Student (b) (875 Points)
15 December 2011A provided services to B for say, 100000 which is subject to abatement of 40%
So, service tax is collected on 60000 only ie 6180.
A has ST cenvat credit of 1000. What is the ST liability of A?
Can 1000 be adjusted against 6180 and only the difference is payable?
Further, can B avail the full amount of 6180 as cenvat credit?
Sunil
(Internal Auditor)
(334 Points)
Replied 15 December 2011
40% abatement is available in the case of Mandap Keeper Service and Convention Centre Service. In both cases the abatement is given subject to the condition that the assessee should not avail the input tax credit.
So in your case if you takes abatement you are not eligible to set off Rs.1000/- as Cenvat Credit
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 15 December 2011
Kirti,
In my opinion, most of the notifications providing for abatement do not allow CENVAT credit on inputs & input services to the service provider if he claims abatement. Such notifications do not restrict Credit of service tax paid in such manner to the Recepient of service.
Hence, where A would be restricted to utilise Credit of Service Tax on input service, B could utilise such credit.
Please give details of service provided and Notification under which abatement is claimed, for more specific answer.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 15 December 2011
Kirti,
In my opinion, most of the notifications providing for abatement do not allow CENVAT credit on inputs & input services to the service provider if he claims abatement. Such notifications do not restrict Credit of service tax paid in such manner to the Recepient of service.
Hence, where A would be restricted to utilise Credit of Service Tax on input service, B could utilise such credit.
Please give details of service provided and Notification under which abatement is claimed, for more specific answer.
Student
(b)
(875 Points)
Replied 15 December 2011
Thanks Prabhat.
The services include 1. Tour operator & 2. renting of cabs. (Notification No.01/2006-ST, dated 01-03-2006)
Can you pls. mention the amount of ST liabilty for A & B?
Sunil
(Internal Auditor)
(334 Points)
Replied 15 December 2011
Dear kirthi in case of Tour operator service services other than package tour and booking of accomodation abatement available is 60% and in case of Renting Cab also it is 60% abatement. So after abatement you required to pay service tax on 40% of the vallue. In this case it is 40000x10.3% which comes to 4120 only.
In both the cases it is provieded that abatement will not be available if the assesse has opted to avail cenvat credit
So cenvat credit is not available in your case
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 16 December 2011
You Should also look into Notification No. 38/2007 - ST dated 23.08.2007 for some additional benefits as tour operator. If you are providing services as specified in the Notification, you can claim additional abatement by classifying services accordingly. For reference the said notification is produced below.
"
TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY DATED THE 23rd AUGUST, 2007
1st Bhadrapada, 1929(Saka)
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(Department of Revenue)
New Delhi, the 23rd August, 2007
G.S.R. (E). In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 1/2006-Service Tax, dated the 1st March, 2006, vide number G.S.R. 115 (E), dated the 1st March, 2006, namely: -
In the said notification, in the Table, for S.No. 2 and the entries relating thereto, the following shall be substituted, namely: -
|
(1) |
(2) |
(3) |
(4) |
(5) |
|
“2. |
(n) |
(i) Services provided or to be provided to any person, by a tour operator in relation to a package tour.
Explanation.- The expression “package tour” means a tour wherein transportation, accommodation for stay, food, tourist guide, entry to monuments and other similar services in relation to tour are provided by the tour operator as part of the package tour to the person undertaking the tour.
(ii) Services provided or to be provided to any person, by a tour operator in relation to a tour, if the tour operator is providing services solely of arranging or booking accommodation for any person in relation to a tour.
(iii) Services, other than services specified in (i) and (ii) above, provided or to be provided to any person, by a tour operator in relation to a tour. |
The bill issued for this purpose indicates that it is inclusive of charges for such a tour.
(a) The invoice, bill or challan issued indicates that it is towards charges for such accommodation, and (b) this exemption shall not apply in such cases where the invoice, bill or challan issued by the tour operator, in relation to a tour, only includes the service charges for arranging or booking accommodation for any person and does not include the cost of such accommodation.
The bill issued indicates that the amount charged in the bill is the gross amount charged for such a tour.
|
25
10
40” |
(G.G. Pai)
Under Secretary to the Government of India
[F.No. 356/82/2006-TRU]
Note:- The principal notification No. 1/2006-Service Tax, dated the 1st March,2006, was published in the Gazette of India , Part II, Section 3, sub-section (i)vide number G.S.R. 115(E), dated the 1st March,2006 and was last amended by notification No. 20/2006-Service Tax, dated the 25th April,2006, G.S.R. 250(E), dated the 25th April,2006."
Student
(b)
(875 Points)
Replied 16 December 2011
Prabhat ji, unable to interpret this notification. Can you pls. explain with a example?
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 16 December 2011
Hence if you are providing a Packaged Tour abatement is 75% instead of 60%.
Further, where a Tour Operator is providing services solely of arranging or booking accommodation for any person in relation to a tour, abatement is 90%.
In relation to rent a cab services by renting of maxicab or motor vehicle rented for use by an educational body (other than a commercial training or coaching centre), it is not taxable [However, motor cab, even if rented to an educational body, is leviable to service tax].
Refer the link: https://www.servicetax.gov.in/st-profiles/rentcab.pdf
Student
(b)
(875 Points)
Replied 16 December 2011
If the tour operator provides both package tour & cabs on rent, then which rate is applicable 75% or 90%?
Can the abatement be claimed separately for each service - package tour @ 75% and cab renting @ 90%?
(cab is rented to parties other than educational insitute)
thanks.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 16 December 2011
If for an example A has provided a package tour (as defined in the notification above) of Rs.100000/- to B. Abatement will be 75%, i.e., Service tax would be Rs.100000*(100-75)%*10.3% = Rs. 2575/- only.
It is also seen that Tour operator also arrange for accomodation for a passanger. Suppose where A does not provide any tour facility but arranges for accomodation of C and issues a bill showing Cost of accomodation plus charges for such arrangement say Rs.1000/- + Rs.200/- (total Rs.1200/-). Service Tax would be payable as follows:Rs1200/-*(100-90)%*10.3% = 12.36 or Rs.12/- only.
CA Prabhat Gupta
(Manager (Indirect Taxes))
(821 Points)
Replied 16 December 2011
Given below are type of service provided, abatement & taxable value
| SL.NO. | NATURE OF SERVICE | ABATEMENT % | TAXABLE VALUE % |
|---|---|---|---|
| 1 | PACKAGE TOUR | 75% | 25% of Gross Amount |
| 2 | SERVICE IN RELATION TO BOOKING OF ACCOMODATION ONLY | 90% | 10% of Gross Amount |
| 3. | SERVICES AS TOUR OPERATOR OTHER THAN ABOVE | 60% | 40% of Gross Amount |
| 4. | RENT A CAB SERVICE BY RENTING A MAXICAB OR OTHER MOTOR VEHICLE (BUT NOT MOTORCAB) TO AN EDUCATIONAL INSTITUTION (BUT NOT COMMERCIAL TRAINING & COACHING CENTRS). | EXEMPT | NIL |
| 5. | RENT A CAB SERVICE OTHER THAN SL NO.4 ABOVE | 60% | 40% of Gross Amount |
Yes abatement can be claimed for separate service provided proper classification ha been made.
Hope this is more clear.
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