TRADE NOTICE NO. 01/2010-ST
Dated Shillong, The 4th MARCH’2010
Trade and all concerned are informed that the Finance Minister has introduced the Finance Bill, 2010, in the Lok Sabha on 26th February 2010. Clause 75 and 76 of the said Bill covers the legislative changes relating to Chapter V of the Finance Act, 1994 (i.e. Service Tax). While some fresh exemptions from service tax have been granted, some existing exemptions have either been withdrawn or modified. All these changes have been notified under notification nos. 2/2010-ST to 17/2010-ST all dated 27th February 2010. While most of the legislative changes in the Finance Act, 1994 would come into force from a date to be notified after the enactment of the Finance Bill, 2010, the notifications (except notification nos. 7/2010-ST, 8/2010-ST and 9/2010-ST which would come into effect from 01.04.2010) would become effective from 27th February 2010. Salient features of some of these proposals in respect of Service Tax are indicated below. For full details, relevant provisions of the Finance Bills and above mentioned Notifications should be referred to, which are available in the following websites :
2. NEW SERVICES INCLUDED IN THE LIST OF TAXABLE SERVICES
2.1 Eight services, hitherto not included separately within the list of taxable
services, are being included in the said list through appropriate amendments in sub-section 105 of Section 65 of the Finance Act, 1994. One of them, namely promotion, marketing etc. of lottery and similar games of chance presently figures as part of Business Auxiliary Service (BAS). This is now being introduced as an independent entry in the list of taxable services. Consequential amendments have been made in the definition of the BAS.
2.2 The new services are,-
Services of promoting, marketing or organizing of games of chance,
· Health services, namely:
health check up undertaken by hospitals or medical establishments for the employees of business entities##; and
health services provided under health insurance schemes offered by insurance companies##. [Section 65 (105) (zzzzo)]
[ ##The tax on these health services would be payable only to the extent payment for such medical check up or preventive care or treatment etc. is made directly by the business entity or the insurance company to the hospital or medical establishment].
· Services provided for maintenance of medical records of employees of a business
entity [Section 65 (105) (zzzzp)].
· Services of promoting of a ‘brand’ of goods, services, events, business entity etc
[Section 65 (105) (zzzzq)].
· Services of permitting commercial use or exploitation of any event organized by
a person or organization [Section 65 (105) (zzzzr)].
· Services provided by Electricity Exchanges [Section 65 (105) (zzzzs)].
· Services related to two types of copyrights hitherto not covered under existing
taxable service ‘Intellectual Property Right (IPR)’, namely, those on (a)
cinematographic films; and (b) sound recording [Section 65 (105) (zzzzt)].
services provided by a builder etc. to the prospective buyers such as
on these services would come into effect from a notified date
3. ALTERARTION OR EXPANSION IN THE SCOPE OF EXISTING SERVICES
3.1 In the case of following existing taxable services, the scope has been altered
either to expand their scope or to remove certain difficulties that have been faced during tax implementation. These changes are as follows,-
The scope of the taxable service ‘Air Passenger Transport Service’
Presently the taxable service, ‘Information Technology Software Service’
Explanation is being added in the definition of the taxable
In the definition of the taxable service ‘Sponsorship Service’ [section
· In the definition of the taxable services ‘Construction of Complex service’
[section 65 (105) (zzzh)], and ‘Commercial or industrial
Amendments are being made in the definition of the taxable service
(i) provide explicitly that the activity of ‘renting’ itself is a taxable service.
This change is being given retrospective effect from 01.06.2007; and
· The definitions of the taxable services, namely the ‘Airport Services’ [section 65
(105) (zzm)], the ‘Port Services’ [section 65 (105) (zn)] and the ‘Other Port
Services’ [section 65 (105) (zzl)] are being amended to provide that,-
(a) all services provided entirely within the airport/port premises would
fall under these services; and
an authorization from the airport/port authority would not be a pre-
explanation is being added in the definition of the taxable
The definition of the taxable service ‘Management of Investment
3.2 The scope of modifications in the aforesaid taxable services and other
significant details pertaining to amendments being made in the Finance
4. OTHER AMENDMENTS TO THE FINANCE ACT, 1994
4.1 Finance Act, 1994 is being amended to,-
a) insert an explanation in sub-section (3) of Section 73 to clarify that no
penalty shall be imposed where service tax along with interest has been
b) provide definition of the term ‘business entity’ so as to include an
association of persons, body of individuals, company or firm but to exclude an individual. This would be effective from a notified date after the enactment of the Finance bill, 2010
4.2 For other editorial changes being made in the Finance Act, 1994, please refer
to the Finance Bill, 2010.
5.1 The following exemptions from service tax are being provided with effect from
27th February, 2010’ namely,-
Statutory taxes charged by any government (including foreign governments,
· Exemption from service tax is being provided to services relating to
‘Erection, Commissioning or Installation’ of,-
o Mechanized Food Grain Handling Systems etc.;
o Equipment for setting up or substantial expansion of cold storage; and
Machinery/equipment for initial setting up or substantial expansion of
(Notification No.12/2010-ST, dated 27th February, 2010 refers).
Packaged I.T. software, pre-packed in retail packages for single use, is
At present, exemption from service tax is available to transport
· Exemption from service tax is being provided to Indian news agencies under ‘Online Information and Database Retrieval Service’ and ‘Business Auxiliary Service’ subject to specified conditions (Notification No.13/2010-ST, dated 27th February’2010 refers).
Exemption from service tax is being provided to the ‘Technical Testing and
· Exemption from service tax is being provided to the transmission of
electricity (Notification No.11/2010-ST, dated 27th February, 2010 refers).
6. WITHDRAWALS OR AMENDMENTS TO EXISTING EXEMPTIONS
6.1 The following changes have been brought about in the existing exemptions,-
a) Exemption from service tax on service provided in relation to ‘Transport of
Goods by Rail’ by notification No.33/2009, dated 1st
September, 2009 is being
(Notification No. 8/2010-ST, dated 27th
February, 2010 refers). An abatement of
The exemption from service tax on ‘Commercial training or coaching
No.3/2010-ST, dated 27th February, 2010 refers).
c) Exemption from service tax, presently available to Group Personal Accident
Scheme provided by Govt. of Rajasthan to its employees, under General Insurance
Service is being withdrawn (Notification No.5/2010-ST, dated 27th February, 2010
d) Notification No.1/2002-ST dated 01.03.2002 is being superceded by
Notification No.14/2010-ST, dated 27th February 2010 to provide that the
construction and operation of installations, structures and vessels for
February, 2010 refers).
7. AMENDMENT TO EXPORT OF SERVICE RULES, 2005
7.1 Export of Service Rules, 2005 have been amended as follows:
· The taxable service, namely ‘Mandap Keeper Service’ has been shifted from the list under rule 3(1) (ii) [i.e. performance related services] to the list under rule 3(1)(i) [immovable property related services] and three taxable services, namely ‘Chartered Accountant Services’, ‘Cost Accountant Services’ and ‘Company Secretary’s Services’, have been shifted from the list under rule
[residual category of services]. Notification No.6/2010-ST, dated 27th
February 2010 refers. Identical changes have been made under the Taxation of services (Provided from Outside India and Received in India) Rules, 2006 as well (Notification No.16/2010-ST, dated 27th February 2010 refers);
· The condition prescribed under rule (2) (a) i.e. ‘such service is provided from
India and used outside India’ has been deleted (Notification No.6/2010-ST, dated 27th February 2010 refers).
These changes have been carried out keeping in view certain difficulties
8. AMENDMENT TO NOTIFICATION NO. 5/2006-CE(NT) ISSUED UNDER
RULE 5 OF THE CENVAT CREDIT RULES, 2004
8.1 It may be recalled that a number of representations were
Authority : CBEC’s Explanatory Notes (Central Excise)’2010
Disclaimer : Though care has been taken to reproduce the text in its Original form, We cannot entirely rule out some inadvertent omission/mistake which might have crept in. For the purpose of authenticity, CBEC’s Explanatory Notes may be referred to.
(A. K. Jain)