News Flash Service Tax

Udyog Software (India) Ltd.

27/10/2014



This document contains a brief summary of the latest updates related to Service Tax

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Service tax: Payable on commission / fee for handling India end of inward remittances

The place of provision of the service of intermediary is at the location of the intermediary, as per rule 9 of
the Place of Provision of Services Rules 2012. The CBEC has clarified that, in terms of this rule, service tax will
be payable in India on services provided by Indian entities that handle the India end of remittances from
abroad and charge a commission / fee to foreign banks for this. The CBEC circular number 180/06/2014-ST
dated 14 October 2014 communicating this to the field formations can be downloaded from
http://www.servicetax.gov.in/circular/st-circular14/st-circ-180-2014.htm.


Service tax: Date for filing return extended

The last date for filing ST-3 return for the period April to September 2014 has been extended from 25 October
2014 to 14 November 2014 by CBEC order number 2/2014-Service Tax dated 24 October 2014 issued from
F.No. 137/99/2011-Service Tax, in view of natural calamities in various parts of the country. The order can be
seen by selecting Orders for 2014 under the Notifications tab on the CBEC site at
http://www.servicetax.gov.in/st-notfns-home.htm.


Service tax/ Central excise / Cenvat credit: CBEC clarifies regarding place of removal

In the definition of input service in rule 2(l) of the Cenvat Credit Rules 2004, transportation and storage of
goods upto the place of removal are input services. However, the Rules did not define what was meant by
place of removal, till recently.
The definition of place of removal, inserted into the Cenvat Credit Rules by notification 21/2014-CE(NT)
dated 11 July 2014, gives the expression the same meaning as in section 4(3)(c) of the Central Excise Act
1944, whereby place of removal includes any place from where goods are sold by the assessee after their
clearance from the factory. This begs the question of determining where sale actually takes place. The CBEC
has sought to clarify the matter by issue of circular number 988/12/2014-CX dated 20 October 2014, which
says, inter alia, that

Sale takes place at the location where the transfer of property in the goods takes place from the
seller to the buyer; and this is the place of removal of the goods;
It is incorrect to decide the matter on the basis of who pays the freight or who bears the insurance
charges for the goods;
The time when transfer of property takes place is determined in terms of the Sale of Goods Act 1930;
section 19 to 24 of the said Act are applicable in this regard, as observed by the CESTAT in the case of
Associated Strips Limited v CCE New Delhi [2002 (143) ELT 131)].

The CBEC Circular no. 988/12/2014-CX dated 20 October 2014 can be seen at http://cbec.gov.in/excise/cx-
circulars/cx-circ14/988-2014cx.htm.


Service tax: CESTAT allows deduction of reimbursements from taxable value

The contracts for running petrol filling stations of HP were framed as labour supply contracts for a specified
number and grade of personnel for operating the filling station. The monthly payment consisted of an amount
for the personnel, and a fee per litre of product actually sold. Expenses of running the filling station were
borne by HP in the form of reimbursements of actual expenses to the contractor.
In deciding upon the demand of service tax on the payments made to the contractor, the CESTAT allowed
deduction of the reimbursement of actual expenses of running the filling station, like telephone, repair and
maintenance, conveyance, diary and calendar printing, from the gross amounts paid to the contractor, to
arrive at the taxable value. This order dated 7 November 2013 of CESTAT, Bangalore bench in appeals
numbering ST/3618-3620/2012 of Sajjid Ahmed, Janardhan Goud and Mallikarjun Reddy, can be downloaded
from the CESTAT site at http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Qry.asp, by entering
the information given above in the case number search.



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Service tax: leviable on commitment charges charged by bank: CESTAT

Commitment charges were levied by Punjab National Bank for amount of loan that was kept at the disposal of
the client but was not drawn. A single-member bench of the CESTAT, Delhi, has held in Punjab National
Banks appeal number ST/50483/2014-SM that such charges are integrally connected with the service of
lending and are therefore taxable. The order can be downloaded from the CESTAT site at
http://judis.nic.in/dist_judis/Cestat_Delhi/Retrieve/CaseNo_Result.asp by entering the above information in
case number search.


Service tax / Central excise: Review committees constituted for departmental appeals

Pursuant to the changes in the cadre in the recently undertaken restructuring, the CBEC has reconstituted the
review committees that will decide whether to file appeals against orders passed by departmental officers.
The reconstituted committees have been notified under office order 4/2014-ST dated 15 October 2014 and
office order 6/2014-ST dated 22 October 2014, which can be accessed at http://www.servicetax.gov.in/st-
notfns-home.htm.


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Content provided by:

Radha Arun
Consultants to Udyog Software (India) Ltd.
radha.arjuni@gmail.com

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