Impact on Service Tax after Finance Bill 2016 assented by President

CA Anshul Aggarwal

The Finance Bill was presented in the Lok Sabha on February 29, 2016. On May 5, 2016, the Lok Sabha passed the Finance Bill, 2016 and later on it was approved by the Rajya Sabha. The Finance Bill, 2016 received the presidential assent on May 14, 2016. Now it becomes the Finance Act, 2016 (28/2016).

It has given way to various amendments including following important changes under service tax:

• Approved vocational education course‟ is to be incorporated inthe general exemption notification & exemption to specified educational services (Notification No.25/2012-Service Tax)
• Section 67A which provides for the ‘Date of determination of rate of tax, value of taxable service and rate of exchange’ has been amended to the effect that the time or the point in time with respect to rate of Service tax shall be determined as per the Point of Taxation Rules (POTR) ( Notification No- 10/2016-Service Tax)
• Interest rates rationalised at a uniform rate of 15%, except in case of Service tax collected but not deposited to the exchequer, in which case it would be 24% from the date it becomes due (Notification No-13/2016-Service Tax)
• Assesses whose value of taxable services in the preceding year/years covered by the notice is less than Rs.60 Lakh, the rate of interest on delayed payment of Service Tax will be 12%
• Assignment of right to use the spectrum and its subsequent transfer has been included in the declared list of services and thus made leviable to Service tax. It will not be treated as sale of intangible goods
• It is clarified that any activity carried out by a lottery distributor or selling agent in relation to promotion, marketing, organizing, selling of lottery or facilitating in organizing lottery of any kind, in any other manner, on behalf of the State Government as per the provisions of the Lotteries (Regulation) Act, 1998, is leviable to Service Tax
• The longer period of limitation has now been extended to 30 months from the erstwhile 18 months from the relevant date (Section 73, Clauses 149 of the Finance Bill, 2016)
• Proceedings on personnel of a company (including Directors) shall be deemed to have been consummated when the proceedings against Company stands concluded (Section 78A, Clauses 151 of the Finance Bill, 2016)
• Monetary limit for imposing penalty and launching prosecution (including power to arrest) increased from erstwhile `50 Lakhs to `2 Crores (Section 89, Clauses 152 of the Finance Bill, 2016)
• The power to arrest in Service Tax is proposed to be restricted only to situations when the tax has been collected and not deposited with the Government and the amount exceeds the threshold of Rs 2 core. (Section 90, Clauses 153 & 154 of the Finance Bill, 2016)
• Penal provisions with respect to non-cognizable and bailable offences have been omitted in light of omission of the clause that provided for treatment of all offences  which were non-cognizable and bailable
• Application for refund as per Section 101, 102 & 103 of Finance Bill 2016 (i.e. Retrospective exemption is to be extended to the construction, repair, maintenance etc. of canal, dam or other irrigation works provided to entities set up by Govt. provided during the period from the 1st  July,2012 to 29.01.2014.) has to be made within 6 months from the date when the Finance Bill, 2016 receives President’s assent.

Author can be reached at anshulaggarwal88@gmail.com