centralised registration, the office or premises from where centralised billing is done or centralised accounting is maintained, will be required to be registered. Centralised registration is granted by the Commissioner of Central Excise/Service Tax having jurisdiction over such premises.

4.7        The registration certificate is granted by department, in Form ST-2, within seven days of filing of complete application for registration. In case registration certificate is not issued within seven days, the registration deems to have been granted. Registration No., also known as Service Tax Code (STC) is a fifteen digit PAN based number. First 10 digits of this number are same as the PAN of such person. Next two digits are ‘ST’. Next three digits are S. No. indicating the number of registrations taken by the service taxpayer against a common PAN. In addition to PAN, another number, namely, premises code is also issued vide S. No. 5 of Form ST-2. This number indicates the code of concerned Commissionerate, division, range and S. No. in the range. This number is issued for easy identification of location of registration of service taxpayer.   

5.            Payment of service tax:

5.1        The provision related to payment of service tax are contained in section 68 of the Chapter V of the Finance Act, 1994 and rule 6 of the Service Tax Rules, 1994. The salient features are as under.

5.2          In terms of rule 6 of the Service Tax Rules, 1994, service tax liability for a particular month or quarter is to be discharged on the payments received towards the value of taxable service received in that month or quarter, as the case may be. The service tax is required to be paid on monthly basis, by all service taxpayers, other than individuals and proprietary/partnership concerns. The individuals and proprietary or partnership concerns are required to pay service tax on quarterly basis. The service tax is to be deposited by the 5^th of month following the month or quarter for which service tax is paid. Service tax is to be deposited in the designated banks. For depositing the service tax, the duty paying challan should be filled complete in all respect.

5.3        E-payment of service tax: The service tax can be paid electronically also. For this purpose, the service taxpayer needs to have an account in any branch of the designated banks. For availing facility of e-payment, the service taxpayer will have to obtain a user-id and password from the bank in which he has the account. The procedure of e-payment is that the service taxpayer would log on to the web-site of the bank with his user-id and password.  He will then choose the option of payment of service tax. On choosing this option, the service taxpayer will be guided to e-payment portal wherein he would be filling the challan for payment of service tax and would authorize payment of service tax by way of debit to his account. On submission, copy of acknowledgement and challans would be generated for the records of service taxpayer.

6.             Mandatory e-payment of service tax

6.1           The e-payment of service tax has been made mandatory w.e.f . 1.10.2006, vide sub-rule (2) of rule 6 of the Service Tax Rules, 1994, for all assesses who have paid (in cash plus through CENVAT Credt) a service tax  amounting to Rs 50 lakh or more in the preceding financial year or in the current financial year. For such service taxpayer, if he pays any further service tax in cash, it would be mandatory to make such payment through e-payment only.

6.2      It has been brought to the notice of the Board that there are certain  problems like procedural delays in opening of account in designated banks and issue of user’s-id and password by banks for internet banking; delays in passing a resolution  by the Board of Directors of a company to authorize any person for making e-payment (a requirement stipulated by banks for internet banking); systems failure, particularly at bank’s end, are causing some difficulties to the service taxpayer in complying with the requirement of mandatory e-payment of service tax. Keeping in view the systemic and procedural problems during initial phase of implementation of this scheme, it is advised that such taxpayers should contact the jurisdictional service tax/ central excise office or the jurisdictional

commissioner, who would extend all possible help to the taxpayers to comply with this requirement of mandatory e-payment. At the same time, such taxpayers should expeditiously complete the procedural formalities required at their end for availing internet banking facility from designated banks and complying with this requirement.

6.3           For a person providing taxable service from more than one premises and where each of such premises is separately registered with the department for payment of service tax, the criterion of Rs 50 lakh would apply to each registered premises individually, as each registered premises is separately an assessee in terms of law. Similar is the situation in the case of a person paying service tax on taxable service received by him.  However, in case of a Large Taxpayer (LTU), the cumulative service tax paid by all registered premises of such Large Taxpayer will be taken into account for satisfaction of criterion of payment of service tax amount of Rs 50 lakh.

6.4       If a person provides taxable service, also receives taxable services on which he is liable to pay service tax and has a single registered premises, the criterion of payment of service tax amount of Rs 50 lakh for the purposes of mandatory e-payment would be the total service tax paid by him.

7.             Issuance of invoices, bills, challan, consignment note and other documents:

7.1       The provisions relating to issuance of such documents, in respect of taxable service, are prescribed in rule 4A and 4B of the Service Tax Rules, 1994. The salient features are as under.

7.2            Every taxable service provider is required to issue a document (i.e. invoice, bill or challan) with in 14 days from either the date of completion of provision of service or receipt of any service charges (which ever is earlier).  Such document should be serially numbered and should contain the name and address of service provider and service receiver, description and value of service provided and service tax payable thereon.

7.3            An input service distributor is also required to issue such a document in favour of the recipient of the credit distributed.  This document should also be serially numbered and should give the details of the invoices under which the taxable service has been received, the name, address and registration of the input service distributor as well as the recipient of the credit.  The amount of credit is also to be mentioned.

7.4            For banking, financial or other service providers, providing ‘banking & other financial services’, certain relaxations are available.  For such service provider there is no need of serial numbering and address of the service receiver.  Similar dispensation is available for input service distributors of such type of service provider.

7.5            For providers of taxable service of transport of goods by road (i.e. goods transport agency) the invoice/bill/challan should, in addition to the information required, as mentioned in para 7.2, contain the consignment note number and date and gross weight of the consignment. 

7.6            Rule 4B of the Service Tax Rules prescribes that the goods transport agency would issue a consignment note, which would be serially numbered and contain the name of the consigner and consignee, the vehicle registration number, details of goods transported, details of place of origin and destination, and the person (consigner / consignee/goods transport agency) liable to pay service tax.  In case of less container load (LCL) cargo, where the goods transport agent is not aware of the vehicle registration number at the time when he receives the goods and issues consignment note, he may mention the non-availability of vehicle registration number on the copy issued to the consigner.  However, after he comes to know about the vehicle registration number, he should mention the same in his office copy of the consignment note, so as to enable future verification.   Similarly, in case of transshipment of goods, the goods transport agency would make entry of such transshipment, in their copy of consignment note.  For example, if goods moves from Delhi to Agra, and is transshipped from there for further movement to Mumbai, the goods transport agency would mention in his copy of consignment note, against vehicle No. as “ (i) Delhi to Agra: Vehicle No.- XXX (ii)Agra to Mumbai: Vehicle No.-  XXXX”. This would satisfy the requirement of the said rule 4B.

8.             Classification of taxable service

8.1           The taxable services are classifiable in respective sub-clauses of clause (105) of section 65 of the Act. In case a service is prima facie classifiable under two or more sub-clauses of clause (105), the classification is to be determined in terms of principles for classification of services is enunciated in section 65A of the Act.

9.               Service tax return:

9.1          The provisions relating to service tax returns are contained in section 70 of the Chapter V of the Finance Act, 1994 and rule 6 of the Service Tax Rules, 1994. The salient features are as under.

9.2           Every assessee is required to file a half yearly return in Form ST-3. This return, for the periods from April to September and October to March, is to be filed by the 25^th October and the 25^th April respectively. Further, ‘Input Service Distributor’ is also required to file this return.

9.3             The service tax return is required to be filed under Section 70 of the Act, by 'any person liable to pay the service tax'. Similarly, as per Rule 7 of the ST Rules, 1994, 'every service taxpayer' is required to submit service tax return. By definition, an 'assessee' is a person liable to pay service tax. Thus, persons, who are not liable to pay service tax (because of the exemption including threshold exemption), are also not required to file ST-3 returns.

9.4          E-filing of return- The service tax return can be filed electronically after logging into the website www.servicetaxefiling.com. For this purpose the assessee is required to obtain user-id and login password from department. For this purpose a simple application may be made to the jurisdictional Central Excise Officer, giving details of STC No. and an ‘e-mail id’. ‘User id’ and ‘password’ for the service taxpayer will be communicated, on the ‘e-mail-id’ furnished by him, within ten days after filing the application along with technical details required for accessing the relevant site and the procedure for making entries and other guidance as may be necessary. While filing the return electronically, the service taxpayer is required to file details as contained in Form ST-3 and duty paying challans.  On submission of return, complete in all respect, a key number will be generated by the system which will depend on the STC No., date of filing, value of services declared and tax paid and an acknowledgement would be generated by the system along with a copy of Form ST-3 and Challan which could be printed by the service taxpayer for his records.

9.5          In case of any difficulty faced in e-filing, the service taxpayer may send an e-mail at the address specified by the Commissioner explaining the difficulties and if any reply is not received within 2 days he may send a mail to saps@excise.nic.in

9.6      The Automation of Central Excise and Service Tax (ACES) is under implementation. Subsequent to its implementation, the electronic returns would be filed through ACES.

10             Assessment

10.1       Normally under self assessment scheme, the service taxpayer himself assesses his tax liability and pays the same (a) for the period; and (b) by a date that has been stipulated. However, if an service taxpayer is not in a position to determine the service tax liability, say, for the reason that valuation or classification of taxable service or issue of admissibility of an exemption notification could not be determined (or any such other reason), he may opt for assessment of service tax on provisional basis after obtaining an order from jurisdictional Deputy Commissioner/ Assistant Commissioner, in terms of such order. The assessment in such case would continue to be provisional till the issue is finalized and upon such finalization if the tax liability arises more than what has been paid by the service taxpayer on provisional assessment basis, the service taxpayer would pay the differential amount along with applicable interest else, if the service tax paid on provisional assessment basis is more than the finalized service tax liability, the differential amount would be refunded by the department subject to provisions relating to refund of service tax.

11.            CENVAT Credit

11.1     With effect from 10.9.2004, CENVAT Credit across goods and services has been allowed. In this regard the manner of availing credit and the procedure to be followed is prescribed in the CENVAT Credit Rules, 2004 (herein after called ‘the Credit Rules’). This circular deals with only certain commonly raised issues relating to certain provisions of these rules that relate to service tax credit, namely, (a) those pertaining to credit of service tax paid on taxable service i.e. ‘transportation of goods by road’; and (b) eligibility to avail credit on service tax paid on mobile phones. The following are the issues have been examined in this circular,-

(a)ISSUE: Whether a manufacturer or taxable service provider having credit balance in his account can utilize that credit for payment of service tax on goods transport by road, as a consignor or as a consignee?

COMMENTS : In terms of rule 3 (4) of the Rules CENVAT credit can be utilized for the following payment of ,-

(a)                      any duty of excise payable on any final product;

(b)                     any amount payable while removing (i) inputs as such or in partially processed form or (ii) capital goods as such;

(c)                      any amount payable on duty-paid goods, when such goods are brought back to a factory and subsequently remove after carrying processes, not amounting to manufacture (rule 16 (2) of the Central Excise Rules);

(d)                     service tax on any output service

In terms of the Credit Rules, ‘output service’ means any taxable service provided by the provider of taxable service, to service receiver. Further, the definition of ‘provider of taxable service’ includes a person liable for paying service tax. Therefore, reading the two definitions in conjunction, it is clear that to form ‘output service’, taxable service has to be actually provided by the ‘provider of taxable service’. Even if due to a legal fiction, a consignor or a consignee becomes ‘a person liable to pay service tax’ (and consequently a ‘provider of taxable service’), it cannot be said that they have actually provided any taxable service. The service provided by a Goods Transport Agent (GTA) for which the consignor or the consignee are made liable to pay service tax, does not become an ‘output service’ for such consignor or the consignee. Therefore, the service tax payable by the consignor or consignee on transportation of goods by road cannot be paid through credit accumulated by such consigner or consignee. Accordingly, the  consigner and consignee has to be pay tax in cash on goods transport by road service.

(b)ISSUE ; Whether a consignee can take the credit of the amount paid as service tax either by himself (as consignee), or by the consignor or by the Goods Transport Agency?

COMMENTS: As per Rule 3 of the CENVAT Rules, 2004, CENVAT Credit of, inter alia, service tax leviable and paid on any ‘input services’ can be taken. The rule does not distinguish as to who (i.e. the GTA, the consignor or the consignee himself) has paid the aforesaid tax. The only conditions required to be satisfied is that the consignee must be a manufacturer of excisable goods or a provider of taxable service and the service must be in the nature of ‘input service’ for such activity. In case of inward transportation of inputs or capital goods, such service (being specifically mentioned under the definition of ‘input service’) would qualify to be called as ‘input service’  and thus the service tax paid (by any of the persons mentioned above) on it would be eligible as credit to the receiver if  he is either a manufacturer of excisable goods or a provider of taxable service.

(c) ISSUE; Up to what stage a manufacturer/consignor can take credit on the service tax paid on goods transport by road?

COMMENTS: This issue has been examined in great detail by the CESTAT in the cases of M/s Gujarat Ambuja Cements Ltd. vs CCE, Ludhiana [2007 (006)STR 0249 Tri-D],. In this case CESTAT has held as follows,

 “the post sale transport of manufactured goods is not an input for the manufacturer/consignor. The two clauses in the definition of ‘input services’ take care to circumscribe input credit by stating that service used in relation to the clearance from the place of removal and service used for outward transportation upto the place of removal are to be treated as input service. The first clause does not mention transport service in particular. The second clause restricts transport service credit upto the place of removal. When these two clauses are read together, it becomes clear that transport service credit cannot go beyond transport upto the place of removal. The two clauses, one dealing with general provision and other dealing with a specific item, are not to be read disjunctively as to bring about conflict to defeat the laws scheme. The purpose of interpretation is to find harmony and reconciliation among the various provisions”.

 In conclusion a manufacturer / consignor can take credit on the service tax paid on out ward transport of goods up to the place of removal and not beyond that.

11.2             A related question that requires further elaboration is the place, which should be treated as ‘place of removal’ for the aforesaid purposes.  The phrase ‘place of removal’ has not been defined in CENVAT Credit Rules. In terms of sub-rule (t) of rule 2 of the said rules, if any words or expressions used in the CENVAT Credit Rules and are not defined therein but are defined in the Central Excise Act or the Finance Act, 1944, they shall have the same meaning for the CENVAT Credit Rules as assigned to them in those Acts. The phrase ‘place of removal’ is defined under section 4 of the Central Excise Act, 1944. It states that,-

“place of removal” means-

(i) a factory or any other place or premises  of production or manufacture of the excisable goods ;

(ii) a warehouse or any other place or premises wherein the excisable goods have been permitted to be stored without payment of duty ;

(iii)        a depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory;

from where such goods are removed.”

It is therefore, clear that to a manufacturer/consignor the eligibility for availment of credit on the service tax paid on the transportation, the factual situation (whether a factory gate sale, sale from a non-duty paid warehouse, depot sale or sale from any other place or premises from where the excisable goods are to be sold after their clearance from the factory) would determine the extent of such eligibility. In this regard, in the case of CCE, Indore Vs NHK Springs Ltd, the CESTAT[ order No. 907/8, dated 26.4.2007] has observed,

‘The definition of “place of removal” has expanded by virtue of Section 4 of Central Excise Act, 1944, beyond the factory premises to other place or premises wherein the goods are permitted to be deposited without payment of duty, from where the goods are removed, and also depot, premises of a consignment agent or any other place or premises from where the excisable goods are to be sold after their clearance from the factory. In view of the expanded meaning of the expression 'place of removal', outward transportation upto the place of removal has been recognized as 'input service'. 

For illustration if the goods are first sold at the factory gate or depot and then the transportation is being undertaken for delivery of the goods at the destination. In such cases, the factory /depot would become the ‘place of removal’ and any transportation thereafter would be transportation beyond such ‘place of removal’. As such no credit would be admissible on such outward freight. However, there are situations, where by way of the terms of contract a sale is in the nature of destination sales. In such cases, the ownership of the goods rests with the seller of the goods till the delivery of the goods to the purchaser at his door step. The seller not only bears the freight for such transportation but also suffers the risk of loss of or damage to the goods during transit to the destination. The terms of the contract for sale also makes it clear that the property in the goods would stand transferred upto the purchasers only when such goods are delivered in acceptable condition to the purchasers, and the purchasers accept such delivery. Obviously in such a case the door step of the purchaser is the ‘place of removal’ within the meaning of section 4(3) (c) of the Act as the goods are being sold at such place after their clearance from the factory. Therefore, the credit of service tax paid on outward transportation up to such place of removal would be clearly admissible as credit to the manufacturer of any excisable goods, if its sale takes place in above manner.

11.3    A doubt has also been raised regarding admissibility of CENVAT credit on service tax paid in respect of mobile phones. In the Service Tax Credit Rules, 2002, it was prescribed that credit of service tax was admissible only on telephone connection installed in the business premises. A clarification to this effect was also issued vide circular No. 59/8/2003-ST dated 20.6.2003, in the context of the Service Tax Credit Rules, 2002. However, in the CENVAT Credit Rules, 2004 no such condition has been prescribed. Therefore, w.e.f. 10.9.2004, credit of service tax paid in respect of mobile telephone service is admissible, provided the mobile phone is used for providing out put service or used in or in relation to manufacture of finished goods.

12              Delay in payment of service tax

12.1           Delay in payment of service tax, including a part thereof, attract simple interest in terms of section 75 of the Act, The rate of interest is as prescribed from time to time, in accordance with this section.  At present the rate of interest is 13% per annum (notification No. 26/2004-ST, dated 10.9.2004).  

13              Any amount recovered by any person as service tax

13.1          Any amount collected by a person as service tax from any other person, which is not chargeable in terms of services tax, such amount is required to be deposited with the Central Government.  In other words no amount collected as service tax could be retained by person who has collected such amount. Any delay in depositing such amount attracts simple interest at rate prescribed under section 73 B of the Act. At present the rate of interest is 13% per annum (notification No. 8/2006-ST, dated 19.4.2006).  

14             Scrutiny of return and audit

14.1      The selective scrutiny of return or audit of service taxpayer and other assessees, like input service distributor, may be done by the jurisdictional central excise officer (authorized for the purpose)  in terms of the instructions/guidelines issued by the Board, from time to time. Similarly, an audit party deputed by the Comptroller and Auditor General of India may also undertake audit of service tax assessee. The rule 5 of the Service tax Rules makes it mandatory for every assessee to make available the records, on demand, for inspection  and examination to such authorized person/audit parties.

15.           Adjudication of cases

15.1         Section 73 of the Act deals with the adjudication of cases of short levy or non levy of service tax or   service tax short paid or not paid or erroneously refunded. For quick settlement of disputes, this section prescribes that (i) in cases other that those involving fraud, collusion, wilful mis-statement, suppression of fact or contravention of provisions of Act or rules made thereunder with intent to evade tax, the person chargeable to service tax, or to whom service tax has been erroneously refunded may make payment suo-moto along with interest, as applicable, and, consequently no Show Cause Notice would be served in respect of amount so paid; (ii) in other cases involving fraud, collusions, wilful mis-statement and suppression of facts, etc., the dispute could be settled by making payment of service tax amount specified in the notice along with interest and penalty equal to 25% of service tax amount, within thirty days of issue of show cause notice.  Section 83A confers powers on the Central Excise Officer for adjudging a penalty under the provisions of the said Act or the rules made thereunder. Board has specified monetary limits for adjudication of cases under section 83A of the said Act vide notification No. 30/2005- Service Tax dated 10th August, 2005. The monetary limits are as follows:

            Uniform monetary limits apply for the purposes of adjudication under section 73 and section 83A of the said Act.

            The monetary limits specified in the above Tables for adjudication of service tax cases are irrespective of whether or not such cases involve fraud, collusion, willful mis-statement, suppression of facts or contravention of any of the provisions of the said Act or the rules made thereunder with an intent to evade payment of service tax and whether or not extended period has been invoked.

            Further, those cases where there is no alleged failure to pay or evasion/avoidance of service tax or utilization of CENVAT credit is to be adjudicated by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise.

15.2       A notice to show cause under the provisions of the said Act or the rules made thereunder is to be approved in writing and signed by the Central Excise Officer who is competent to adjudicate the said notice.

15.3       Where simultaneously different cases involving the same issue are due to be adjudicated in a Commissionerate, all such cases may be adjudicated by the Central Excise Officer competent to decide the case where the service tax or CENVAT credit involved is of the highest amount.

15.4    For cases where the appellate authority remands the case for de-novo adjudication specifically mentioning the authority that has to adjudicate the case, then such authority specified in the said appellate order should adjudicate such cases. Where the appellate authority does not specifically mention the authority who has to adjudicate the case, then it should be decided by the authority who passed the said remanded order. The above specified monetary limits are not applicable in such cases.

15.5    As decided earlier by the Board, in respect of issue involving Show Cause Notice for an amount of Rs one thousand and below, towards short payment/non-payment of service tax, the jurisdictional officer should give an opportunity and allow the service taxpayer to deposit the amount of service tax not paid alongwith interest, if any.   In case the service provider pays the service tax alongwith interest within period of one month of the default in payment being pointed out, recourse should be made to section 80 of Finance Act, 1994 as amended provided the service taxpayer fulfils the conditions therein. However, in other cases of failure on behalf of Service provider to pay the service tax and interest, if any, normal procedure shall be followed.

16      Revision of orders:

16.1 The adjudication order passed by the officers subordinate to the Commissioner of Service Tax could be revised by the Commissioner after causing inquiry as he deems fit, in terms of section 84 of the Act. The limitation period for issuing such reversionary order is two years from the date on which original order is passed. However, the issue against which appeal has been filed by the service taxpayer before Commissioner (Appeal) cannot be revised. Thus if an order deals with several issues and party files appeal only in respect of few issues, the commissioner can pass revisionary order in respect of remaining issues against which appeal has not been filed by the party.

16.2     Further, before revising any order, an opportunity for hearing is to be given to service taxpayer to comply with the principle of natural justice.

17               Appeals provisions

17.1     If the service taxpayer is aggrieved by any order passed by an adjudication authority lower than the Commissioner, he may file an appeal before the Commissioner (Appeal). Such appeal is required to be filed within three months of communication of such orders to party.

17.2         Appeal against an order of Commissioner, including a revisionary order, and order of Commissioner (Appeal) lies with the Appellate Tribunal.

Yours faithfully,  

 (Gautam Bhattacharya)

Commissioner(Service Tax)

              *******

     CBEC solicits views, comments and suggestions on the draft circulars, particularly suggestion for inclusion of any additional issues in the proposed circulars, from the trade and industry associations, departmental officers and others. The views, comments and suggestions may be sent so as to reach CBEC on or before 29^th June, 2007.

Comments and suggestions on the draft circulars –

(i) on technical issues may be sent to Shri Girdhar G. Pai, Under Secretary (TRU), CBEC, Room No.146-G, North Block, New Delhi. Fax No. 011-23093037. E-mail: tru.finmin@gmail.com