Service tax

Index
Sr.No Topic Page No.
1 Introduction 2
2 Purpose and Significance Point Of Taxation 3
3 Registration of Service Tax 10
4 Payment of Service Tax 18
5 Case Laws 21
6 News Paper articles 29
7 Bibliography 30

Point of Taxation
Backdrop in introduction of Point of Taxation Rules (POT):
In any fiscal laws, the concept of levy, collection and payment of tax to the Government are
the fundamental aspects. Levy of tax is directly linked with the taxable event. Once the event
has become taxable, then comes the question of collection of tax. The governing Statute of
such taxable event will provide for the time period or the occurring of such event on which tax
will be paid. For instance, in case of Central Excise, the taxable event is manufacture or
production of goods and point of taxation is the time of removal of goods from factory or
warehouse. Actual payment of duty is governed by the Excise Rules which is generally the 5th
or 6th date of the month following the month in which goods are removed.
Similarly, in case of VAT the taxable event is the transfer of property in goods and collection
will be on 20 th of the next month. Since the levy is with respect to manufacture or sale of
goods which are tangible, it is comparatively easy to identify and determine the specified
events. In case of Services due to the intangible nature identification of point in time at which
the service was provided or completed is always subject to the legal wrangle.
Hence, the Finance Act 1994, since 1st July 1994 has assessed and collected tax on Services
Service tax only on Cash basis (i.e.) Service tax has to be discharged to the Government only
on the receipt of the consideration. The event of receipt of consideration, being easily
identifiable, did not raise any issue. However, it is in deviation to the principles applied in the
case of CE and VAT.
Since all the taxes levied under indirect taxation viz. Central Excise, VAT and Service Tax are
proposed to be brought under single umbrella of Goods and Service Tax (GST), it has become
necessary to have the common base for levy and collection of tax in respect of all the cases.
Therefore, Point of taxation Rules, 2011 has been introduced in Service Tax law to bring
Uniformity in levy and collection of all these taxes.

Purpose of POT Rules :
 To introduce clarity and certainty in the matter of levy and collection of Service Tax
particularly in situations of change of rate of service tax or imposition of service tax on
new services.
 To link the payment of tax to provision of service, raising of the invoice or payment for
service provided or to be provided, whichever is the earliest.
 On lines of best international practices.
Significance of Point of Taxation :
The point of taxation is significant for determining the following :
i. Applicability of rate of service tax: The service tax rate shall be the rate prevailing
on the date on which the service is deemed to be provided as per the Point of
Taxation Rules, 2011. Earlier the rate prevailing at the time of raising the invoice
was considered for charging service tax, irrespective of date of realization.
ii. Payment of Service Tax: The service tax has to be paid to the credit of Central
Government within due dates immediately the following month in which the
services are deemed to be provided as per the Point of Taxation Rules, 2011.
iii. Adjustment for non-provision of service: In case of assessee who has issued an
invoice/ received payment towards a service to be provided and has not provided
service (in full or part), he is eligible to take the credit of excess ST paid by him if
he:
a. Refunded the payment along with the ST to the receiver of service or
b. Issued a credit note for the value of service not so provided to the person to
whom he has issued invoice.
Statutory Background : 
 The Point of Taxation Rules, 2011 have been introduced by Notification No. 18/2011-
ST dated 01-03-2011. 
 The Rules have come into effect from 01-04-2011and later amended by the following
Notifications : 
 Notification No. 41/2011-ST dated 27.06.2011 effective from 27-06-2011 
 Notification No. 4/2012-ST dated 17.03.2012 effective from 01-04-2012 
 Notification No. 37/2012-ST dated 20-06-2012 effective from 01-7-2012 
 Notification No. 13/2014-ST dated 11-07-2014 effective from 01-10-2014

Structure of the Rules :
Rule 2 Definitions
Rule 3 Determination of PoT
Determination of PoT where invoice has been issued for service
provided or to be provided
Determination of PoT where payment has been received before the
time provided
Rule 4(a) Determination of PoT where service has been provided before the
change in effective rate of tax
Rule 4(b) Determination of PoT where service has been provided after the
change in effective rate of tax
Rule 5: Determination of PoT where tax is being levied on the service for the
first time
Rule 6: Omitted from 01-04-2012
Rule 7: Determination of PoT in case of specified services or persons
Rule 8: Determination of PoT where service in the case of copyright,
trademarks, designs or patents
Rule 9: Transitional Provisions

Important Definitions :
I. Point of Taxation
“ Point of Taxation “ mean the point in time when a service shall be deemed to have been
provided.
II. Invoice
“Invoice” means the Invoice referred to in Rule 4A of the Service Tax Rules, 1994 and shall
include any documents as referred to in the said Rule. Thus, the term ‘Invoice’ includes bill
and challan also.
III. Continuous Supply of Service
“Continuous Supply of Service” means –
 Any service which is provided or agreed to be provided continuously on recurrent basis,
under a contract, for a period exceeding 3 months with the obligation for payment
periodically or from time to time, or
 Any service notified by the Central Government as a continuous supply of service
irrespective of its duration with or without any condition.
Notified Continuous Supply of Services :
The following services have been notified by the Central Government as
Continuous Supply of Service without any conditions:
i. Telecommunication Service
ii. Service portion in execution of Works Contract

Date of Payment
“Date of Payment”, shall be the earlier of the dates on which the payment is entered in the
books of account or credited to the bank account of the person liable to pay tax.
However, the date of payment shall be the date of credit in the bank account when –
I. there is a change in effective rate of tax or when a service is taxed for the first
time during the period between such entry in books of accounts and its credit in the
bank account; and
II. the credit in the bank account is after four working days from the date when there
is change in effective rate of tax or a service is taxed for the first time; and
III. the payment is made by way of an instrument which is credited to a bank
Change in effective rate of tax:
“Change in effective rate of tax” shall include a change in the portion of value on which tax
is payable in terms of a notification issued in the Official Gazette under the provisions of the
Act, or rules made thereunder. Thus it includes the notifications involving the following
changes -
 Change in effective rate of tax
 Exemptions from tax
 Abatement from tax

DETERMINATION OF POINT OF TAXATION (Rule 3) :
As per Rule 3, the Point of Taxation for any Service in general shall be –
 Date of invoice or payment, whichever is earlier, if the invoice is issued within 30
days or 45 days in case of Banking and other Financial Services, from the date of
completion of the provision of Service.
 Date of completion / provision of service or payment, whichever is earlier, if the
invoice is not issued within the prescribed period as above.
Similarly, any advance is received then the POT shall be the date of receipt of such advance.
This is a default or residuary Rule as it starts with the word ‘unless otherwise stated and hence
for a service if any other Rule in POT Rule does not apply, this Rule 3 applies generally.
S.No Date of
completion of
service
Date of
invoice
Date on
which
payment
recd
Point of
Taxation
Remarks
1 July10, 2014 July 31, 2014 July 30,
2014
July 20,
2014
Invoice issued within
30 days and before
receipt of payment.
2 July 10, 2014 Aug 15, 2014 July 30,
2014
July 10,
2014
Invoice not issued
within 30 days and
payment received after
completion of service
3 July 10, 2014 Aug 02, 2014 July 15,
2014
July 15,
2014
Invoice issued within
30 days but payment
received before
invoice.
4 July 10, 2014 July 26, 2014 July 5, 2014
(part) and
July 25,
2014
(remaining)
July 5,
2014 and
July 10,
2014 for
respective
amounts
Invoice not issued
within 30 days. Part
payment before
completion, remaining
later.

Significance of Rule 3 –
The following points have to be considered
 Time of issue of invoice is relevant only if it is within the stipulated
period of 30 days from the date of completion of event as specifiedin the
contract.
 Payments actually received are relevant only in respect of payments
received before the time of issue of invoice, and that too only in cases
where invoice is issued in time.
 The date of completion of an event and time schedule for intermediate
payment as specified in the contract must be considered, and the actual
date of completion of event and the actual date and quantum of payment
received have no relevance.

When a Service is completed:
The Ministry has clarified vide Circular No. 13/2011-ST, dated 18-7-2011 that ‘the test for the
determination whether a service has completed would be the completion of all the ‘related’
activities that place the provider in a situation to be able to issue an invoice and that ‘however
such activity does not include flimsy or irrelevant grounds for delay in issuance of invoice’.
Illustration :
XYZ Ltd is a bulding contractor and has agreed to provide works contract services by way of
constructions. Determine the POT if the terms of payment of total Rs.200 Lacs are finalized as
below :
Instalment Amount Event on which
consideration
payable
Date of
completion
of such event
Date of
Invoice (DoI)
Date of
Payment
(DoP)
1 10% Signing of
Agreement
1 Apr 13 5 Apr 13 4 Apr 13
2 40% Construction upto
Plinth level
1 Jul 13 10 Jul 13 15 Jul 13
3 40% Completion of
Finishing
1 Sep 14 5 Oct14 10 Oct 14
4 10% Handing over of
Possession
5 Nov 14 10 Nov 14 10 Nov 14

Solution :
As per the explanation to Rule 3, in case of continuous supply of services, the date of
completion of service means the date of completion of each such event specified in the
agreement on which service tax becomes payable.
Hence the POT is determined as below
Instalment Date of
Completion of
Service
Date of Invoice Date of
Payment
POT
1 1 Apr 13 5 Apr 13 4 Apr 13 Date of Payment - 4 Apr
13
2 1 Jul 13 10 Jul 13 15 Jul 13 Date of Invoice – 10 Jul 13
3 1 Sep 14 5 Oct14 10 Oct 14 Date of Service – 1 Sep 14
4 5 Nov 14 10 Nov 14 10 Oct 14 Date of Invoice – 10 Nov
14
Small Advances upto Rs. 1000/- :
As per ExplanationtoRule3, wherever the provider of the taxable service receives a payment
upto Rs. 1000/- in excess of the amount indicated in the invoice, the point of taxation to the
extent of such excess amount at the option of the provider of taxable service shall be the date
of invoice. This is applicable to the Telecom Service provider, and also to the Banks especially
in respect of Credit card services, etc.

DETERMINATION OF POINT OF TAXATION IN CASE OF CHANGE IN
EFFECTIVE RATE OF TAX (Rule 4) :
Rule 4 is an overriding Rule and only this Rule is applicable for a situation when any of the
following activities are done where there is a change in effective rate of tax :
 Completion or provision of Service
 Issue of Invoice for a service provided or to be provided
 Payment received for the service provided or to be provided
Notwithstanding, anything contained in Rule 3, the point of taxation in cases where
there is a change in effective rate of tax in respect of a service, shall be determined in
following manner, namely –
Where Taxable Service has been provided before the change in effective rate of tax
Scenario Issue of Invoice Receipt of Payment Point of Taxation
Taxable Service provided
before change in effective
rate of tax
After the change in
effective rate of tax
After the change in
Date of Payment or
Date of Invoice
whichever is earlier
[Rule 4(a)(i)]
rate of tax
Before the change
in effective rate of
tax
After the change in
Date of Invoice
[Rule 4(a)(ii)]
rate of tax
After the change in
Before the change
tax
Date of Payment
[Rule 4(a)(iii)]

Where Taxable Service has been provided after the change in effective rate of tax
Scenario Issue of Invoice Receipt of
Payment
Point of Taxation
after change in effective
rate of tax
Before the change
tax
After the change in
effective rate of
tax
After the change in
effective rate of
tax
rate of tax
Before the change
tax
Before the change
tax
Date of Payment
or Date of Invoice
whichever is
earlier [Rule
4(b)(ii)]
rate of tax
After the change in
effective rate of
tax
Before the change
tax
Date of Invoice
DETERMINATION OF POINT OF TAXATION WHERE SERVICE IS TAXED FOR
THE FIRST TIME (Rule 5) : I
In case of new service which was hitherto not covered due to negative list or exemption
notification and is taxed for the first time then –
a) no tax shall be payable to the extent the invoice has been issued and the payment
received against such invoice before such service became taxable.
b) no tax shall be payable if the payment has been received before the service
becomes taxable and invoice for the said payment has been issued within 14 days of
the date when the service is taxed for the first time.
Under this clause if the payment has been received in the first step but invoice has been issued
after the service became taxable and service has been provided subsequent thereto, no tax will
be payable provided invoice has been issued within 14 days of date when the service is taxed
for the first time.

DETERMINATION OF POINT OF TAXATION IN CASE OF SPECIFIED PERSONS
(Rule 7) :
Reverse Charge Mechanism :
Effective from 1 st Oct 2014, in terms of Rule 7, where the recipient of service is liable to pay
service tax as a Service Recipient under Sec 68(2) of the Finance Act, the POT in respect of
such persons, the Point of taxation shall be –
o the date on which payment is made to the service provider OR
o the first day that occurs immediately after a period of 3 months from the date of
invoice whichever is earlier
Illustration:
If a Service bill dated 02nd July attracting Reverse Charge mechanism is received, payment
for the same if made on or before 1st October then point of taxation is date of payment.
However, if payment is made after 1st October, say on 02nd December.
then point of taxation shall be 2nd October. Service tax is to be paid on or before 05th
November.
Notified services liable under Reverse Charge Mechanism :
By virtue of Sec 68(2) read with the Notification No. 30/2012, the persons who are receiving
the following Services are liable to pay service tax as Service Recipient :
 Insurance related services by agents
 Goods Transportation by Road
 Sponsorship  Arbitral tribunals
 Legal services
 Company director’s services
 Services provided by Government / local authority excluding specified services
 Services provided by persons located in non-taxable territory to persons located in
taxable territory.
 Renting of motor vehicles
 Manpower supply & security services
 Works contracts

DETERMINATION OF POINT OF TAXATION IN CASE OF COPYRIGHTS, ETC.:
[RULE 8] :
In respect of royalties and payments pertaining to copyrights, trademarks, designs or
patents, where the whole amount of the consideration for the provision of service is not
ascertainable at the time when service was performed, and subsequently the use or the benefit
of these services by a person other than the provider gives rise to any payment of consideration,
the service shall be treated as having beenprovided each time when a payment in respect
of such use or the benefit is received by the provider in respect thereof, or an invoice is
issued by the provider, whichever is earlier.
A typical nature of such service is that at the time of entering into the contract value of service
is not ascertainable. Secondly, value of service gets determined by the act of a person who is
not SP. For such cases, two events have been provided for as follow:
a) Payment in respect of such IPR
b) Issue of invoice by the service provider
Illustration:
Company X is the owner of a trademark ‘Supreme’. Company ‘X’ allows Company ‘Y’ which
is manufacturing health drink to use trademark ‘Supreme’ on its products, on the condition that
‘Y’ pays 5% of the sale proceeds realized by it to ‘X’. In this case, the consideration is
dependent on the use or benefit received by ‘Y’ and it is not ascertainable at the time of
performance of service (i.e.) at the time of manufacture of health drink, but becomes
ascertainable only at the end of the sale of health drinks. Meanwhile, Company ‘X’ will also
issues invoices for some intermediate payments on estimate or actual basis. In such cases, the
point of taxation will be determined as earlier of the following 2 events :-
 Date of issue of invoice (whenever raised) or
 Date of receipt of payment.

DETERMINATION OF POINT OF TAXATION IN OTHER CASES:
Where the point of taxation cannot be determined as per these rules as the date of invoice or
date of payment or both are not available, the Central Excise Officer, may determine the point
of taxation to the best of his judgement, after giving an opportunity of being heard to the
assessee.
TRANSITIONAL PROVISIONS : [RULE 9]
Nothing contained in these rules shall be applicable,-
 where the provision of service is completed; or
 where invoices are issued prior to the date on which these rules come into force.
Provided that services for which provision is completed on or before 30th day of June, 2011 or
where the invoices are issued upto the 30th day of June, 2011, the point of taxation shall, at the
option of the taxpayer, be the date on which the payment is received or made as the case may
be.

 Registration
The service provider whose gross receipts exceeds Rs. 10,00,000/- needs to be registered with
the Service Tax Department.
The gross receipt upto the extent of Rs. 1,00,000/- are exempt from Service Tax.
However, this exemption is available only once till the gross receipts have not crossed the Rs.
10,00,000 lacs limit. Once the gross receipt exceeds Rs. 10,00,000 lacs, the services provider
needs to collect and pay service tax on each billing.
Application for registration is to be made by every person liable for paying the service tax in
Form ST-1
(i) within 30 days from the date on which service tax is levied or
(ii) within 30 days from the date of commencement of business whichever is later, to the
concerned Superintendent of Central Excise having jurisdiction.
(b) Documents to be submitted along with the application of service tax registration:
The following documents have been prescribed by the CBEC to be
submitted along with the application for registration under service tax:
(a) Copy of Permanent Account Number (PAN)
(b) Proof of Residence
(c) Constitution of the Applicant
(d) Power of Attorney in respect of authorized person (s).
The above documents must be submitted within a period of 15 days from the date of filing of
the application, otherwise the application may be rejected. The time limit of seven days within
which the registration is to be granted by the Superintendent of Central Excise/Service Tax
would be reckoned from the date the application for registration is complete in all respects.
 Single premise registration:
In case service provider is providing services from multiple place of business, separate
registration is required in respect of each premise from where the services are rendered.
The application shall be filed in Form ST-
 Centralised registration:
Where a person, liable for paying service tax on a taxable
service:
(i) provides such service from more than one premises or offices; or
(ii) receives such service in more than one premises or offices; or
(iii) is having more than one premises or offices,
which are engaged in relation to such service in any other manner, making such person liable
for paying service tax, and has centralized billing system or centralised accounting system in

respect of such service, and such centralised billing or centralised accounting systems are
located in one or more premises, he may, at his option, register such premises or offices from
where centralised billing or centralised accounting systems are located
In Form ST-1 within 30 days from the date on which Service Tax is levied or within 30 days
from the date of commencement of business whichever is later, to the Central Excise Officer
having jurisdiction.
Registration Certificate is granted in Form ST-2 within 7 days from the date of receipt of
intimation, if not, then deemed to be granted. In case the registration certificate is not issued
within seven days, the registration applied for is deemed to have been granted. (Rule 4(5) of
the STR, 1994)
Assessee providing more than one taxable service should mention in single application, all the
taxable services provided by him. Rule 4(4), Service Tax Rule,1994.

Payment of Service Tax
Due datesfor paymentof service tax have beenprescribedunderRule 6(1) of the Service Tax Rules,
1994. Accordingto thisrule,the due date forpaymentof service tax woulddependuponthe kindof
entity,whichistopay the service tax.Thisisexplainedbelow:
Payment by Individuals, Proprietary concern and Partnership Firms
Others
Others Monthly 5th of following
month
or 6th if payment is done online
From above it is clear that it is beneficial to pay online as grace period of 1 Day is allotted and
moreover taxpayer does no have to stand in long queues for depositing the service tax.
Deposit of Service Tax
Service tax may be deposited either physically or by e-payment mode.
Effective from 01-04-2010, the Service Tax Rules have been amended to provide that in case
the tax payment in the preceding financial year is Rs. 10 lakhs or more, it is mandatory to make
service tax payment by e-payment mode, i.e. through ACES system.
Service tax is required to be deposited in any of the designated banks12 through yellow colour
GAR-7 Challan13, either by way of cash or by cheque. Pune Commissionerate has clarified14
that the assessees should submit a single copy of the form GAR-7 to their bank for depositing
the Excise duty/Service tax. After realisation of the cheques etc. the assessee will be provided
a counterfoil of the challan duly receipted by the receiving bank/branch as approved of
payment. Assessee should insist on double stamping of dates from bank officials i.e. “date of
tender” and “date of realisation” as per the instructions issued by the Reserve Bank of India.
(i) Filling of GAR-7 Challan:
Filling of GAR-7 challan accurately is an important issue. Many Commissionerates have issued
Trade Notices instructing the assessees about filling up GAR-7 challans properly. Pune
Commissionerate in its Trade Notice No. 8/2007, dated 05-06-2007, states that the instructions
for filling of the form are given on the backside of the challans. The same should be studied

carefully before filling up the form. Proper precautions should be taken while filling up the
challans and correct information is provided in all the columns, so that the duty is credited to
the proper Assessee Code and Accounting Code.
The information submitted by the assessee in the Form GAR-7 should be legible/neat so that
correct information can be fed by the bank officials. Further, the Pune Commissionerate in its
Trade Notice No. 27/2007, dated 02-11-2007 states that the assessees would have to
mandatorily indicate the 15 character PAN/TAN based Assessee Code. This has been
continuous endeavour of the Department to issue/allot 15 characters PAN based Assessee Code
at the earliest possible time and it is expected that most of the assessees must have obtained it.
In case of difficulty in obtaining it from this department, they can approach the Divisional
Deputy/Assistant Commissioner in charge or the undersigned for quick redressal. Further, in
case the same has not been allotted to the taxpayer, the bank branch should ask for the
Temporary Code, which again is of 15 characters be written by the assessee in GAR-7.
(ii) Mentioning Proper Accounting Codes:
Principal Chief Controller of Accounts, CBEC15 has allotted Heads of Accounts for the
various services brought under service tax along with 8 digit Serial Code Numbers for each
service. The assessees are required to quote only the 8 digit codes for the type and category of
taxes paid by them and not the 9 or 11 digit codes. The Accounting Code of Major head in
respect of service tax is 0044. Accounting Codes for Minor heads allocated for individual
services are under the following sub-heads:
 Tax Collection: meant for service tax
 Other Receipts: meant for interest, penalty leviable on delayed payment of service tax
 Deduct/Refunds: meant for Excise Department while allowing refund of tax
Implication of using a wrong Accounting Code:
Though assessees should not use wrong accounting codes but in case an assessee does so, the
Department has clarified16 that in such a case the assessee need not be asked to pay the service
tax again but the matter should be sorted with the PAO. In cases where the assessees were
asked to pay the service tax again, the amount thus paid may be refunded by the concerned
Divisional Assistant Commissioner/Deputy Commissioner.
(iii) Payment of service tax to the designated bank:
The Excise Commissionerates (Service Tax Commissionerates in some of the cities) also
designate the specified branches of specified banks in which service tax can be deposited by
the assessees of respective Commissionerates. Since service tax is to be deposited in any of the
designated banks, the assessee may choose only one branch of any of such banks convenient
to him and all payments shall be made in that branch only. Where the assessee deposits service
tax in a non-designated bank, it would not amount to payment of service tax. Since these
payments are not considered as payment of service tax, penal consequences will follow.

Late Payment of Service Tax
Interest is levied on the assessee when he delays the payment of service tax which is due and
payable –
Up to 6 months 18%
From 6 months upto 1 Year 24%
More than 1Year 30%
Illustration
Suppose, there is a delay of 15 months in payment of service tax of Rs 1 lakh by the assessee.
The impact of rate change would be as under:
 If paid prior to 1.10.2014
- Interest @ 18% p.a for 15 months = Rs 2500
 If paid after 1.10.2014
(say due on 1 August 2013 and paid on 1 November 2014)
Period upto 30.9.2014 (14 months @ 18 %
p.a.)
21000
1 month @ 30% p.a.(as delay is > 1 year) 2500
Total Interest 23500

Case Laws
THYSSENKRUPP INDUSTRIES (I) PVT. LTD. VS CCE, PUNE (industry wide issue)
Citation: 2014-TIOL-1825-CESTAT-MUM
Facts of the case
The appellant is a manufacturer of excisable goods and also provider of taxable services. They
also undertook trading activities which is an exempted service. During April 2011 to March
2012, the appellant availed CENVAT Credit amounting to Rs.1,80,44,714/- in respect of
services which were solely used in the manufacture of excisable goods. Similarly, they availed
input service credit in respect of services solely used in rendering of taxable output services
amounting to Rs.18,87,88,934/-. They also availed input service credit in respect common input
services used in the manufacture of dutiable goods, taxable output services and exempted
output services amounting to Rs.2,07,66,032/-
Case of the department
According to the department, as the appellants were not able to maintain separate records, they
were required to reverse the CENVAT Credit amounting to Rs.8,62,06,300/- in respect of
common input services taken during April 2011 to March 2012 in terms of Rule 6(3A)(c)(iii).
Court Held
The assesse argued that the formula for reversal should be applied only on the common input
service and not on all the CENVAT Credit. However, without agreeing the view of the
appellants the tribunal prima facie held that while interpreting statutes, no words can be added
or removed/deleted from the statute. As held by Rowlatt J., "in a taxing statute one has 7 to
look merely at what is clearly said. There is no room for any intendment.
Nothing is to be read in, nothing is to be implied. One can only look fairly at the language
used." If this principle is applied to the formula prescribed in sub-rule (3A), there is no scope
for interpreting the term "P" otherwise. If the formula leads to an irregular situation, the remedy
lies in amending the provisions of the statute and the judiciary is helpless and hence the formula
will apply on total input services and not only on common input services.

M/S IDEA CELLULAR LTD. UOI (adjustment of the VAT paid againstthe
service tax liability)
Citation: 2015-TIOL-896-P&H .-HC
Facts of the case
The assessee is a telecom service provider and as a part of its business, activates SIM cards.
The State of Haryana collected VAT from the assessee on the premise that activation of SIM
cards is a sale. The assessee approached the State of Haryana for refund of the amount of VAT
but as no action was taken in the matter, and thereafter it filed civil writ petition in which the
High Court directed the Government to decide the assessee's representation for refund.
The representation was dismissed on the ground that the assessee did not challenge its liability
before the AO and now when the assessment order is final, no refund can be granted since there
is no provision for refund under the Haryana VAT Act.
Aggrieved, the assessee has filed this writ petition pleading for issuance of a writ of mandamus
to the Government of Haryana to refund the tax amount.
Court held
As per BSNL judgment on these types of charges only service tax is leviable and hence the
VAT assessment order is nullity. Accordingly the court directed the state of Haryana to transfer
the amount of VAT collected from the petitioner to the Service Tax Department of the Union
of India.

MAHARASHTRA INDUSTRIAL DEVELOPMENT CORPORATION V. CCE, NASIK
(Services provided industrial development corporation)
Citation: 2014-TIOL-2022-CESTAT-MUM
Facts of the case:
MIDC has been constituted by the Government of Maharashtra to develop industrial areas in
the State of Maharashtra by acquiring land from the land owners and plotting it into suitable
industrial plots. Thereafter, these plots were sold/leased out under a lease agreement to
individuals/companies desirous of setting up industries. As per the lease agreement, certain
infrastructural facilities like roads, water, drainage, street light, etc. were provided by MIDC
to plot owners. MIDC collect certain charges from the plot owners for providing the above
facilities.
Case of the department:
According to the department the service charges so collected by MIDC are for the purpose of
maintenance of roads, street lights etc. and accordingly falls under the category of
‘Management, Maintenance or Repair Service'.
Court Held
Court relied on the provisions of the MID Act to hold that the service charges collected and
levied amounted to mandatory and statutory levy. Therefore, in light of CBEC 4
Circular No 89/7/2006 dated 18.12.2006 the activity performed by the appellants are immune
from levy of service tax.
The court also noted section 97 of the Finance Act, 1994 which retrospectively exempts the
services of maintenance and repairs of roads.
The court further held that some period is after the introduction of the negative list however,
the demand is made based on the old provisions and hence not sustainable in law.

Newspaper Articles
Government promises jewellers 'zero interference'with taxman over excise
duty levy
ET Bureau Mar 16, 2016,
NEW DELHI: Keen to allay the apprehensions of jewellers over the 1% exciseduty on gold ornaments,
the government has promised "zero interface" with the tax authorities and no inspection of premises
after registration. "Some jewellers have begun to come forward to register," AK Gupta, chief
commissioner, excise, told reporters on Tuesday. "We have promised them that no one would visit their
premises." Jewellers went on strike after the levy was announced in the Budget.
Eco Survey 2016:Raise taxpayers to GDP ratio, not exemption threshold
ET Bureau Mar 15,2016
NEW DELHI: The exemption threshold is a keenly watched ingredient in the budget, with many
people waiting with bated breath to see how much it has been raised. But the Economic Survey 2015-
16 favours inaction on this count, terming it a low-hanging fruit to build the country's fiscal capacity
which suffers from low tax base as also poor quality spending.

Bibliography
 Bhanu, B. F. (2013, February/March). Service Tax Notes For IPCC. Retrieved March
18, 2016, from http://www.club4ca.com/formats/students/service-tax-notes-for-ipcc/
 Raut, D. D. (2015, November 29). All about Service Tax & new Service Tax Rate @
14.5%. Retrieved March 18, 2016, from http://www.charteredclub.com/what-is-
service-tax-and-current-rates-of-service-tax-in-india/
 Chandra, R. S. (2015, December 15). Service Tax News, Articles, Notifications and
Forms. Retrieved March 18, 2016, from http://taxguru.in/category/service-tax/
 BALCHANDRA, S. B. (2015, December 16). Case Laws. Retrieved March 18, 2016,
from http://ctconline.org/documents/service/29.7.15 SC

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