We are a company with a multi-product retail chain in major metros of India. We have taken space for our outlets from various parties. Since renting of property is a service taxable from June 1, 2007, the providers of space are charging service tax on the rent bills. With respect to a yearly rental arrangement where we had previously paid rent for the period January to December 2007, we received a supplementary bill for service tax for the entire year. Please advise whether charging service tax for the entire year is correct as the service has become taxable only recently.
Renting of immovable property has been notified as a taxable service from June 1, 2007 and hence services provided after this date are liable to service tax. As per the taxation rules, service tax is not payable for the value of service related to services provided during the period when such services were not taxable. It appears that the supplementary bill received by you covers a period prior to June 1, 2007 when such services were not taxable. Service tax should not be charged for the period prior to June 1, 2007.
We are a non-banking financial corporation (NBFC) having headquartered at Delhi. We have various subsidiaries engaged in providing varied financial services. Training programmes on development of technical and professional skills are organised centrally at Delhi by us for the employees of the holding company and for the subsidiaries. The holding company located at Delhi charges the subsidiaries for the training imparted at an agreed rate. We have been advised that the holding company is providing training to the subsidiaries under the taxable category of ?commercial training or coaching service? which is exigible to service tax. Is this position correct?
The holding company is imparting training to the subsidiaries for development of skill or knowledge of the personnel for a consideration. Any service provided by a commercial training or coaching centre in relation to commercial coaching or training is a taxable service. Commercial coaching or training centre is an institute or establishment providing training for imparting skill or knowledge in any field. ?Establishment? is a wide term covering various entities including companies. Hence, the services provided by the holding company to the subsidiaries may be treated as a taxable service.
We are an advertising company located at Kolkata and are members of various clubs in the city. The clubs are charging service tax on the membership fees as well as on the facilities used by our guests and us. The clubs bill us for boarding charges for the stay of our guests at the guesthouse, and for the food and beverage consumed by them. There is a confusion within the company that since the guests are not the members of the club, any service provided to them should not be taxable as the same is not being provided to the members. Is this position correct?
Any service provided to the members of a club for provision of services or facilities for a subscription or any other amount is a taxable service under the category of ?club or association service?. The tax research unit has clarified through a circular that services provided to guests of a member is within the ambit of the levy. Any charges recovered from members for allowing guests to use club facilities is liable to service tax, as these would amount to services being received by the members themselves.
We are a commissioning and installation agency engaged in laying of underground cables for telecom connectivity to various telecom service providers. We are registered under the category of ?Erection, Commissioning and Installation Service?. In the course of rendering the service we are procuring some goods/materials required for commissioning and installation of the underground cable. Such materials are received at the site where the cables are being installed. We are adjusting the amount of excise duty paid on such materials, used with the service tax payable by us for rendering the service. Can we adjust the duty paid on the materials procured with the service tax?
As per Cenvat Credit Rules 2004, inputs include goods used for providing output service and hence duty paid on procurement of such inputs can be set off with the service tax liability on the output service. However, as per Rule 4(1) of the Cenvat Credit Rules, inputs should be received in the premises of the service provider. Hence, in your case the service tax authorities might raise a dispute that such inputs were not received at your premises but at the site of installation and therefore, credit of duty paid on such inputs might be disallowed.
?Respondents are senior professionals at Ernst & Young. The replies do not constitute professional advice, but are based on interpretation of facts available in readers? queries to the professionals. Neither Ernst & Young nor this publication are liable for any action taken on the basis of this information