Service Tax

What is Service Tax?

It is a type of indirect duty levied on particular services that are
categorized as taxable services. The responsibility of paying this kind
of levy lies on the service provider. This duty can't be levied on services
that are not included in the specified list. Over last one or two years,
the domain of service tax been broadened to include new services.

The goal behind imposing service tax in India is to lower the extent of
concentration of taxation on business and industry without compelling
the government to find the middle ground on the revenue requirements
Why service tax?
Services constitute a very good spectrum of
economic activities.
The share of the services sector in the real
GDP s higher than agriculture and industrial
sector.
Why service tax needed?
With the increasing role of service sector and its
contribution to GDP, the government felt that
this sector should not be untaxed
This decision also make tremendous revenue
potential to the government
It is expected that in due course, service tax
would be reduce the tax burden on international
trade and domestic manufacturing sector
So a planned growth of service tax would be
commensurate with the goals of economic
utilization and globalization
Beginning
Service tax in India made a humble
beginning from 1
st
July, 1994 with only three
services being covered in the organized
sector like telephone, general insurance and
stock broking.
Different approaches to Service tax
There are two approaches to service tax
Comprehensive approach: All services are taxable and a
negative list is specified for services, which are not taxable
Selective approach: Only selective services are subjected to
service tax. India follows the selective approach of taxing
selected service only.
Service tax is levied on the specified service and is paid by the
service provider except in a few cases when the service receiver
pays it
The liability to pay service tax is there even if it is not collected
from customer
Central board of excise & Customs (CBEC) regulates service tax
matter
What is nature of Service Tax?
Service tax is a tax on service.
Service means value addition to a product that is intangible
If there is no service, there is no tax.
There is no service tax act; service tax is imposed by amending
chapter V of finance act 1994 from time to time.
There is also no provision of deduction of tax at source from
service tax
For charge of service tax, one has to know
What is taxable service and,
Value of service.
Service tax is payable only and only on taxable service.
Different features of service tax
Indirect tax
No separate act
Central govt. has power to make rules to carry out ST act
Administrated by CBEC
Uniform rate
12% Service tax + 2% EC + 1% SHEC = 12.36% actually
No double taxation
Service falling under two or more sub clauses cant taxed twice
Not applicable in Jammu & Kashmir
Chargeable on taxable service
Small service provider excluded
A threshold limit of ` 10 lakh has been provided
Taxable service/value
Taxable service and value have been specially defined
Tax is generally payable by service provider
Self assessment
Exemption by notification
Power have been given to government to exempt from service tax in appropriate cases by special notification
Voluntary compliance
There is reliance on collection of tax primarily through voluntary
How to define extent & application
(Sec. 64)
Service tax introduced by virtue of chapter V of the finance act 1994,
extends to the whole of India except to the state of Jammu and Kashmir
Service provided in the state of Jammu and Kashmir from any other
state are not subject to service tax. However service provided from
Jammu and Kashmir to other state are subject to service tax
Service provided beyond the territorial waters of India were not liable to
service tax provision but under a notification issued in 2002, the service
tax provisions have been extended to designated areas in the
continental shelf and exclusive economic zones of India. The exclusive
economic zone extends up to 200 nautical miles inside the sea from
base line.
Service provided within the territorial water of India are subject to
service tax in the same way as services provided in India are taxable.
India includes territorial waters extended up to 12 nautical miles from
the Indian land and mass
What is basis of charge of service tax?
The rate of service tax is applied on the value
of taxable services provided or to be
provided
There is a uniform rate of service tax on all
services currently it is 12.36% (12 + 3% of 12)
The cess paid on input services is allowed as
credit for payment of cess on output
services.
How to find out valuation of taxable service?
The consideration for a taxable service shall be
the gross amount charged by service provider
for the service provided or to be provided.
Consideration in terms of money: gross amt.
charged by service provider
Consideration is not in terms of money: the
value of taxable service shall be the amount of
money as with addition of service tax charged, is
equivalent to consideration
How to find out valuation of taxable service?
(Cont)
Consideration is not ascertainable than value of taxable service will be on valuation basis like
When service provider provides similar service to any
other
valuation on the basis of charged by the service
provider from other person
In any other case Shall determine equivalent money value of such
consideration
Valuation of Service Tax = Gross Amount Charged x 100
100 + 12.36
Computation of service tax
Find out value of taxable service
12.36% value of taxable service is the
quantum of service tax
Again the tax liability calculated & step no. 2,
one can claim credit for service tax paid on
input service subject to a few condition.
Partial abatement of service tax
Service Who can take
benefit
Rate Is it optional
Air travel agent Person liable for
paying service tax
in relation to
service provided by
an air travel agent
0.6% - domestic
booking
1.25% -
international
booking
If ones this potion
select than, It
charged for a whole
FY and for all
bookings.
Life insurance Policy holder 1% of gross amount
of premium
Only for risk cover
premium
Purchase or sale of
foreign currency,
money changer
Authorized money
changer or foreign
exchange broker
0.25 % of gross
amount of currency
exchanged

Works contract Person liable to pay
service tax
4 % gross amount
charged for work
contract
If one exercise it
shall be applied for
entire contract.
Partial abatement available vides notification no. 1/2006:- 1
st
march, 2006 service tax abatement is available
in some cases. However service tax provider cannot take CENVET credit of such duty/tax on inputs. Input
service & Capital goods used for providing such taxable service
Illustration
In Particular service 70% gross amount is chargeable for service tax
Particular A Ltd. B Ltd.
Gross amount charged (a) 18,00,000 25,00,000
Value of Capital goods used (b) 15,00,000 4,00,000
Balance (a) - (b) = (c) 3,00,000 21,00,000
Normal Service tax (c) x 12.36% 37,080 2,59,560
Service available on abetment (a) x 70% x 12.36% 1,55,736 2,16,300
Service tax available whichever Is lower 37,080 2,16,300
How service tax is paid
Service tax is payable on receipt basis. As is an indirect
tax, it s payable by the service provider but it is recovered
from recipient of service
Credit for Input Service
Output and input service fall within the same category
Registration
Person liable to pay service tax is required to register.
In case of non-resident, who do not have office in India but
liable to pay service tax in India, this burden of shifted to
recipient of service
Payment Schedules of service tax
Every person providing taxable service is liable to pay service
tax to the central government
Exceptions
Notified service Person liable to paying
Telecommunication Director general of post & Telegraph
MTNL chairmen
Any person who granted license by Govt.
for service
General Insurance business Insurer or reinsurance providing such
service
Insurance auxiliary service provider by an
insurance agent
Person who carrying general insurance
business or life insurance business
Service provided by any person from a
country other than india
Recipient of such service
Service I relation to transport of goods
by road in a goods carriage
Any person who pays or liable to pay
freight either himself or through his
agent.
Sponsorship Service Who receive such sponsorship service
Registration Requirements
The following person must
Person liable to pay service tax
Input service distributor :- head office
Every provider of taxable service whose
aggregate value of taxable service in a FY
exceeds ` 9.00 Lakh
Form of Application
The application for registration is required to be made in duplicate form ST-1 with
A copy of PAN
Proof of address
Constitution of applicant (Partnership Deed, AOA, MOA)
Time limit for making application
Particular Time
Person who liable to pay service tax Within 30 days from the date on which
charge of service tax is bought into force
Input Service distributor Within a period of 30 days of the
commencement of business or 16th June
2005 whichever is later
Small Service Provider Within a period of 30 days of the date in
FY on which the aggregate value of
service exceeds Rs. 9 Lakh
Time limit for granting
registration
The department is required to issue
the registration certificate in form
ST-2, within 7 days of the receipt of
the application
In case failure to issue certificate
assessee can carry his activities with
a deemed registration.
Centralized registration Process
Central office or premises registered if accounting is
centralized.
Particular Situation
When more than one
service is provided
Single application is
sufficient
When information is to
be change or added
Writing an application to
assistant of CBSE within
30 days of such change
When assessee stop to
provide taxable service
Surrender the
registration certificate
immediately
Tax to be pain on amounts
actually received
Service provider charges service tax on the
amount of bill raised on his client, service tax is
payable to the government on the amount actually
received towards value of taxable service.
It is thus, not payable on amount charged in the
Bills/Invoice but on the amount actually received
No Service tax on free service
If service is given free of charge
than service tax is not payable.
Payment of service tax if not
collected from the client
Service tax on payments
received in advance
Service tax is payable as soon as advance is received even
if service I provided later
If when service is not taxable at the time of receipt of
advance but become taxable at the time of providing
service than advance received is apportioned between
two periods (When Service was not taxable and become
taxable) and tax is paid on the part of service which is
provided on or after the service becomes taxable
If advance is received but no service provided than
Service tax paid in advance shall be refunded.
Payment of service tax collected in excess to be paid to
the central government.
Due date for payment of Service tax
Individual Proprietary, Partnership Firm Any Other (Corporate Assessee)
Quarter E-payment Due Due Date Month E-payment due Due date
1st Apr. to 30th Jun 6th July 5th July April 6th May 5th May
1st July to 30th Sep 6th Oct 5th oct May 6th Jun 5th Jun
1st Oct to 31st Dec 6th Jan 5th Jan
Service Tax = Gross Amount Charged x 12.36
100 + 12.36
Valuation of Service Tax = Gross Amount Charged x 100
100 + 12.36
Manner of Payment fo Service tax
Assesses has to pay service tax in the bank designated by CBEC in form
TR-6, or any other manner is prescribed by CBEC.
Form TR-6 is yellow in colour.
Multiple service providers can use a single TR Challan.
E Payment of Service Tax
GR 7 challan used instead of TR-6 Challan
From 1
st
January 2006. In case of assesses who paid service tax of Rs. 50
Lakh or more in the preceding FY have already paid during current year
must make payment through E-payment
Payment By Cheque
The cheque should be deposited with the designated bank on or before the
due date
Rounding off
Includes 50 paisa or more rounded off to Rs.1
Less than 50 paisa ignored
Adjustment of Service Tax
When no service is provided
Service provider can adjust the excess service tax paid by hm against his service tax liability for the
subsequent period if the following two condition are satisfied\
Assesses has no rendered service wholly or partly
Value of taxable service along with service tax has been refunded by the service provider
When excess amount of service tax is paid for other reason
A assesses is allowed to adjust the excess service tax paid by him for the subsequent period. Wit
effect from 1
st
march 2007.
Self adjustment facility has been extended to all assesses subject to following condition
If adjustment are other than interpretation of law, taxability, classification, valuation on applicability of any
exemption notifications
Adjusted amount should be made only in succeeding month/Quarter.
Adjustment amount should not exceed Rs. 1,00,000 for the relevant month/Quarter
The detail of self-adjustment should be intimated to officer within a 15 days from the date of adjustment.
Centralized registration can adjust the excess service tax paid without any monetary limit
Provisional Payment of Service tax
If assesses is unable to correctly estimate the amount of tax
payable by him, he can request in writing to the commissioner of
CBSE for payment of service tax on provisional basis
In such cases, the assesses has to submit a memorandum in form
ST-3A giving detail of difference between service taxes deposited
and service tax to be paid for each month/Quarter.
Interest on Late payment of service tax
(Sec.75)
If the service tax is paid after the due date, simple interest is paid at
13% for late payment
Interest is paid for the period of delay not for the whole month.
Period of delay is counted from the first day after the due date till the
actual payment of service tax is made.
If delay s for 10 days than interest is paid for 1 days only.
General exemption from service tax
(Sec. 93)
The central government can grant total or partial exemptions to taxable services following are general exemptions..
Services provided by united nation or an in international organizations
Service provided to developer or units of special economic zone
The central government has granted full exemption to the service provider who provided taxable service to a developer of SEZ
He exemption is granted subject to the following condition
The developer has been approved by the board
The unit of SEZ has been approved by the development commission of SEZ
The developer or unit of SEZ shall maintain proper account of receipt & utilization of the said taxable services
Goods & materials sold by service provider to recipient of service
If provider sold goods than that amount is not included in the taxable service amount
The sale value of goods and material sold as a part of service must be shown separately in the bills raised on the recipients.
Exemption for small service provider
The service provider whose turnover is less than 10 lakh in the previous year will be exempt from service tax up to ` 10 lakh in next FY
Service provided by reserve bank of India
Exemption to technology business Incubator, Science and Technology Entrepreneurship park (STEP) and Incubates
STEP Software developer Company
Incubates - Who help for development of IT
Exemption is granted to incubates subject to following condition
Incubates should be located within the premises of the incubator
Total business turnover of incubates entrepreneurship does not exceed ` 50 Lakh during the preceding financial year.
The exemption is avail to incubate for a period of 3 year.
Services provided by a digital cinema service provider.
If service rendered by satellite, microwave or global communication line thats only exempt but physical means including CD/DVD thats not
exempt.
Service provided by Residential welfare association
Monthly contribution does not exceed Rs. 3000/Month
Drug & Medicine Produces
What is Provisions Pertaining to returns
Furnishing of returns: Who paid tax are must file the return
Form of Return: ST-3
Periodicity for filing return: Half year basis April to September
October to March
Due dated for filing return
1
st
April to 30
th
Sep. 25
th
Oct is Due Date
1
st
Oct. to 31
st
Mar. 25
th
April is Due Date
If the 25
th
April or 25
th
Oct. is a public holiday, than filled on the immediately succeeding working day.
Contents of Return
Half Year Period detail
Name of the Assesses, Registration No.
Category of Taxable Service
Documents submitted along with return
Copies of TR-6 challan indicate payment of service tax for Month/Quarter
Memorandum in form ST-3A (in case of Provisional Assessment)
First Return: At first time furnish all the accounts which maintained by assesses are inform to the officer
Return when no service provided: Must file a NIL return
Return in case of multiple service: Service wise detail should be given in the return instead of Single figure
Revised Return: According to Rule 7B of Service tax rules it allows to assesses to rectify mistakes and file a revised return in form ST-3, in triplicate within
90 days from the date of filing the original return
E-Filing of return: Assesses should have a 15 digit STP code for e-filing
Penalty for late filing of return: Overall maximum limit is Rs. 2000
Delay Penalty
Up to 15 Days `. 500
15 to 30 Days ` 1000
31 Days and On ` 1000 to ` 100/day from 31st day onwards but the total penalty
can not exceed ` 2000
When Person is liable for penalty under
Service Tax
Particular Penalty
For non-Payment or Late Payment ` 200/Day during which failure contains
Interest s charge 2%/Month which the
failure contains
Whichever is higher is selected but the penalty
cannot exceed the amount of service tax
which was payable. penalty can be waived or
reduced if proper cause is shown
Penalty for non-Obtain Registration
For not furnishing required information
` 5000 or
` 200/Day whichever is higher
For non maintenance of books of account and
documents. For Failure to pay tax electronically
when required. Penalty for issuing incorrect
invoice.
Liable to penalty which may extent to ` 5000
Other Points:
Interest and penalty paid within 30 days from the date of communication of order of the
central excise officer. The amount of above penalty shall be 25%
If this penalty is payable, penalty for non-payment or late payment service tax can not be
imposed.
What is a role of Chartered
Accountant?
Advising Clients
Procedural Requirements
Personal representation
Appear before the assessment authority for
appeal
Certification and Audit
Constant updating of Law and Provisions
Challenges before the Service tax
administration in India
Service tax is said to be the tax of 21
st
century because of its potential to raise
revenue for the government it is open for a number of challenges.
A few of them are related to the nature and growth while others to procedural
aspects of the service tax collection.
In order to speed up and smoothen the service tax administration in India, it is
required that exists a separate legislation along with distinct mechanism that
exclusively looks after collection of Service tax
A separate legislation would bring greater clarity in service tax procedure and
promote govt. revenue from tax collection along with tax environment
The twin goal of revenue maximization introduction of the culture of voluntary
tax compliance also throw up major challenge before the service tax
administration in the country.
Services are by nature, intangible & Spread across the nation in both organized
and unorganized sector.
Service provides in all sectors cannot easily identified & Brought under the Tax
Net
Some services are provided by people with low education level who can not
easily follow the tax administration provision.
Taxable Services
Taxable Services

Commercial training and coaching services
Shall mean any service provided or
to be provided
To any person,
By any institute or establishment
providing commercial training or
coaching
For imparting skill or knowledge or
lessons
On any subject or field,
Whether with or without issuance of
a certificate, and
But it includes
1. Coaching or tutorial classes
2. Computer training institute
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Commercial training and coaching
Services
Taxable:
Not Taxable:
Sports coaching
Preschool coaching (Nursery or Play group)
Certificate course by recognised institute
Degree course by recognised institute
Coaching at residence of service recipient
Training to employee
Vocational training
Provided by central affiliated to NCVT
Other than above
Not for profit organisation
Postal coaching
Taxable Services
Practicing Chartered Accountancy Services
Any service provided (or to be
provided) to person, by a practicing
chartered accountant in his
professional capacity in any manner, is
taxable service. Individual/ Proprietor/
Firms providing this service shall
continue to pay tax on receipt basis.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Practicing Chartered Accountancy
Value of Taxable Services:
Service tax is payable on the amount received for the
aforesaid services (excluding exempt services).
However, service tax is not payable on charges which
represent cost of goods sold by service provider.
Moreover, expenses (which are a liability of the service
receiver) incurred by the practicing chartered
accountant and later on recovered from the service
receiver, are not subject to service tax.
Taxable Services
Information Technology Services
Information technology software
means any representation of
instructions, data, sound or image,
including source code and object
code, recorded in a machine readable
form, and capable of being
manipulated or providing interactivity
to a user, by means of a computer or
an automatic data processing machine
or any other device or equipment.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Information Technology Services
Important points:
Only customized software is covered. Packaged software sold off the shelf is leviable
to excise duty. However in some cases here is an exemption granted from excise /
customs duty for part of the value of the packaged software. Such value which is
exempt from excise would be liable for service tax.
Packaged or Canned software intended for single use and packed accordingly is not
liable to service tax if following conditions are satisfied
Document providing the right to use is packed along with software
Importer has paid appropriate customs duties
The manufacturer/ duplicator/ the person holding the copyright to software has
paid the excise duty on the entire amount received from the buyer.
Services provided in relation to Information Technology (IT) software, such as
development, designing, programming, up-gradation, providing advice, consultancy
and assistance on the mattes of IT software and providing right to use IT software,
whether supplied on a media or electronically, were brought in the ambit of Service
tax. However, taxable only when the receiver of service exploits them for commercial
or business purposes.
Taxable Services
Consulting Engineering Services
Any service provided (or to be provided) to
any person, by a consulting engineer in
relation to advice, consultancy or technical
assistance in any manner (in one or more
discipline of engineering including the
discipline of computer hardware engineering)
is a taxable service. Services provided by a
consulting engineer in relation to advice,
consultancy or technical assistance in the
disciplines of both computer hardware
engineering and computer software
engineering shall also be classifiable under
consulting engineers services.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Consulting Engineer Services
Discipline of Engineering
Industrial engineering
Mechanical engineering
Aerospace engineering
Computer engineering
Electrical engineering
Metallurgical engineering
Chemical engineering
Civil/environmental engineering
Agricultural engineering
Aquaculture engineering
Architecture engineering
Automobile engineering
Aviation engineering
Electronics engineering
Environmental engineering
Fabrication engineering
Geotechnical engineering
Hydraulic engineering
Marine engineering
Mining engineering
Telecommunication engineering
Biotechnology engineering
Value of Services
Service tax is payable on the amount received for the aforesaid service. However, service tax is not payable on charges which
represent cost of goods sold by service provider. Moreover, expenses (which are the liability of the service receiver) incurred by
the service provider and later on recovered from service receiver, are not subject to service tax.
Important Points
Service provided by unqualified engineers cannot be taxed under consulting engineers services.
Service provided by a person who is holder of certificate from an industrial training institute run by Ministry of Labour and
Rehabilitation, cannot be taken as service provided by consulting engineer.
It is not necessary that the concern rendering service should be a commercial concern.
Research & Development Cess (Cess payable on import of technology) is allowed as deduction from value of taxable
Service provided.
Taxable Services
Meaning: shall mean any service provided or to be
provided to any person, by a scientist or a
technocrat, or any science or technology institution
or organisation, in relation to scientific or technical
consultancy.

Scientific or technical consultancy means any
advice, consultancy, or scientific or technical
assistance, rendered in any manner, either directly
or indirectly, by a scientist or a technocrat, or any
science or technology institution or organisation,
to any person, in one or more disciplines of science
or technology.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Scientific or Technical Consultancy
Clarification/Explanation
Consultation may be in nature of an expert opinion/advice.
Service tax will be payable by public funded research institutions like
CSIR, ICAR, DRDO, IIT, IISc, Regional Engineering Colleges, etc.
Service tax will be payable even if consultancy is provided to
Government Department for which consultation fee is received.
In case of Scientific or Technical Consultancy Services, Point of Taxation
Rules, 2011 provides that services shall be deemed to be provided on
the date of receipt of amount (i.e. service tax shall be deposited on
receipt basis and not on accrual basis).
Exemptions
By doctors, medical colleges, nursing homes, hospitals,
diagnostic and pathological labs, etc. as in common parlance
they are not known as scientists, technocrats, etc.
Taxable Services Meaning: Shall mean any service provided or to
be provided to any person, by a technical testing
and analysis agency, in relation to technical testing
& analysis.

Technical testing and analysis agency means any
agency or person engaged in providing service in
relation to technical testing and analysis.

Technical testing and analysis means any service in
relation to physical, chemical, biological or any
other scientific testing or analysis of goods or
material or information technology software or any
immovable property, but does not include any
testing or analysis services provided in relation to
human beings or animals.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Technical testing and analysis
Clarification/Explanation
Includes testing and analysis undertaken for the purpose of clinical testing of drugs
and formulations; but does not include testing or analysis for the purpose of
determination of the nature of diseased condition, identification of a disease,
prevention of any disease or disorder in human beings or animals. (i.e. medical
testing & diagnosis has been excluded from service tax)
Exemptions
Clinical testing of newly developed drugs
Testing & analysis services provided in relation to water quality testing by
Government owned State & District level laboratories
Testing & analysis of seed done by Central or State Laboratory and Central or
State Certifying Agency.
Any testing or analysis services provided in relation to human beings or animals
Taxable Services Meaning: Shall mean any service provided or to be
provided to an exhibitor, by the organizer of a business
exhibition, in relation to business exhibition.

Business Exhibition means an exhibition (a) to market; or
(b) to promote; or (c) to advertise; or
(d) to showcase, any product or service, intended for the
growth in business of the producer or provider of such
product or service, as the case may be.

Business Exhibition Service vs. Advertisement Service:
Whether taxable services rendered in relation to a circular,
label, documents, hoardings or any other audio visual
representation of a product or service falls under
Advertisement Services? Taxable services rendered in
relation to a circular, label, documents, hoardings or any
other audio visual representation of a product or service
falls under ''advertisement services'', the services relating
to actual exhibition or display of the product or services
would fall under the category of ''Business Exhibition
Services''.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Business exhibition services
Clarification/Explanation
Business exhibition service is a service rendered to an exhibitor by an organizer of a business exhibition that intends to market,
promote, advertise or show case products or services for growth services. Thus, organizers of events such as trade fairs, road
shows, fashion shows, display showcases kept in airports, railway stations, hotels etc. would be covered under this new levy. A
display of consumer goods in shops or shopping centres for customers to select and purchase would normally not attract any
Service Tax, as normally no separate charges are collected by the shop-keepers for displaying such goods. However, in case an
amount is collectzed for merely displaying an item, the same would be chargeable to Service Tax.
Exhibition Service vs Event Management Service
Organizers of Trade Fairs and Exhibitions solicit participation from the trade and industry and provide space and other facilities,
including furniture, cabins, security, electricity, etc., to display products and provision of services. Whether services provided by
the organizers of trade fairs/exhibitions are covered within the scope of event management service? Trade fairs and exhibitions
are organised by persons. Such organisers of trade fairs and exhibitions provide services to exhibitors in relation to business
exhibition. Services provided by an organizer of trade fairs and exhibitions to an exhibitor in relation to business exhibition is
liable to Service Tax under Business Exhibition Service In addition, an organiser of the trade fair or business exhibition may
engage an event manager to provide service to the organizer in relation to organising trade fairs and exhibitions. In such
cases, the event manager renders the service of Event Management to the organisers and is liable to pay Service Tax under
Event Management Service. The two services, namely Business Exhibition Service and Event Management Service, and the
two service providers of the respective services are distinct.
Exemptions
Services provided by an organiser of business exhibition for holding a business
exhibition outside India.
Taxable Services Meaning:Shall mean any service provided or to be
provided to any person, by a mandap keeper in relation
to the use of a mandapin any manner including the
facilities provided or to be provided to such person in
relation to such use and also the services, if any, provided
or to be provided as a caterer.

Mandapmeans any immovable property as defined in the
section 3 of the Transfer of Property Act, 1882 and
includes any furniture, fixtures, light fittings and floor
coverings therein let out for consideration for organizing
any official, social or business function (For this purpose,
social function includes marriage.)

Mandap keeper means a person who allows temporary
occupation of a mandapfor consideration for organizing
any official, social or business function.
Caterermeans any person who supplies, either directly or
indirectly, any food, edible preparations, alcoholic or non-
alcoholic beverages or crockery and similar articles or
accoutrements for any purpose or occasion.
1. Commercial training and
coaching services
2. Practicing CAs services
3. Information Technology
services
4. Consulting Engineer
services
5. Scientific and Technical
consultancy services
6. Technical testing and
analysis services
7. Business exhibition
services
8. Mandap keepers services
Mandap Keepers services
Clarification/Explanation
Dance, drama or music programme or competitions are social functions and allowing
temporary occupation of a hall for a consideration for organizing such functions are liable
to service tax under Mandap Keeper Service.
Halls, rooms etc. let out by hotels/restaurants for a consideration for organising social,
official or business functions are covered within the scope of mandap, and such hotels
and restaurants are covered within the scope of mandap keeper.
Accordingly, service tax is leviable on services provided by hotels and restaurants in
relation to letting out of halls, rooms, etc. for organizing any official, social or business
function under mandap keeper service.
Political meetings, film shooting are not social function and hence not taxable.
Renting of art gallery will get covered under Business Exhibition Service.
It also includes the following:
Kalyana mandap or marriage halls
Banquet halls, Barat Ghar
Conference halls etc
Hotels and restaurants providing any such service for organising any social, official or
business function (mere reservation of seats not taxable)
Mandap Keepers services
Clarification/Explanation (Cont)
Services of letting out of boats for organizing boat parties or events would not be liable to
service tax being boat is not an immovable property.
Any sports stadium or Gymkhana let out their premises for a consideration for holding
official, social or business functions would fall within the purview of Mandap.
The renting of Banquet halls for conducting the Seminars/conferences would fall within the
ambit of the definition of the taxable service provided by a Mandap Keeper as such
seminars/conferences are considered as official/business function.
Mandap let out for stay of Barratis for a consideration would attract Service Tax, as
Barratis is a part of marriage, which is a social function.
Letting out of school/college building or open land for marriage function, which is also a
social function, would attract Service Tax.
Open land /ground is to be treated as an immovable property as per the definition given
in section 3 of Transfer of Property Act, 1882 and hence the above premises let out for
consideration will fall under the category Mandap for the levy of Service Tax.
Screening of feature films in cinema theatres is not an official, social or business function
and, therefore, no service tax would be leviable under the category of "Mandap Keeper
for giving the theatre on rent for showing premier shows of movies which is a part of the
entire process of making and relating the feature films in cinema theatres.
Mandap Keepers services
Clarification/Explanation (Cont)
Meeting of Board of directors of a company is an example of business function,
opening ceremony of a shop is also a type of business function and birthday,
marriage function, etc. are instances of social function, when a company holds a
seminar for their staff/officers, it would be an official function of the company.
Services rendered by mandap keepers is taxable service only when he has let out
some room, halls, etc. and essentially hand over the temporary possession to the
person to whom it is let out. In other words, there is a certain exclusivity, which
has been afforded to the person to whom it has been let out. The activity of
mere reservation of seats in a restaurant, hence, shall not attract service tax.
Letting out furniture or any other items will not be called as 'mandap keeper'
services because no immovable property is involved.
Mandap keeper may not be owner of the premises.
If it is temporary structure, service will be taxed under Pandal or Shamiana
Contractors Service.
No tax on general donations received.
Mandap Keepers services
Clarification/Explanation (Cont)
Service charge (even if later on distributed as tips to employees) and amenities
charge shall be included in value of taxable service being charge is on gross
amount charged.
Sales Tax, Expenditure Tax are statutory levies, they cannot be included in the
value of the taxable services. Any calculation of the Service Tax has to be on the
value of service excluding the statutory taxes.
Car parking charges collected from client who availed mandap keeper service
also includible in the taxable value and liable to be taxed.
The charges of vessels, furniture, decoration etc, provided by the third party
other than the mandap keepers are not includible in the taxable value if the
mandap keeper is not associated with such supply in any way since the said
facility is not provided by the mandap keeper.
If the mandap keeper raise separate bill for the charges for other facilities like
furniture, fixtures, lighting, vessels, crockery, cutlery, etc. all these charges are
includible in the value of taxable service for levy of service tax.
Mandap Keepers services
Exemptions/Abatements
The taxable services provided to any person by a mandap keeper for the use of the precincts of a
religious place as a mandap are exempt from service tax leviable thereon. Religious place means a place
which is meant for conduct of prayers or worship pertaining to a religion
40% abatement is available if, value of taxable service includes use of mandap, facilities provided to the
client in relation to such use and also for the catering charges where the mandap keeper also provides
catering services, that is, supply of food and the invoice, bill or challan issued indicates that it is inclusive
of the charges for catering service. Effective rate of duty would be 60% of normal rate in such cases.
40% abatement is available if, taxable service provided by a hotel as Mandap keeper in such cases
where services provided include catering services, that is, supply of food alongwith any service in
relation to use of a Mandap. The invoice, bill or challan issued indicates that it is inclusive of charges for
catering services. Effective rate of duty would be 60% of normal rate in such cases. Here, the expression
hotel means a place that provides boarding and lodging facilities to public on commercial basis. The
expression "food means a substantial and satisfying meal. High tea or unlimited breakfast is a
substantial meal.
Notification 12/2003 shall not apply in case of Mandap Keeper Services if catering services are also
being provided. Notification 12/2003 applies only in case contract is divisible and further sale of goods is
not covered by definition of service. In case of mandap keeper services, supply of food & drinks has
been made integral part of services and even practically supply of food & drinks is indivisible part of
mandap keeper services. (controversial matter)