Notification – Service Tax on Advertisement & Rate of exchange for valuation of services
Notification No. 18/2014-ST – dated 25th August, 2014 – Seeks to notify the date on which Clauses A, B, C of the section 114 of the Finance (No.2) Act 2014 becomes effective
Clause A & B of Finance Act, 2014 for Services of radio taxi and services of advertisement other than selling of space for advertisements in print media, such services should be taxable from 1st October, 2014 and Clause C of finance Act, 2014 relating to substitution of explanation to section 67A for meaning of rate of exchange, such subtitled explanation should be applicable from 1st October, 2014.
Related Notification is as follows :-
NOTIFICATION NO 18/2014-Service Tax, Dated: August 25, 2014
In exercise of the powers conferred by clauses (A), (B) and (C) of section 114 of the Finance (No.2) Act, 2014 (25 of 2014), the Central Government hereby appoints the 1st day of October, 2014 as the date on which the provisions of clauses (A), (B) and (C) of the said section of the said Act shall come into force.
[F. No. 334 /15 /2014-TRU]
(Akshay Joshi)
Under Secretary to the Government of India
Under Secretary to the Government of India
For Detailed Analysis Read following article-
Changes in Negative List & Service Tax Rules wef 01.10.2014
CA Sumit Grover
→ Effective date of amendment—1st Oct'14
SERVICES PROVIDED BY RADIO TAXIS:
- Earlier, radio taxis were excluded from the purview of service tax by virtue of section 66D(o)(vi) of Finance Act,1994;
- However, in the Finance (No.2) Act, 2014, enacted on 6th August, 2014, the said section was amended & the "radio taxis" got deleted, resulting in levy of service tax thereupon. However, effective date wasn't notified. Now, the same has been notified as 1st October,2014;
- At the same time, abatement of 40% shall be allowed in such cases, as provided in entry no. 9/9A of N/N 26/2012-ST, amended by N/N 08/2014- ST, subject to the condition that no CENVAT is claimed.
- Hence, effective rate of service tax shall be 4.944%.
SERVICES BY WAY OF ADVERTISEMENT:
- As per the erstwhile provisions contained in section 66D(g) of Finance Act, 1994, sale of space for advertisement, other than radio & television, used to remain excluded from the levy of service tax.
- In the Finance (no. 2) Act, 2014, all advertisements, other than in print media, were made subject to service tax, though effective date of applicability of amended provisions, was not defined.
- Now, the same has been notified as 1st October, 2014.
DETERMINATION OF RATE OF EXCHANGE:
- From 28-May-2012, section 67A was inserted to determine the rate of exchange to be opted for the purpose of determination of value of the taxable service & such rate was construed to be the rates notified by CBEC from time to time, in accordance with section 14 of Customs Act,1962.
- This had led to various practical difficulties in the industry, since they had to separately maintain a track record as per CBEC rates for the purpose of valuing import or export of service, while in financial statements the rates were taken on a different basis(e.g. RBI rates, Bank TT buying/selling rate, etc.)
- Now, w.e.f. 1st October, 2014, rule 10 has been inserted in Service Tax Rules, 1994 to consider the rate of exchange as per GAAP on the date when Point of taxation arises in terms of the Point of Taxation Rules, 2011.
- Post this amendment, an ambiguity may arise as to whether the same rates may also be used for valuing export of services, or department may take the other view?
(Author can be reached at Sumitgrover.ca@gmail.com, +91-9910946323)
Service Tax- Rate of exchange for determination of value of taxable service wef 01.10.2014
Notification No. 19/2014-ST- dated 25th August, 2014 – Seeks to amend the Service Tax Rules, 1994 to insert rule of determination of rate of exchange and power to issue supplementary instruction
With effect from 01.10.2014 Rate of exchange for determination of value of taxable service shall be as per the generally accepted accounting principles instead of Rates Notified by custom authorities from time to time.
NOTIFICATION NO. 19/2014-Service Tax, Dated: August 25, 2014
In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994, namely:-
1. (1) These rules may be called the Service Tax (Second Amendment) Rules, 2014.
(2) They shall come into force on the 1st day of October, 2014.
2. In the Service Tax Rules, 1994, after rule 10, the following rules shall be inserted, namely:-
"11. Determination of rate of exchange.– The rate of exchange for determination of value of taxable service shall be the applicable rate of exchange as per the generally accepted accounting principles on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011.12. Power to issue supplementary instructions.– The Board or the Chief Commissioners of Central Excise may issue instructions for any incidental or supplemental matters for the implementation of the provisions of the Act.".
[F. No. 334 /15 /2014-TRU]
(Akshay Joshi)
Under Secretary to the Government of India
Under Secretary to the Government of India
Note.- The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide notification No. 2/94-SERVICE TAX, dated the 28th June, 1994 vide number G.S.R. 546 (E), dated the 28th June, 1994 and last amended vide notification No.9/2014-Service Tax, dated the 11th July, 2014 vide number G.S.R. 478 (E), dated the 11th July, 2014.
For Detailed Analysis Read following article-
Power of CBDT to Extend due date of Tax Audit Report, without ITR Due Date extension?
CA Nilay G. Popat
Whether CBDT have any power to extend due date Under section 44AB of the Income Tax Act,1961 without extending due date for filing return of income u/s 139(1)?Recently, on 20.08.2014, CBDT issued an order under Section 119 of the Income Tax Act, 1961, by which it extended the due date for obtaining and furnishing tax audit report u/s 44AB from 30/09/2014 to 30/11/2014 for AY 2014-15. At the outset, we should thank them for extending due date for Section 44AB. However, the said order doesn't have any reference to Section 139(1), (which provides for due date of filing income tax returns). This has created doubts amongst many of us as to whether due date of return of income has been actually extended or not.
As we all know, Section 44AB of the Income Tax Act, 1961 provides tax audit for every assessee who are covered in either of the four clauses viz. Clause (a), (b), (c) & (d) of Section 44AB. Such assessees are required to get their accounts audited by an accountant before the "SPECIFIED DATE" and furnish BY THAT DATE the report of such audit in prescribed form (viz. Form 3CA or Form 3CB along with Form 3CD).
Explanation (ii) of the said Section 44AB provides that "Specified date", in relation to the accounts of the assessee of the previous year relevant to an assessment year, means the due date for furnishing the return of income under sub-section (1) of section 139. Thus, it is crystal clear that due date u/s 44AB is directly linked to due date u/s 139(1) as applicable to an assessee.
Further Section 44AB does not provide for any powers to any authority with respect to alteration of the "Specified Date". Therefore, the "Specified Date" for the purpose of obtaining and furnishing the tax audit report shall be the due date for furnishing the return of income under section 139(1). It also makes it clear that there cannot be an isolated extension of due date u/s 44AB without extension of due date u/s 139(1).
order U/s. 119 dated 20.08.2014 (as referred above) starts with "In exercise of power conferred by section 119 of the Income-tax Act ('the Act'), the Central Board of Direct Taxes (CBDT) hereby extends the due date for obtaining and furnishing of the report of audit under section 44AB…" Neither Section 44AB nor Section 119 contains any provision which conferred power to CBDT for providing any relaxations from the provisions of Section 44AB.
Hence, if at all CBDT wants to extend due date of obtaining and furnishing Tax Audit Report u/s 44AB, it can do so only by way extending due date u/s 139(1). Only parliament can amend/alter provisions of Section 44AB and hence, any isolated extension of due date u/s 44AB would ultra vires the Income Tax Act and may not survive in front of judicial review.
Views herein above are personal in nature and shall not be used for any commercial or professional purpose. Counter views/suggestions as well as critical review of above write up is always welcome.
(Author can be reached at eM@il : nilay@canilaypopat.in)
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