[u/Sec 66-B]
Person liable to pay SP (forward charge) If SR is NOR (non-assessee online recipient)
[Sec 68 read with STR, 1994] SR (reverse charge) If SR is other than NOR
.
Further discussion:
FORWARD CHARGE if SR = NOR
.

NoR = Category of person Usage of Service Location Registration Status


(Non-Assessee • Government Any purpose other than Located in taxable Unregistered under
Online • Local authority commerce, industry or any other territory Service Tax
Recipient) • Governmental business or profession
authority
• An individual (i.e., B2C supply)
.

When forward charge is applicable


• SP in non-TT shall be liable to pay ST.
• He shall comply with registration, invoicing, payment, return.

Registration -- Rule 4 of STR, 1994

Pre amendment: Every SP to apply for registration in Form ST-1


Rule 4 of STR, 1994
Every person liable for paying the service tax shall make an application in Form ST-1 for registration
within the following period:
• [New Business]
Where the service is already taxable but assessee is … within 30 days of commencement of
commencing business for the first time business by assessee

• [New Levy]
Where the service provider is providing a service … within 30 days from the date on
that has become taxable for the FIRST TIME which ST u/s 66-B is levied
.
.

Post amendment: SP located in Non-TT shall apply for registration in Form ST-1A

Rule 4 of STR, 1994


.
Provided also that a person located in non taxable territory liable for paying the service tax in the case of
OIDAR services may make an application for registration in form ST-1A for registration within a period
of 30 days from the date on which
… the ST u/Sec 66B of the Act is levied or
… the person located in non taxable territory has commenced supply of taxable services in the taxable
territory in India
.

and notwithstanding anything contrary in these rules, the registration shall be deemed to be granted in form
.
ST-2A from the date of receipt of the application.
.

Remarks
.
Person liable to pay Registration Registration application & Certificate
[Sec 68 read with STR, 1994]
SP * (forward charge) SP needs registration Registration Application: Form ST-1A
[If SR is NOR (non-assessee online Registration Certificate: Form ST-2A
recipient)] (new provisions are applicable)
Registration in absence of PAN
Special registration procedure is being provided,
which will be based on country code / registration /
business number obtained by such service provider
in the country of incorporation.
.
SR (reverse charge) SP needs registration Registration Application: Form ST-1
[If SR is other than NOR] Registration Certificate: Form ST-2
(old provisions are applicable)

* SSP/Threshold Exemption to SP (Non-TT): Threshold exemption shall be available (if related conditions are fulfilled). ST liability will arise only
after crossing the threshold. [CBEC Circular No. 202/12/2016 (Point No. 33)]

Invoicing – Rule 4A of STR, 1994


.

Pre amendment: Invoice shall be issued containing specified particulars


.

.
.

Rule 4-A of STR, 1994


 Every person providing taxable service shall, issue an Invoice, bill or a Challan
… signed by such person or a person authorized by him
… in respect of such taxable service provided or agreed to be provided
.

.
Content of invoice, bill or challan:
1. Title – Invoice / Bill
2. Signature of service provider or his authorized person
3. Serial Numbering
4. Name and address of service provider
5. Reg. No. of service provider
6. Name of recipient of service
7. Address of Recipient of service
8. Description of Service
9. ST payable
10. Additional Details
.
.
Post amendment: OIDAR SP provided relaxation as to certain particulars in invoicing:

Rule 4-A of STR, 1994 – proviso inserted

Provided also that in case of OIDAR services provided or agreed to be provided in taxable territory by a
person located in the non- taxable territory,
… an invoice, a bill or, as the case may be, challan shall include any document, by whatever name called,
… whether or not serially numbered,
… but containing name and address of the person receiving taxable service to the extent available and
.
other information in such documents as required under this sub-rule
Govt allows e-invoice without digital sign till Jan 31, 2017 for OIDAR services from abroad
.
th
Rule 4C of STR, 1994: Authentication by digital signature [proviso inserted -dated 19 Dec, 2016]
Any invoice, bill or challan issued under rule 4A or consignment note issued under rule 4B may be authenticated
by means of a digital signature.

Provided that a person located in non-taxable territory providing OIDAR services to a non-assessee online recipient
located in taxable territory may issue online invoices not authenticated by means of a digital signature for a
st
period upto 31 Jan, 2017.
.

ST Return – Rule 7 of STR, 1994


.

In general, ST Return in Form ST-3 shall be filed.


OIDAR SP shall be required to file ST return in Form ST-3C (return shall be filed electronically)
.

Press Release: Procedure for payment of ST


.
(Just for knowledge)
Press Release Procedure For Online Payment Through Foreign Banks In Respect Of OIDAR Service Tax
dated 11-1-2017 Payments By Non-Taxable Territory (Non-TT) Assessees
.
1. The Taxpayer need to have an internet banking account in one of the following foreign banks
1. BNP PARIBAS 2. CITI BANK 3. DBS 4. DEUTSCHE BANK 5. HSBC
6. STANDARD CHARTERED BANK 7. BANK OF AMERICA
2. Using the Internet Banking login facility, the taxpayer need to click a link provided for making payment of Service Taxes on
Online Information and Database Access or Retrieval Services (OIDAR).
3. On clicking the link, the taxpayer will be routed to a replica of the EASIEST e-Payment portal.
4. On this replica e-payment portal, taxpayer will enter the 15 digit Assessee Code allotted by the Department.
5. After entering the Assessee Code, taxpayer will be required to enter the CAPTCHA details.
6. On successful matching of the CAPTCHA and based on the Assessee Code entered, corresponding taxpayer details like Name,
Address, Commissionerate code etc. as present in the Assessee Code Master, will be displayed.
7. Based on the type of Assessee Code, the Duty / Tax i.e. Excise Duty or Service Tax to be paid, will be automatically selected.

8. As the assessee code pertains to Service Tax, the taxpayer will get all the accounting codes/descriptions of the Services.
9. The taxpayer being an OIDAR service provider, need to select the following Accounting codes and enter the amounts towards
each Accounting code.
Description of Service Service Tax Accounting Code Interest Penalties
Basic Service Tax 0153 0154 1333
Krishi kalyan cess 1509 1510 1512
Swachh bharath cess 1493 1494 1496

10. After save and submit, the taxpayer would be allowed to make the internet payment after validating the net banking login
credentials.
11. Using the EASIEST web portal (https://cbec-easiest.gov.in) the taxpayer can view/download the GAR-7 challan evidencing
the above payment of Service Taxes.
.

Relief in Due Dates


Rule 6 of STR, 1994 – proviso inserted
Provided also that in case of online information and database access or retrieval services provided or agreed
to be provided by any person located in a non-taxable territory and received by non-assessee online
recipient,
… the service tax payable for the month of December, 2016 and January, 2017, shall be paid to the credit
of the Central Government by the 6th day of March, 2017.
...........inserted from 30/1/2017.
Updates in CENVAT CREDIT RULES, 2004

1 Exclusion of ‘Interest’ from Value of Exempted Service shall not be applicable to Banking
Company, Financial Institution including NBFC engaged in providing services by way of extending
deposits, loans or advances
N/N 4/2017-Central Excise (N.T.), Dated: February 2, 2017
Rule 6 : Manufacture of EXEMPTD GOODS or provision of EXEMPTED SERVICE

Banking Company/ FI (including NBFC): ANOTHER ALTERNATIVE: Retain only 50% of credit

(3B) A Banking Company and a Financial Institution including a non-banking financial company, engaged in providing
services by way of extending deposits, loans or advances,
… in addition to options given in sub-rules (1), (2) and (3), shall have the OPTION to pay for every month an
amount equal to 50% of the CENVAT credit availed on inputs and input services in that month.
.

Author
.

Service Services Status Credit of Input and Input Service


Provider
Banking DD making Chargeable to ST Rule 6(3) applicable – 2 options
Company Lending Interest – Negative List • Rule 6(3)(i)
Processing Fee - Chargeable to ST • Rule 6(3)(ii)
Money changing Bank to bank/ AD – negative list
Bank to user – chargeable to ST Rule 6(3B) – Additional option
• [Credit Availed – 50%] = net admissible
credit which shall be available for utilization
NBFC
IDFC It gives loans for Interest – Negative List Rule 6(3) applicable – 2 options
(Infrastructure infrastructure Processing Fee - Chargeable to ST • Rule 6(3)(i)
Development related projects in • Rule 6(3)(ii)
Finance India.
Company)
Rule 6(3B) – Additional option
[Credit Availed – 50%] = net admissible credit
which shall be available for utilization

Explanation I.—"VALUE" for the purpose of sub-rules (3) and (3A),—

(a) shall have the same meaning as assigned to it under section 67 of the Finance Act, read with rules made
thereunder or, as the case may be, the value determined under section 3, 4 or 4A of the Excise Act, read with
rules made thereunder;

(b) in the case of a taxable service, when the option available under sub-rules (7), (7A), (7B) or (7C) of rule 6 of
the Service Tax Rules, 1994, has been availed, shall be the VALUE on which the rate of service tax under
section 66B of the Finance Act, read with an exemption notification, if any, relating to such rate, when
applied for calculation of service tax results in the same amount of tax as calculated under the option
availed;

(c) in case of trading, shall be (the difference between the sale price and the cost of goods sold (determined as
per the generally accepted accounting principles without including the expenses incurred towards their
purchase) ) or ( 10% of the Cost Of Goods Sold ), whichever is more;

(d) in case of trading of SECURITIES, shall be (the difference between the sale price and the purchase price of the
securities traded ) or (1 % of the purchase price of the securities traded ), whichever is more;
(e) shall not include the value of services by way of extending deposits, loans or advances in so far as the
consideration is represented by way of INTEREST or DISCOUNT.

Inapplicability of ‘interest exclusion provisions’ to Banking Company / FI (including NBFC)


. N/N 4/2017-Central Excise (N.T.), Dated: February 2, 2017

Provided that this clause shall not apply to a banking company and a financial institution
including a non-banking financial company, engaged in providing services by way of
extending deposits, loans or advances.
Illustration:
A Ltd. is a private bank, also having a forex department.
Following is the details of services provided by it during April, 2017 :
Particulars (Rs in lakhs) Details
(1) Commission received on DD making 10 Non-exempt service
services
(2) Income from lending activity
1) Interest earned 500 Exempt Service (being
2) Processing Fee received 20 negative listed)
Non-Exempt Service

(3) Money Changing Activity


1) Money changing for users 200 (value as per Sec 67 read with Rule 2- Non-exempt Service
2) Money changing for another bank or B of STVR, 2006)

authorized dealers 300 (value as per Sec 67 read with Rule 2- Exempt Service (being
B of STVR, 2006)
. negative listed)

You are required to compute the amount payable / credit reversible under Rule 6(3)(i) of CCR, 2004 for the month of April, 2017.
Note: Bank has not opted for any sort of composition scheme, if any, applicable/available.

Rule 6 (3)(i) :
April, 2017: Amount payable under Rule 6(3)(i)
EXEMPT SERVICE Computation of Amount Remarks
Payable
u/Rule 6(3)
Value 7% Amount
Negative listed
Service
Interest Earned Nil 7% Nil
500,00,000 35,00,000
Money changing for 300,00,000 7% 21,00,000 Since composition scheme has not been opted for,
another bank or value of service shall be computed in normal manner,
authorized dealers i.e., as per Sec 67 read with Rule 2-B of STVR, 2006.

Total amount payable u/Rule 6(3)(i) 56,00,000


.

Tutorial Note:
A Ltd., the private bank, is engaged in providing services by way of extending deposits/loans/advances, thus, it is also eligible to claim
option as provided by Rule 6(3-B), where under it can, in net, avail credit equal to 50%. It shall evaluate which option is beneficial for it:
Option-1 : Credit availment as per Rule 6(3)
.
Option-2 : Credit availment as per Rule 6(3B)
.

CRUX OF AMENDMENT:
• If a banking company and a financial institution do not opt for last option (i.e., claiming 50% credit) then under
both options, value of exempted services is to be determined.
• Clause (e) to Explanation to Rule 6 of CCR, 2004 shall not apply to a banking company and, a financial
institution, including a NBFC, engaged in providing services by way of extending deposits, loans or advances.
Hence, the amount of interest will be included in the value of exempted service for ascertaining the ineligible
credit.
Author: Provision of exclusion of ‘interest’ is actually meant for manufacturers and service providers occasionally
giving loans or making deposits. Hence, a proviso has been added w.e.f. 2-2-2017 that this clause shall not
apply to a banking company, financial institution and NBFC engaged in providing services by way of
extending deposits, loans or advances.
.
2 Transfer of cenvat credit is made subject to permission of AC/DC who shall dispose off transfer
request in time bound manner
N/N 4/2017-Central Excise (N.T.), Dated: February 2, 2017
Rule 10 : Transfer of Credit.
Unutilized credit in factory can be transferred –i) When factory is relocated or ii) When ownership is tfd
(1) -- If a manufacturer of the final products shifts his factory to another site or
-- if the factory is transferred
⇒ on account of change in ownership or
⇒ on account of sale, merger, amalgamation, lease or --- with the specific provision for
transfer of the factory to a joint venture transfer of liability of such factory.

then, the manufacturer shall be allowed to transfer the cenvat credit* lying unutilized in his accounts to
such transferred, sold, merged, leased or amalgamated factory.
Unutilized credit in factory can be transferred –i) When factory is relocated or ii) When ownership is tfd
(2) -- If a provider of output service shifts or transfers his business
.

⇒ on account of change in ownership or .

⇒ on account of sale, merger, amalgamation, lease or --- with the specific provision for transfer of
transfer of the factory to a joint venture liability of such factory.

then, the provider of output service shall be allowed to transfer the cenvat credit* lying unutilized in his
accounts to such transferred, sold, merged, leased or amalgamated business.

When credit is transferred, related input or capital goods shall also be transferred (wherever possible)
(3) The transfer of the cenvat credit shall be allowed only if
… the stock of inputs as such or in process, or the capital goods, is also transferred along with the
factory/ business to the new site or ownership and
… the inputs, or capital goods, on which credit has been availed of are duly accounted for* to the
satisfaction of AC/DC.
.
Time bound disposal of CREDIT TRANSFER application: [3 months + 6 months extension by Principal
CCE / CCE]
(4) Subject to the provisions contained in sub-rule (3), the transfer of the CENVAT Credit shall be allowed
within a period of three months from the date of receipt of application by the AC/DC of Central Excise:
.
Provided that the period specified in this sub-rule may, on sufficient cause being shown and reasons to
be recorded in writing, be extended by the Principal CCE /CCE, for a further period not exceeding six
months.

REMARKS
Situations covered (from angle of Manufacturer) Extent of Conditions for transfer of
transferrable credit credit
1. When there is physical shifting of factory from one site to 2 conditions:
another (say, Mr X relocating his factory from Delhi to Haryana) Cenvat credit 1) Stock of inputs as well
lying unutilized in as capital goods is also
2. When ownership of factory stands transferred to another the factory transferred; and
person (say, Mr X sold out his factory to Mr Y) – Liability of 2) Transferred goods are
business/factory shall also be transferred alongwith duly accounted for to
satisfaction of AC/DC **
Pre-amendment:
** HP INDIA SALES LTD- 2012- KARNATKA HC:
• Permission of AC/ DC is not required for transfer of credit.
• It is sufficient if stock of input/ capital goods has been duly accounted for to satisfaction of excise
authority.

Post-amendment:
• Legislative amendment now clearly suggests that permission of AC/ DC is mandatory for transfer of
credit.
• Assessee shall submit credit transfer application to the AC/ DC, who shall dispose off the application in
time bound manner. The prescribed time limit is of 3 months, which on sufficient reasons can be further
extended for another 6 months by Principal CCE / CCE.

3. Rule 2(l), Rule 4(7) and Rule 9(1) amended to allow credit to importer who has paid ST in
respect of overseas transportation service provided by SP located in non-TT to SR located in
Non-TT

These have been discussed under ‘Updates in Service Tax’


Updates in CENTRAL EXCISE

CENTRAL EXCISE RULES, 2002

Rule 21 of CER, 2002 amended to provide for time bound disposal of remission application

Pre amendment: Remission only upon request


.
Rule 21 of CER, 2002
(1) Where it is shown to the satisfaction of proper officer that
… Goods have been lost or destroyed by natural causes (*such as earthquake, flood, excessive rain) or
by unavoidable accident (*such as industrial accident, fire, breakage during handling
within factory etc.),

… Goods are claimed by the manufacturer as unfit for consumption or as unfit for marketing (*such
as manufactured goods found on testing of very poor quality for human consumption or having safety issue etc),

at any time before removal,


He may REMIT the duty payable on such goods,
… subject to such conditions as may be imposed by him by ORDER in writing.

Amount of ED sought to be remitted To whom remission application shall be submitted


Upto 10,000/- SCE
Exceeding 10,000/- but upto 1,00,000/- AC/DC
Exceeding 1,00,000/- but upto 5,00,000/- JC / ADDL Commissioner
Exceeding 5,00,000/- Principal CCE / CCE
.
.

Post amendment: Time limit introduced for disposal of remission application


.

Rule 21 - sub-rule (2) inserted N/N 5/2017-Central Excise (N.T.), Dated: February 2, 2017
.
Time bound disposal of remission application: [3 months + 6 months extension by next higher authority]
(2) The authority referred to in sub-rule (1) shall, within a period of three months from the date of receipt of
an application, decide the remission of duty:

Provided that the period specified in this sub-rule may, on sufficient cause being shown and reasons to be
recorded in writing, be extended by an authority next higher than the authority before whom the
application for remission of duty is pending, for a further period not exceeding six months.
POPS R
ULE
Remarks
CBEC issued circular exempting assesses from requirement of filing combined ANNUAL RETURN
of central excise and service tax

CIRCULAR NO 1050/38/2016-CX, Dated: November 08, 2016

Sub: Combined Annual Return Form for Central Excise and Service Tax - reg.
Kind attention is invited to Notification No. 8/2016-CE(N.T.) (Sl.No.51 dated 01.03.2016 and Notification
No.13/2016-CE(N.T.) (Sl.No.9) dated 01.03.2016 vide which Rule 12 of Central Excise Rules, 2002 and Rule
9A of CENVAT Credit Rules, 2004, respectively, were amended to replace the existing Central Excise Forms
ER-4 to ER-7 with an Annual Return form.
On the service tax side, vide Notification No.19/2016-ST dated (11.03.2016, Rule 7 of the Service Tax
Rules, 1994 was amended to prescribe an annual return.

In terms of Rule 12 of Central Excise Rules, 2002 and Rule 7 of the Service Tax Rules, 1994, the format of the
Annual Return, which was required to be filed by 30th day of November, was to be specified by the Board by
notification.

In view of impending implementation of Goods & Services Tax (GST) it has been decided that, the
aforesaid Annual Return shall not be required to be filed for the year 2015-16, which is due to be filed
by 30.11.2016.
• After implementation of GST, Annual Return for non-GST goods only may be required.
• A final view on the same would be taken after due consultation with the trade.

Trade may be suitably informed that the aforesaid Combined Annual Return for 2015-16 is not required
to be filed.
Updates in CUSTOMS

CUSTOMS ACT, 1962

1. Deferment Payment Scheme – related rules notified


.
Sec 47 of Customs Act, 1962 was amended by FA, 2016 to provide ‘deferred payment facility’ to the importer.
Scheme  Deferral of the payment of Customs duty/ charges for up to certain period (Period as notified in Rules)
 No requirement to pay cash on each Customs import entry. Instead, aggregate liability of a period is
discharged by single payment..

 Hitherto, Customs provides for payment of duty on TRANSACTION BASIS.

Rules have been notified.

Deferred Payment of Import Duty Rules, 2016


Rule Subject Matter
R-1 Short title and commencement
(1) These rules may be called the Deferred Payment of Import Duty Rules, 2016.
(2) They shall come into force on the 16th day of November, 2016.

R-2 Definitions
(1) In these rules, unless the context otherwise requires,-
(a) “Act” means the Customs Act, 1962;
(b) “due date” means the date specified in rule 5 of these rules;
(c) “eligible importer” means any class of importers notified under proviso to Section 47(1) of
the Act.
nd
N/N 135/2016- Cus (NT) – 2 Nov, 2016
CG permits the following class of importers to make deferred payment of import duty:
• Importers certified under Authorized Economic Operator programme as AEO (Tier-
Two) and AEO (Tier-Three)

Explanation: For the purpose of this notification, AEO means Authorized Economic Operator
certified by the Directorate General of Performance Management under the CBEC.

(2) Words and expressions used and not defined herein but defined in the Act, shall have the
meanings respectively assigned to them in the Act.

R-3 Application
These rules shall apply to eligible importer who have been notified under the proviso to Section 47(1)
of the Act.

R-4 Information about intent to avail benefit of notification


(1) An eligible importer who intends to avail the benefit under section 47(1) of the Act shall intimate
to the Principal CC or CC, as the case may be, having jurisdiction over the port of clearance, his
intention to avail the said benefit.
(2) The Principal CC or CC, as the case may be, shall, upon being satisfied with the eligibility of the
importer to pay the duty under these rules, allow the eligible importer to pay the duty by due
dates specified in rule 5.
R-5 Payment of duty
The eligible importer shall pay the duty by the dates specified hereunder inclusive of the period
(excluding holidays) as mentioned in Section 47(2) of the Act, namely:
th
(a) for goods corresponding to Bill of Entry returned the duty shall be paid by the 17
st th
for payment from 1 day to 15 day of any month, day of that month;
nd
(b) for goods corresponding to Bill of Entry returned the duty shall be paid by the 2
th
for payment from 16 day till the last day of any day of the following month;
month other than March
st
(c) for goods corresponding to Bill of Entry returned for the duty shall be paid by the 31
th th
payment from 16 day till the 29 day of March, March;
nd
(d) for goods corresponding to Bill of Entry returned for the duty shall be paid by the 2
th st
payment from 30 day of March to 31 day of March, April

[Substituted by N/N 28/2017 - 31 March, 2017]


st

th
(a) for goods corresponding to Bill of Entry returned the duty shall be paid by the 16
st th
for payment from 1 day to 15 day of any month, day of that month;
st
(b) for goods corresponding to Bill of Entry returned the duty shall be paid by the 1
th
for payment from 16 day till the last day of any day of the following month;
month other than March
st
(c) for goods corresponding to Bill of Entry returned for the duty shall be paid by the 31
th st
payment from 16 day till the 31 day of March, March;

R-6 Manner of payment


The eligible importer shall pay the duty electronically:
Provided that the AC/DC, for reasons to be recorded in writing, may allow payment of duty by any
mode other than electronic payment.

R-7 Deferred payment not to apply in certain cases


An eligible importer who fails to pay duty in full by due date more than once in a period of three
consecutive months shall not be permitted to make deferred payment.

Provided that the facility of deferred payment shall not be restored unless the eligible importer has
paid the duty in full along with the interest.

R-8 Exemption in respect of certain good


Nothing contained in these rules shall apply to the goods which have not been assessed or not
declared by the importer in the entry made under the Act.
.
Remarks
.

Summary
Eligible Importer
• Importers certified under Authorized Economic Operator programme as AEO (Tier-2) and AEO (Tier-3)
.

Explanation: For the purpose of this notification, AEO means Authorized Economic Operator certified by the Directorate
General of Performance Management under the CBEC.

Due Dates: The due dates for payment of duty by an eligible importer are:
(a) for goods corresponding to Bill of Entry returned for the duty shall be paid by the 16 day
th

payment from 1 day to 15 day of any month, of that month;


st th

(b) for goods corresponding to Bill of Entry returned for the duty shall be paid by the 1 day
st

payment from 16 day till the last day of any month other of the following month;
th

than March
(c) for goods corresponding to Bill of Entry returned for payment the duty shall be paid by the 31
st

from 16 day till the 31 day of March, March;


th st
Manner of Payment: The duty has to be paid electronically

Consequences of default in payment: and if there is a default more than once in three consecutive months, this facility of
deferred payment will not be allowed unless the duty with interest has been paid in full.

* Rules notifying ‘deferment payment facility for exporter’ have still not been notified.

CIRCULARS

1. Shipping Line / Agent , being person liable to file ICGM, shall only be held liable to fine/penalty
for improper filing of IGM

CIRCULAR NO 14/2017-Customs, Dated: April 11, 2017

Subject: Incomplete or incorrect filing of Import Manifest or Import Report - Regarding.


• The responsibility of amendment in the IGM rests solely with the Shipping Line/Agent, as they file IGM with
Customs u/Sec 30 of Customs Act, 1962.
• It is, therefore, clarified that the fine/penalty imposed, if any, upon adjudication in such cases, shall be
payable by the Shipping Line only or such other person as specified.

• No fine/penalty is required to be imposed on the consignee or others. No request for any


amendment in the IGM from Custom Broker/Importer will be entertained.

2. Expansion of 24x7 customs clearance and clarification of levy of MOT charges in CFSs
attached to 24x7 ports

CIRCULAR NO 4/2017-Customs, Dated: February 16, 2017


.

• It has been decided to extend 24x7 customs clearance to all bills of entry and not just facilitated bills of
entry.
[Author: Earlier, 24*7 Facility was only to facilitated bill of entry (i.e., bill of entry not interdicted by Risk Management System,
i.e., not selected for scrutiny)]

• Board has amended the Customs (Fees for Rendering Services by the Customs Officers) Regulations, 1998
to provide that at 24x7 customs ports and airports, no fee i.e. merchant overtime fee (MOT) shall be
collected in lieu of the services rendered by the customs officers. As on date no MOT charges are
required to be collected in respect of the services provided by the customs officers at 24x7
customs ports and airports.
Reference has been received seeking clarification as to whether MOT charges are to be collected in
respect of stuffing of export goods at CFSs.
(a) It is observed that a designated 24x7 sea port can have a number of CFSs attached to it. While Board
has already exempted MOT charges at 24x7 ports, the reference in essence seeks clarification as to
whether MOT exemption can be extended to attached CFSs as well.
(b) CFSs are an extension of the Port. In the overall ecosystem of Customs clearance, CFSs have played
an important role in faster clearance of EXIM goods. As a result, bulk of regulatory activity other than
appraising, has shifted to CFSs.
(c) Factory stuffed containers are already covered under 24x7 operations, therefore, MOT charges
are not required to be paid in lieu of services (like verification of seals etc) rendered by
customs officers at CFSs in respect of such containers.
(d) Other than at the manufacturing premises, stuffing can inter-alia also occur at CFSs for export.
Considering that the customs work carried out in the CFSs is actually an extension of the clearance
activity at the port, therefore, logically no MOT charges should be leviable in lieu of services rendered
by customs officers within the CFS premises even in the case of export against a claim to benefit.
(e) Accordingly, it is clarified that no MOT charges would be collected at CFSs attached exclusively to 24x7
ports in lieu of services rendered within the CFS.

3. SWIFT (Single Window Interface for Facilitation of Trade) extended to Exports

CIRCULAR NO 1/2017-Cus, Dated: Jan 4, 2017

What is SWIFT?
SWIFT project envisages that the importers and exporters would electronically lodge their Customs
clearance documents at a single point only with the Customs. The required permission, if any, from other
regulatory agencies would be obtained online without the importer/exporter having to separately approach
these agencies. The Single Window provides the importers/exporters a single point interface for Customs
clearance of import and export goods thereby reducing interface with Governmental agencies, dwell time
and cost of doing business.

4. CBEC instructed all officers to mandatorily pass SEIZURE ORDER in case goods are seized
u/Sec 110

INSTRUCTION NO 01/2017-Customs, Dated: February 8, 2017


Subject: Passing of order under Section 110 of the Customs Act, 1962 - reg.
.
Legal Text of Sec 110 [Seizure of goods etc.]
Sec 110. SEIZURE of GOODs etc.
Seizure Of Goods Liable To Confiscation
(1) If the PO has reason to believe that any goods are liable to confiscation under this Act, he may SEIZE such goods:

Provided that
… where it is not practicable to seize any such goods, the PO may serve on the owner of the goods AN ORDER that he
shall not remove, part with, or otherwise deal with the goods except with the previous permission of such officer.

Release of seized goods: on failure to initiate confiscation proceedings within 6 months (+ 6 Months extension)
(2) ⇒ Where any goods are seized under sub-section (1) but
⇒ notice u/s 124 proposing confiscation in respect thereof is NOT GIVEN within 6 months of seizure*,
.
the goods shall be returned to the person from whose possession they were seized:
Provided that the aforesaid period of 6 months may, on sufficient cause being shown, be extended by the Principal CC
or CC for another 6 months.
.

Every seizure shall be effected by proper seizure order


• It has been brought to the notice of the Board that in several cases, goods are being held-up/seized by the
field formations only under panchnama and separate orders for seizure of goods are not being passed. The
Hon'ble Delhi High Court, in a recent order, has held that a panchnama is a statement by panchas
(witnesses) and cannot be taken to be an order passed by the proper officer u/Sec 110 of the Customs Act,
1962.

• Though Section 110 of the Act ibid does not specify passing an order for seizure of goods, it says
that where it is not practicable to seize any such goods, the proper officer may serve on the owner of the
goods an order that he shall not remove, part with, or otherwise deal with the goods except with the previous
permission of such officer.
• In view of the above, in all future cases, the following may be adhered to:
- Whenever goods are being seized, in addition to panchnama, the proper officer must also pass an appropriate
order (seizure memo/order/etc.) clearly mentioning the reasons to believe that the goods are liable for confiscation.
- Where it is not practicable to seize any such goods, the proper officer may serve on the owner of the goods an order
that he shall not remove, part with, or otherwise deal with the goods except with the previous permission of such
officer. In such cases, investigations should be fast-tracked to expeditiously decide whether to place the goods under
seizure or to release the same to their owner.

Post seizure, SCN proposing confiscation shall invariably be issued within time period stipulated u/Sec
110(2), else goods shall be released
• Further, it has been brought to the notice of the Board that in cases where provisional release of seized
goods is allowed under Section 110A of the Act ibid, show cause notices are not being issued within the
stipulated time period on the ground that the goods have been released to the owner of the goods.
• The provisions of the Customs Act, 1962 are clear that irrespective of the fact whether goods remain
seized or are provisionally released, once goods are seized, the time period (including extended
time period) stipulated under Section 110(2) of the Act shall remain applicable (i.e., seized goods shall be released to the
owner) and has to be strictly adhered to.
Updates in COMMON CHAPTERS

APPEALS, REVIEW & REVISION

SEC 35-R (Appeal not to be filed in certain cases)

Monetary limit for filing appeal to HC has been raised


.
Sec 35-R of CEA, 1994

CBEC instructions issued u/Sec 35-R


[Instruction F.No. 390/Misc/ 163/2010 as revised on 17th Dec, 2015]
Appellate Forum Appeal cannot be filed* Appeal can be filed
if duty/tax involved in case is if duty/tax involved in case is
1. CESTAT * Below Rs. 10,00,000/- Rs. 10,00,000/- or more

2. High Court * Below Rs. 15,00,000/- Rs. 15,00,000/- or more

Below Rs. 20,00,000/- Rs. 20,00,000/- or more

3. Supreme Court Below Rs. 25,00,000/- Rs. 25,00,000/- or more


.
.

F.No.390/Misc./163/2010-JC/Pt
.
Sub: Reduction of Government litigation - providing monetary limits for filing appeals by the Department
before CESTAT regarding

In exercise of the powers conferred by Section 35R of the Central Excise Act, 1944 made applicable to Service
Tax vide section 83 of the Finance Act, 1994 and Section 131BA of the Customs Act, 1962 and
in partial modification of earlier instruction issued from F. No. 390/Misc./163/2010-JC dated 17.12.2015,

CBEC fixed the monetary limit below which appeal shall not be filed in the High Court as Rs. 20,00,000/-.
.

POPS R
ULES