Verification of Clients Address by CA is not "Business Auxiliary Services"

Services provided by CA to Bank for contact point verification of residense and offices of the clients of the banks. The said service is not falling under the category of " Business Auxilliary Services.   

Rakesh Porwal & Associates vs. CCE (CESTAT DElhi) 

BUDGET 2011 : SERVICE TAX

SERVICE TAX

Ø  Rate of Service Tax retained at 10% to create foundation for GST.

Ø  Service Tax Refund / Exemption to SEZ Units rationalized & clarified.

Ø  2 New services introduced

»        Services by air-conditioned restaurants having license to serve liquor; and

»        Short-term accommodation in hotels / inns / clubs / guest houses etc

Ø  Scope of following existing services expanded:

»        Authorized Service Station service: To cover all persons and all motor vehicles other than those meant for goods carriage or three wheeler auto rickshaw

»        Life Insurance Services: Services provided by Life Insurance Companies in the area of investment also brought within the ambit of Service Tax.

»        Commercial Training or Coaching Services: Scope expanded to include all coaching and training that is not recognized by law.

»        Club or Association Services: Services provided to non-members covered

»        Business Support Services: Scope expanded to include operational and administrative assistance of any kind.

»        Legal Consultancy Services: Services provided to individuals covered and representation services provided by any person to business entities covered under Service Tax net.

»        Health Services: Scope of health services expanded in respect of clinical establishment having central air-conditioning facility in any part of the establishment and more than 25 beds for in-patient treatment.

Ø  Point of Service Tax Rules, 2011 introduced to determine the point of time when the services shall be deemed to be provided to determine rate of Service Tax.

Ø  Individual and sole proprietors provided relief from Service Tax audit by Department subject to having turnover less than INR 60 lakhs.

Ø  Penal provisions rationalized to encourage voluntary compliance.

Service Tax : Renting of immovable Property

Burden of service tax levied on service or facility of leasing of premises should be borne by lessee (user).
If the overall objective of the levy - as explained by the Supreme Court, were to be taken into consideration, it is the service which is taxed, and the levy is an indirect one, which necessarily means that the user has to bear it; the rationale why this logic has to be accepted is that the ultimate consumer has contact with the user; it is from them that the levy would eventually be realized, by including the amount of tax in the cost of the service (or goods).

Pyarelal Bhavan Association vs. Satya Developers Delhi High Court.

Service Tax on Renting of Immovable Property : Retrospective amendment and constitutional validity : UPHELD

The Punjab and Haryana High Court has upheld the Constitutional validity and retrospective levy of service tax on renting of immovable property.

The levy of service tax on renting was challenged by Shubh Timb Steels Ltd, owning commercial property in Himachal Pradesh, on the issue of Constitutional validity and also validity of the retrospective amendment. On both these points, the court ruled in favour of the government. The court observed that it could not be held that renting of immovable property did not involve any service, as a service could only be in relation to property and not be renting of property. It said renting for commercial purposes is a service and has a value for a service receiver.

Stay on Retrospective Amendment : Renting of Immovable property :

Allahabad High Court in M/S Orient Craft Limited vs Union Of India And Others - granted stay on the retrospective operation (Retrospective amendment w.e.f. 1.6.2007 vide Finance Act, 2010)  of levy of service tax on renting of property but not stay on prospective levy.