Service Tax Based On Negative List

Chapter VI (Section 119) of the Finance Act 2015 contains provisions for levy and collection of Swachh Bharat Cess (SBC). Now the Government has announced 15th November, 2015 as the date from which the provisions of Section 119 would come into effect.

Simultaneously, Government has also notified levy of Swachh Bharat Cess at the rate of 0.5% on all taxable services. Effectively, the rate of SBC would be 0.5% and new rate of service tax plus SBC would be 14.5%. As such SBC translates into a tax of 50 paisa only on every one hundred rupees worth of taxable services.

The proceeds from this cess will be exclusively used for Swachh Bharat initiatives.

1. In all, there are 17 heads of services that have been specified in the negative list, which are:

   (a) Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:

   (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;

   (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

   (iii) transport of goods or passengers; or

   (iv) any services, other than services covered under clauses (i) to (iii) above, provided to business entities.

   (b) Services by the Reserve bank of India.

   (c) Services by a foreign diplomatic mission located in India.

   (d) Services relating to agriculture or agricultural produce by way of –

   (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;

   (ii) supply of farm labour;

   (iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;

   (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

   (v) loading, unloading, packing, storage or warehousing of agricultural produce;

   (vi) agricultural extension services;

   (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

   (e) Trading of goods.

   (f) Any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption.

   (g) Selling of space for advertisements in print media.

   (h) Service by way of access to a road or a bridge on payment of toll charges.

   (i) Betting, gambling or lottery.

   (j) Admission to entertainment events or access to amusement facilities.

   (k) Transmission or distribution of electricity by an electricity transmission or distribution utility.

   (l) 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 law;

   (iii) education as a part of an approved vocational education course.

   (m) Services by way of renting of residential dwelling for use as residence;

   (n) Services by way of –

   (i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;

   (ii) inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;

   (o) Service of transportation of passengers, with or without accompanied belongings, by –

   (i) a stage carriage;

   (ii) railways in a class other than –

   (A) first class; or

   (B) an air conditioned coach;

   (iii) metro, monorail or tramway;

   (iv) inland waterways;

   (v) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and

   (vi) metered cabs, or auto rickshaws;

   (p) Services by way of transportation of goods –

   (i) by road except the services of –

   (A) a goods transportation agency; or

   (B) a courier agency;

   (ii) by an aircraft or a vessel from a place outside India up to the customs station of clearance in India; or

   (iii) by inland waterways;

   (q) Funeral, burial, crematorium or mortuary services including transportation of the deceased.

   In all, there are 17 heads of services that have been specified in the negative list, which are:

   (a) Services by Government or a local authority excluding the following services to the extent they are not covered elsewhere:

   (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Government;

   (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;

   (iii) transport of goods or passengers; or

   (iv) any services, other than services covered under clauses (i) to (iii) above, provided to business entities.

   (b) Services by the Reserve bank of India.

   (c) Services by a foreign diplomatic mission located in India.

   (d) Services relating to agriculture or agricultural produce by way of –

   (i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;

   (ii) supply of farm labour;

   (iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;

   (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

   (v) loading, unloading, packing, storage or warehousing of agricultural produce;

   (vi) agricultural extension services;

   (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

   (e) Trading of goods.

   (f) Any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption.

   (g) Selling of space for advertisements in print media.

   (h) Service by way of access to a road or a bridge on payment of toll charges.

   (i) Betting, gambling or lottery.

   (j) Admission to entertainment events or access to amusement facilities.

   (k) Transmission or distribution of electricity by an electricity transmission or distribution utility.

   (l) 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 law;

   (iii) education as a part of an approved vocational education course.

   (m) Services by way of renting of residential dwelling for use as residence;

   (n) Services by way of –

   (i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;

   (ii) inter-se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;

   (o) Service of transportation of passengers, with or without accompanied belongings, by –

   (i) a stage carriage;

   (ii) railways in a class other than –

   (A) first class; or

   (B) an air conditioned coach;

   (iii) metro, monorail or tramway;

   (iv) inland waterways;

   (v) public transport, other than predominantly for tourism purpose, in a vessel between places located in India; and

   (vi) metered cabs, or auto rickshaws;

   (p) Services by way of transportation of goods –

   (i) by road except the services of –

   (A) a goods transportation agency; or

   (B) a courier agency;

   (ii) by an aircraft or a vessel from a place outside India up to the customs station of clearance in India; or

   (iii) by inland waterways;

   (q) Funeral, burial, crematorium or mortuary services including transportation of the deceased.

The following taxable services have been exempt from the whole of the service tax leviable thereon under section 66B of the said Act vide mega exemption notification no. 25/2012 – ST dated 20/6/12 namely:-

1. Services provided to the United Nations or a specified international organization;

2.

(i) Health care services by a clinical establishment, an authorised medical practitioner or para-medics;

(ii) Services provided by way of transportation of a patient in an ambulance, other than those specified in (i) above;”

2A. Services provided by cord blood banks by the way of preservation of stem cells or any other service in relation to such preservation

2B. Services provided by operators of the Common Bio-medical Waste Treatment Facility to a clinical establishment by way of treatment or disposal of bio-medical waste or the processes incidental thereto.

3. Services by a veterinary clinic in relation to health care of animals or birds;
4. Services by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) by way of charitable activities;
5. Services by a person by way of-

(a) renting of precincts of a religious place meant for general public; or

(b) conduct of any religious ceremony;

5A. Services provided by a specified organization in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement

6. Services provided by-

(a) an arbitral tribunal to -

(i) any person other than a business entity; or

(ii) a business entity with a turnover up to rupees ten lakh in the preceding

financial year;                                            

(b) a partnership firm of advocates or an individual as an advocate other than a senior advocate, by way of legal services to-

(i) an advocate or partnership firm of advocates providing legal services;

(ii) any person other than a business entity; or

(iii) a business entity with a turnover up to rupees ten lakh in the preceding financial year; or

(c) a senior advocate by way of legal services to a person other than a person ordinarily carrying out any activity relating to industry, commerce or any other business or profession;

7. Omitted by Notification No. 6/2014-ST
8. Services by way of training or coaching in recreational activities relating to arts, culture or sports;
9. Services provided to or by an educational institution in respect of education exempted from service tax, by way of,-

(b) auxiliary educational services; or

(c) renting of immovable property;

(a) by an educational institution to its students, faculty and staff

(b) to an educational institution, by way of, -

(i) transportation of students, faculty and staff

(ii) catering, including any mid-day meals scheme sponsored by the Government

(iii) security or cleaning or house-keeping services performed in such educational institution

(iv) services relating to admission to, or conduct of examination by, such institution

9A. Any services provided by,-

• the National Skill Development Corporation set up by the Government of India;
• a Sector Skill Council approved by the National Skill Development Corporation;
• an assessment agency approved by the Sector Skill Council or the National Skill Development Corporation;
• a training partner approved by the National Skill Development Corporation or the Sector Skill Council

in relation to (a) the National Skill Development Programme implemented by the National Skill Development Corporation; or (b) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or (c) any other Scheme implemented by the National Skill Development Corporation.

9B.Services provided by the Indian Institutes of Management, as per the guidelines of the Central Government, to their students, by way of the following educational programmes, except Executive Development Programme,-

(a) two 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 Indian Institute of Management;

(b) fellow programme in Management;

(c) five year integrated programme in Management

9C. services of assessing bodies empanelled centrally by Directorate General of Training, Ministry of Skill Development and Entrepreneurship by way of assessments under Skill Development Initiative (SDI) Scheme;

9D. services provided by training providers (Project implementation agencies) under Deen Dayal Upadhyaya Grameen Kaushalya Yojana under the Ministry of Rural Development by way of offering skill or vocational training courses certified by National Council For Vocational Training

10. Services provided to a recognised sports body by-

(a) an individual as a player, referee, umpire, coach or team manager for

participation in a sporting event organized by a recognized sports body;

(b) another recognised sports body;

11. Services by way of sponsorship of sporting events organised,-

(a) by a national sports federation, or its affiliated federations, where the

participating teams or individuals represent any district, state or zone;

(b) by Association of Indian Universities, Inter-University Sports Board, School Games Federation of India, All India Sports Council for the Deaf, Paralympic Committee of India or Special Olympics Bharat;

(c) by Central Civil Services Cultural and Sports Board;

(d) as part of national games, by Indian Olympic Association; or

(e) under Panchayat Yuva Kreeda Aur Khel Abhiyaan (PYKKA) Scheme;

12. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -

(a) deleted w.e.f 1-4-2015

(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under the Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);

(c) deleted w.e.f 1-4-2015

(d) canal, dam or other irrigation works;

(e) pipeline, conduit or plant for (i) water supply (ii) water treatment, or (iii) sewerage treatment or disposal; or

(f) deleted w.e.f 1-4-2015

12A. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -

(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;

(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or

(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act;

under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:

provided that nothing contained in this entry shall apply on or after the 1st April, 2020;

13. Services provided by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of-

(a) a road, bridge, tunnel, or terminal for road transportation for use by general public;

(b) a civil structure or any other original works pertaining to a scheme under

Jawaharlal Nehru National Urban Renewal Mission or Rajiv Awaas Yojana;

(ba) a civil structure or any other original works pertaining to the „In-situ rehabilitation of existing slum dwellers using land as a resource through private participation‟under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana, only for existing slum dwellers.

(bb) a civil structure or any other original works pertaining to the ‘Beneficiary-led individual house construction / enhancement under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana;

(c) a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public;

(d) a pollution control or effluent treatment plant, except located as a part of a factory; or

(e) a structure meant for funeral, burial or cremation of deceased;

14. Services by way of construction, erection, commissioning, or installation of original works pertaining to,-

(a) railways, including monorail or metro;

(b) a single residential unit otherwise than as a part of a residential complex;

(c) low- cost houses up to a carpet area of 60 square metres per house in a housing project approved by competent authority empowered under the ‘Scheme of Affordable Housing in Partnership’ framed by the Ministry of Housing and Urban Poverty Alleviation, Government of India;

(d) post- harvest storage infrastructure for agricultural produce including a cold storage for such purposes; or

(e) mechanised food grain handling system, machinery or equipment for units processing agricultural produce as food stuff excluding alcoholic beverages;

14A. Services by way of construction, erection, commissioning, or installation of original works pertaining to an airport or port provided under a contract which had been entered into prior to 1 st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:

provided that Ministry of Civil Aviation or the Ministry of Shipping in the Government of India, as the case may be, certifies that the contract had been entered into before the 1st March, 2015:

provided further that nothing contained in this entry shall apply on or after the 1st April, 2020;

15. Services provided by way of temporary transfer or permitting the use or enjoyment of a copyright,-

(a) covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 (14 of 1957), relating to original literary, dramatic, musical or artistic works; or

(b) of cinematograph films for exhibition in a cinema hall or cinema theatre.

16. Services by an artist by way of a performance in folk or classical art forms of (i) music, or (ii) dance, or (iii) theatre, if the consideration charged for such performance is not more than one lakh and fifty thousand rupees:

Provided that the exemption shall not apply to service provided by such artist as a brand ambassador.

17. Services by way of collecting or providing news by an independent journalist, Press Trust of India or United News of India;
18. Services by a hotel, inn, guest house, club or campsite, by whatever name called, for residential or lodging purposes, having declared tariff of a unit of accommodation below one thousand rupees per day or equivalent
19. Services provided in relation to serving of food or beverages by a restaurant, eating joint or a mess, other than those having the facility of air-conditioning or central air-heating in any part of the establishment, at any time during the year;

19A. Services provided in relation to serving of food or beverages by a canteen maintained in a factory covered under the Factories Act, 1948 (63 of 1948), having the facility of air-conditioning or central air-heating at any time during the year;

20. Services by way of transportation by rail or a vessel from one place in India to another of the following goods -

(a) DELETED

(b) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap;

(c) defence or military equipments;

(d) DELETED

(e) DELETED

(f) newspaper or magazines registered with the Registrar of Newspapers;

(g) railway equipments or materials;

(h) agricultural produce;

(i) milk, salt and food grain including flours, pulses and rice;

(j) chemical fertilizer, organic manure and oilcakes;

21. Services provided by a goods transport agency, by way of transport in a goods carriage of,-

(a) agricultural produce;

(b) goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees;

(c) goods, where gross amount charged for transportation of all such goods for a single consignee does not exceed rupees seven hundred fifty;

(d) milk, salt and food grain including flours, pulses and rice

(e) chemical fertilizer, organic manure and oil cakes; ]

(f) newspaper or magazines registered with the Registrar of Newspapers;

(g) relief materials meant for victims of natural or man-made disasters, calamities, accidents or mishap; or

(h) defence or military equipments

(i) cotton, ginned or baled.

22. Services by way of giving on hire -

(a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or

(b) to a goods transport agency, a means of transportation of goods;

23. Transport of passengers, with or without accompanied belongings, by -

(a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal;

(b) non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire; or

(bb) stage carriage other than air-conditioned stage carriage;

24. DELETED
25. Services provided to Government, a local authority or a governmental authority by way of -

(a) water supply, public health, sanitation conservancy, solid waste management or slum improvement and up-gradation; or

(b) repair or maintenance of a vessel or an aircraft;

26. Services of general insurance business provided under following schemes -

(a) Hut Insurance Scheme;

(b) Cattle Insurance under Swarnajaynti Gram Swarozgar Yojna (earlier known as Integrated Rural Development Programme);

(c) Scheme for Insurance of Tribals;

(d) Janata Personal Accident Policy and Gramin Accident Policy;

(e) Group Personal Accident Policy for Self-Employed Women;

(f) Agricultural Pumpset and Failed Well Insurance;

(g) premia collected on export credit insurance;

(h) Weather Based Crop Insurance Scheme or the Modified National Agricultural Insurance Scheme, approved by the Government of India and implemented by the Ministry of Agriculture;

(i) Jan Arogya Bima Policy;

(j) National Agricultural Insurance Scheme (Rashtriya Krishi Bima Yojana);

(k) Pilot Scheme on Seed Crop Insurance;

(l) Central Sector Scheme on Cattle Insurance;

(m) Universal Health Insurance Scheme;

(n) Rashtriya Swasthya Bima Yojana; or

(o) Coconut Palm Insurance Scheme;

(p) Pradhan Mantri Suraksha Bima Yojana;

(q) Niramaya‟ Health Insurance Scheme implemented by Trust constituted under the provisions of the National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999).

26A. Services of life insurance business provided under following schemes -

(a) Janashree Bima Yojana (JBY); or

(b) Aam Aadmi Bima Yojana (AABY)

(c) life micro-insurance product as approved by the Insurance Regulatory and Development Authority, having maximum amount of cover of fifty thousand rupees

(d) Varishtha Pension Bima Yojana;

(e) Pradhan Mantri Jeevan Jyoti Beema Yojana

(f) Pradhan Mantri Jan Dhan Yojana

26B. Services by the way of collection of contribution under Atal Pension Yojana (APY)

26C. Services of life insurance business provided by way of annuity under the National Pension System regulated by Pension Fund Regulatory and Development Authority of India (PFRDA) under the Pension Fund Regulatory And Development Authority Act, 2013 (23 of 2013);

27. Services provided by an incubatee up to a total turnover of fifty lakh rupees in a financial year subject to the following conditions, namely:-

(a) the total turnover had not exceeded fifty lakh rupees during the preceding financial year; and

(b) a period of three years has not been elapsed from the date of entering into an agreement as an incubatee;

28. Service by an unincorporated body or a non- profit entity registered under any law for the time being in force, to its own members by way of reimbursement of charges or share of contribution -

(a) as a trade union;

(b) for the provision of carrying out any activity which is exempt from the levy of service tax; or

(c) up to an amount of five thousand rupees per month per member for sourcing of goods or services from a third person for the common use of its members in a housing society or a residential complex;

29. Services by the following persons in respective capacities -

(a) sub-broker or an authorised person to a stock broker;

(b) authorised person to a member of a commodity exchange;

(c) DELETED

(d) DELETED

(e) DELETED

(f) selling agent or a distributer of SIM cards or recharge coupon vouchers;

(g) (i) 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 in the banking company’s rural area branch, by way of account opening, cash deposits, cash withdrawals,obtaining e-life certificate, Aadhar seeding;

(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 a business correspondent to an insurance company in a rural area; or

(ii) (ga) Basic Savings Bank Deposit Account means a Basic Savings Bank Deposit Account opened under the guidelines issued by Reserve Bank of India relating thereto;

(b) in clause (k), in sub-clause (ii), for the words religion or spirituality, the words religion, spirituality or yoga shall be substituted.

(h) sub-contractor providing services by way of works contract to another contractor providing works contract services which are exempt;

30. Carrying out an intermediate production process as job work in relation to -

(a) agriculture, printing or textile processing;

(b) cut and polished diamonds and gemstones; or plain and studded jewellery of gold and other precious metals, falling under Chapter 71 of the Central Excise Tariff Act ,1985 (5 of 1986);

(c) [excluding alcoholic liquors for human consumption], on which appropriate duty is payable by the principal manufacturer; or

(d) processes of electroplating, zinc plating, anodizing, heat treatment, powder coating, painting including spray painting or auto black, during the course of manufacture of parts of cycles or sewing machines upto an aggregate value of taxable service of the specified processes of one hundred and fifty lakh rupees in a financial year subject to the condition that such aggregate value had not exceeded one hundred and fifty lakh rupees during the preceding financial year;

31. Services by an organiser to any person in respect of a business exhibition held outside India;
32. DELETED
33. Services by way of slaughtering of animals;
34. Services received from a provider of service located in a non- taxable territory by-

(a) Government, a local authority, governmental authority or an individual in relation to any purpose other than commerce, industry or any other business or profession;

(b) an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) for the purposes of providing charitable activities; or

(c) a person located in a non-taxable territory;

35. Services of public libraries by way of lending of books, publications or any other knowledge- enhancing content or material;
36. Services by Employees’ State Insurance Corporation to persons governed under the Employees’ Insurance Act, 1948 (34 of 1948);

37. Services by way of transfer of a going concern, as a whole or an independent part thereof;
38. Services by way of public conveniences such as provision of facilities of bathroom, washrooms, lavatories, urinal or toilets;
39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution.
40.  Services by way of loading, unloading, packing, storage or warehousing of rice, cotton, ginned or baled;
41. Services received by the Reserve Bank of India, from outside India in relation to management of foreign exchange reserves;
42. Services provided by a tour operator to a foreign tourist in relation to a tour conducted wholly outside India;
43. Services by operator of Common Effluent Treatment Plant by way of treatment of effluent;
44. Services by way of pre-conditioning, pre-cooling, ripening, waxing, retail packing, labeling of fruits and vegetables which do not change or alter the essential characteristics of the said fruits or vegetables;
45. Services by way of admission to a museum, national park, wildlife sanctuary, tiger reserve or zoo;
46. Service provided by way of exhibition of movie by an exhibitor to the distributor or an association of persons consisting of the exhibitor as one of its members;
47. Services by way of right to admission to,-

(i)   exhibition of cinematographic film, circus, dance, or theatrical performance including drama or ballet;

(ii)  recognized sporting event;

(iii) award function, concert, pageant, musical performance or any sporting event other than a recognized sporting event, where the consideration for admission is not more than ₹ 500 per person.

48. Services provided by Government or a local authority to a business entity with a turnover up to rupees ten lakh in the preceding financial year.
49. Services provided by Employees‟ Provident Fund Organisation (EPFO) to persons governed under the Employees‟ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952);
50. Services provided by Insurance Regulatory and Development Authority of India (IRDA) to insurers under the Insurance Regulatory and Development Authority of India Act, 1999 (41 of 1999);
51. Services provided by Securities and Exchange Board of India (SEBI) set up under the Securities and Exchange Board of India Act, 1992 (15 of 1992) by way of protecting the interests of investors in securities and to promote the development of, and to regulate, the securities market;
52. Services provided by National Centre for Cold Chain Development under Ministry of Agriculture, Cooperation and Farmer‟s Welfare by way of cold chain knowledge dissemination;
53. Services by way of transportation of goods by an aircraft from a place outside India upto the customs station of clearance in India.

In case of some services, there is a provision for abatement i.e part exemption of service tax. All abatements available to services of specified categories have been merged in one exemption Notification No. 26/2012-ST dated 20/6/12. In terms of the said notification, exemption is granted from so much of the service tax leviable, as is in excess of the service tax calculated on a value which is equivalent to a percentage which is specified in the notification, of the amount charged (or in some cases of specified amount) by such service provider for providing the said taxable service, unless specified otherwise, subject to the relevant conditions specified in the notification.

Taxable Services covered under the Abatement Scheme include:

• Services in relation to financial leasing including hire purchase and equipment leasing
• Transport of goods by rail (other than service specified below)
• Transport of goods in containers by rail by any person other than Indian Railways
• Transport of passengers, with or without accompanied belongings by rail
• Bundled service by way of supply of food or any other article of human consumption or any drink, in a premises (including hotel, convention center, club, pandal, shamiana or any other place, specially arranged for organizing a function) together with renting of such premises
• Transport of passengers by air, with or without accompanied belongings in (i) economy class (ii) other than economy class
• Renting of hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes
• Services of goods transport agency in relation to transportation of goods other than used household goods.
• Services of goods transport agency in relation to transportation of used household goods.
• Services provided by a foreman of chit fund in relation to chit
• Renting of motorcab
• Transport of passengers, with or without accompanied belongings, by – (a) a contract carriage other than motorcab. (b) radio taxi. (c) a stage carriage
• Transport of goods in a vessel
• Services by a tour operator in relation to (i) a tour, only for the purpose of arranging or booking accommodation for any person; (ii) tours other than (i) above  (iii) any services other than those specified in (i) and (ii) above
• Construction of a complex, building, civil structure or a part thereof, intended for a sale to a buyer, wholly or partly except where entire consideration is received after issuance of completion certificate by the competent authority

Under section 66B of the Finance Act 1994, which lays down the law with regard to the taxability of services or the charge of service tax, it has been specified that to be a taxable, a service should be –

• provided or agreed to be provided by a person to another
• in the taxable territory
• and should not be specified in the negative list.

When a service has been ‘agreed to be provided’, it needs to be determined whether the liability to pay service tax on a taxable service arises the moment it is agreed to be provided without actual provision of service or does it arise at the time of provision of service. This dilemma of determining the point of taxation is solved by the Point of Taxation Rules, 2011. The Point of Taxation Rules, 2011 were introduced vide Notification No. 18/2011-ST dated 1.3.2011 to prescribe the time as to when the service tax becomes legally due to the Government.

As per these Rules the point of taxation is the time when the invoice for the service provided or agreed to be provided is issued. If invoice is not issued within prescribed time period of completion of provision of service, then the date of completion of service is the date when the chargeability to service tax arises. However, in cases where payment is received before issuance of invoice or completion of service, the date of receipt of payment would be the point of taxation.

Overall, the structure of the Point of taxation (POT) Rules, 2011, which determine the point of chargeability to tax is as follows:

Rule 3 – General Rule for determination of Point of Taxation

Rule 4 - Determination of point of taxation in case of change of rate of tax

Rule 5 - Payment of tax in cases of new services

Rule 6 - Determination of point of taxation in case of continuous supply of service

Rule 7 - Determination of point of taxation in case of associated enterprises (Omitted by POT (Amendment) Rules, 2012 w.e.f 1.4.2012 and merged with Rule 3 of POT Rules 2011)

Rule 8 - Determination of point of taxation in case of copyrights, etc.

Rule 8A – When Central Excise Officer determines point of taxation

Rule 9 – Transitional Provisions

Under Section 66B, service should be provided (or agreed to be provided) in the taxable territory for it to be a taxable service. Thus, the taxability of a service will be determined based on the “place of its provision”. The ‘Place of Provision of Services Rules, 2012’ lay down the manner of determining the taxing jurisdiction for a service.

Taxable territory has been defined in Section 65B(52). It means the territory to which the provisions of Chapter V of the Finance Act, 1994 apply i.e. whole of the territory of India excluding the state of Jammu and Kashmir.

The main provisions of these Rules are:

• Basic Rule – Rule 3 - The place of provision of a service shall be the location of the recipient of service. Provided that in case 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.
• Performance Based Rule – Rule 4 - Place of provision of performance based services.- The place of provision of following services shall be the location where the services are actually performed
• Rule 5 - Place of provision of services relating to immovable property.- The place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn, guest house, club or campsite, by whatever, name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located or intended to be located.
• Rule 6 - Place of provision of services relating to events.- The place of provision of services provided by way of admission to, or organization of, a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar events, and of services ancillary to such admission, shall be the place where the event is actually held.
• Rule 7 - Place of provision of services provided at more than one location.-Where any service referred to in rules 3, 4, 5, or 6 is provided at more than one location, including a location in the taxable territory, its place of provision shall be the location in the taxable territory where the greatest proportion of the service is provided.
• Rule 8 - Place of provision of services where provider and recipient are located in taxable territory.- Place of provision of a service, where the location of the provider of service as well as that of the recipient of service is in the taxable territory, shall be the location of the recipient of service.
• Rule 9 - Place of provision of specified services.- The place of provision of following services shall be the location of the service provider:-

(a)  Services provided by a banking company, or a financial institution, or a non-banking financial company, to account holders;

(b)  Online information and database access or retrieval services;

(c)   Intermediary services;

(d)  Service consisting of hiring of means of transport, upto a period of one month.

• Rule 10 - Place of provision of goods transportation services.- The place of provision of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of the goods: Provided that the place of provision of services of goods transportation agency shall be the location of the person liable to pay tax.
• Rule 11 - Place of provision of passenger transportation service.- The place of provision in respect of a passenger transportation service shall be the place where the passenger embarks on the conveyance for a continuous journey.
• Rule 12 - Place of provision of services provided on board a conveyance.- Place of provision of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey.
• Rule 13 - Powers to notify description of services or circumstances for certain purposes.- In order to prevent double taxation or non-taxation of the provision of a service, or for the uniform application of rules, the Central Government shall have the power to notify any description of service or circumstances in which the place of provision shall be the place of effective use and enjoyment of a service.

The question as to in which order the above rules will apply is answered by Rule 14 of the Place of Provision of Services Rules 2012, which states that ‘Notwithstanding anything stated in any rule, where the provision of a service is, prima facie, determinable in terms of more than one rule, it shall be determined in accordance with the rule that occurs later among the rules that merit equal consideration’.

‘Bundled service’ means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services. (Explanation to Section 66F(3)). In each service the manner of determination of value of the two services for the purpose of charging service tax may be different.

Therefore, under section 66F(3), two rules have been prescribed for determining the taxability of such services, however these rules, are subject to the provisions that where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description.

The taxability of a bundled service shall be determined in the following manner, under section 66F(3):––

(a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character;

(b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax.

There is no specific guideline regarding determining which services are naturally bundled in the ordinary course of business. Whether services are naturally bundled in the ordinary course of business would depend upon the normal or frequent practices followed in the area of business to which services relate.

Normally, service tax is payable by person providing the service. Section 68(2) of the Finance Act 1994, provides for liability to pay service tax by a person other than service provider for certain specified services. This is generally known as “reverse charge”. Before the new regime of service tax based on negative list came into force on 1.7.2012, the scope of services covered under reverse charge were listed in Notification No. 15/2012 dated 17.3.2012 which laid down the kind of services under reverse charge along with the percentage of tax liability payable by service provider and service receiver respectively.

The Provisions relating to reverse charge are now contained in Notification No. 30/2012-ST dated 20-6-2012, which are as follows:

Explanation-I. - The person who pays or is liable to pay freight for the transportation of goods by road in goods carriage, located in the taxable territory shall be treated as the person who receives the service for the purpose of this notification.

Explanation-II. - In works contract services, where both service provider and service recipient is the persons liable to pay tax, the service recipient has the option of choosing the valuation method as per choice, independent of valuation method adopted by the provider of service.