Q.	What is the system and procedure for awailing credit of service tax suffered on telephone bills, advertising, insurance of building, machinery & stocks, surveyor fee bills and all other bills on which service tax is charged?
A.	An output service provider is allowed to take credit of service tax paid on input services received by it, provided, it maintains a record of bills/challans/invoices issued by the provider of input service containing details, such as: Serial number of document; date of issue; description and value of input service; amount of service tax paid; service tax registration number; and address of the service provider. It is the responsibility of the output service provider availing service tax credit to ensure that the input services in respect of which service tax credit is being availed are the services on which service tax has been paid. Further, the output service provider availing service tax credit shall be deemed to have taken reasonable steps to satisfy himself about the identity and address of the input service provider issuing the documents on the basis of which the service tax credit is availed and the correctness of details regarding description and value of input services received by him. The burden of proof lies on the output service provider that the input service provider exists and hence paid the service tax as referred to in his documents. The service tax credit availed on input service may be utilised for payment of service tax on the output services. Provided that the service tax credit shall be utilised only to the extent such credit is available on the last day of a month, for payment of service tax relating to the month or, in case where the assessee is an individual or proprietary firm or partnership firm, to the extent such credit is available on the last day of the quarter for payment of service tax relating to the quarter. The output service provider availing service tax credit shall submit to the Superintendent of Central Excise, a return under Rule 5(4) of Service Tax Credit Rules 2002 along with half yearly Return ST-3.
Q.	In warranty claims, parts are replaced for customers and the manufacturer gives the dealer replacement of parts or credit note for the value of parts. As per expert opinion, no service tax is payable on this. Is it true?
A.	Yes, no service tax is payable on the value of the parts replaced, provided the value of such parts sold is shown separately in the bill raised.
Q.	When an automobile dealership conducts a Free Service Camp for customers for 2/3/4 wheelers, is any service tax payable?
A.	No service tax is payable if the service is provided free of cost, since the service tax is chargeable on the value of taxable services. When the same is zero, the tax is also zero. However, if the dealer conducts Free Service Camp at the instructions of the manufacturer and gets remunerated for the same, tax is applicable.
Q.	In cases where the manufacturer reimburses the cost of free service, is service tax payable on such services? Most manufacturers do not reimburse any service tax to the dealers. Even otherwise, the amount of reimbursement is abysmally low to even cover the cost of providing such services including water and consumables cost. Is any service tax payable on these free services? In case the manufacturer is not reimbursing, can the dealer charge the customer for service tax only on such free services?
A.	Service tax is payable on the amount reimbursed by the manufacturer in the case of free service irrespective of the fact whether the service tax is reimbursed or not, as the liability to pay service tax to the department is that of the service provider.
Q.	In case of free service provided to car owners, the manufacturer does not reimburse the dealers. Such service is given free of cost to the customer by the dealers. Is any service tax payable on such services?
A.	No service tax is payable if the services are provided free of cost, because service tax is chargeable on the value of taxable services.
Q.	According to Notification No. 12/2003 dated, 20-6-2003 issued by the Service Tax Department, cost of goods and material shall not form part of value to be subjected to service tax. There are two issues in this respect:
Q.	According to Notification No. 12/2003 dated, 20-6-2003 issued by the Service Tax Department, cost of goods and material shall not form part of value to be subjected to service tax. There are two issues in this respect:
	a)	While providing service to customers, certain materials, such as, water, soap, shampoo and other consumables are used;
	b)	Paint and consumables account for almost 40-50 per cent of the cost of denting and painting.
Whether the cost of such consumables used during servicing should be excluded from the value of service. If yes, how this is to be done and how details/records are to be maintained?
A.	As per the explanation to Section 67, the value of taxable services does not include the cost of parts or accessories, or consumables, such as, lubricants and coolants, if any, sold to the customers during the course of service or repair of motor cars, light motor vehicles or two-wheeled motor vehicles. The Government vide its circular F. No. B 1l/1/200l-TRU dated 9-7-2001 has clarified that the service provider claiming benefit of the cost of parts or accessories should show them separately on the invoices. Otherwise, the claim will not be admissible. Notification N 0.12/2003 dated 20-6-2003 provides that the value of goods and material sold by the service provider to customer is excludable from the taxable value, only if there is documentary proof indicating the value of goods & material; otherwise, the exemption will not be admissible. The notification only provides exemption to the material sold along with services and not to the material consumed while providing the services. The materials, like, water, soap, shampoo, etc., which are not sold but consumed in providing of service, form an intrinsic part of the services and, as such, are inseparable from the services provided. Cost of such consumables, therefore, cannot be excluded from the value of taxable services. Similarly, the value of certain items, such as, paints used for painting body etc. during the course of providing service, which form an intrinsic part & parcel of service insomuch as these are not distinctly and separately identifiable from the services rendered, is to be included in the value of taxable services. The matter has also been clarified by CBEC vide its circular No. 699/15/2003-CX dated 5-3-2003.
Q.	How to file return of service tax while taking credit of service tax paid on input services?
A.	The output service provider, availing service tax credit shall submit to the Superintendent of Central Excise, a return under Rule 5(4) of Service Tax Credit Rules 2002 along with form ST-3. The proforma can be collected from the Service Tax Cells of respective cities.
Q.	How to file service tax return under e-filing of service tax return?
A.	The service provider is required to have l5-digit PAN based STP code to avail the facility of e-filing of ST-3 returns. The assessees opting for e-filing must me an application to the service tax department at least one month in advance. User identity and password for the assessee will be communicated within 10 days after filing application.
Q.	What procedure should be followed by a dealership having branches at multiple locations, to obtain registration under service tax law?
A.	Where the assessee is providing taxable services from more than one premises or office, and has centralised accounting system at anyone of such locations, he can obtain single registration for all service outlets by making an application to the jurisdictional Commissioner of Central Excise for the registration of such premises or office from where centralised accounting is done. The Commissioner may permit such registration, if he is satisfied that the same would not be detrimental to the interest of revenue [sub-rule (3A) of rule 4 of Service Tax Rules 1994].
Q.	If an authorised dealer of Tata Motors does repair of Maruti vehicles, is service tax payable on such repair bill, as the dealer is not authorised for Maruti?
A.	According to Section 65(9) of Finance Act, 1994, "Authorised Service Station" means any service station, or centre, authorised by any motor vehicle manufacturer, to carry out any service or repair of any motorcar, light motor vehicles or two-wheeled motor vehicle manufactured by such manufacturer. As per section 65(105) (zo) and (zzj), the taxable service is any service provided to a customer, by an authorised service station, in relation to any service or repair of motor cars/twowheeled motor vehicles/light motor vehicles, in any manner. Therefore, service tax is leviable only on such services, which are provided in relation to motorcars, two-wheeled motor vehicles or light motor vehicles for which the service station is authorised by the manufacturer of such vehicles. In this regard, CBEC has issued Circular No. 699/15/2003CX dated 5-3-2003. The intention was to cover only the authorised service and repair of motorcars, two wheeled motor vehicles and light motor vehicles. Accordingly, service/repair of Maruti cars by an authorised service station of Tata Motors, which is not authorised by Maruti Udyog will not attract service tax.
Q.	Is single registration permissible for automobile dealership as a unit under business auxiliary service as well as authorised service stations?
A.	Yes.
Q.	For a composite unit of automobile dealership comprising sales, service and spares, it is very difficult to separate the input service charges, such as, insurance premium, telephone bills etc. for claiming credit of input service tax while paying output service tax. In such a scenario, can the tax suffered on input services for the entire composite unit be claimed as credit for the payment of output service tax on workshop labour bills?
A.	Where a service provider renders output services which are chargeable to service tax as well as exempted services or non-taxable services, then to avail credit of service tax on any input service, he has to maintain separate accounts for receipt and consumption of input services for each such purpose. Where service provider opts not to maintain separate accounts, he shall be allowed to utilise service tax credit for payment of service tax on any output service only to the extent of an amount not exceeding 35 per cent of the amount of service tax payable on such output service.
Q.	If credit of service tax suffered on input services has not been availed earlier during the period, say, September-December'03, can it be claimed now?
A.	Yes. However, no refund of service tax paid on input services is allowed.