Finance Act 2007 has brought certain Amendments in Service Tax Provisions.These Amendments take effect from certain specified dates.An abstract of the said changes is given here below:

• Requirement of submission of original registration certificate with the department at the time of intimation of any changes is dispensed with.Assessee is required to submit only a self- certified copy of the registration certificate and the department will issue the amended registration certificate after canceling the original certificate issued earlier.
• Revised Return can be filed to rectify the mistakes within 60 days from the date of filing of the original return.[Rule 7B ]
• Excess Service Tax paid in one tax period allowed to beadjusted only in the succeeding month/quarter upto a maximum of Rs.50,000.(details of self-adjustment should be intimated to the superintendent of Central Excise within 15 days from the date of adjustment) No limit for adjustment of excess service tax paid by the assessees having centralized registration (provided excess amount is paid on account of delayed receipt of details of payments from Branch Offices).
• Presently,Export of Services is construed if services are ‘delivered outside India and used outside India ’.It has been substituted by the words ‘Provided from India and used outside India ’.(Amendment to Rule 3(2)).Further,it is clarified that both Rule 3(1)and Rule 3(2)are to be satisfied for provision of service to be treated as export of service.
• Services provided by Resident Welfare Associations (where membership is restricted only to members of the residential complex)exempt from service tax if the monthly contribution of a member does not exceed Rs.3,000.(Notification No.8/ 2007)
• Services provided by Resident Welfare Associations (where membership is restricted only to members of the residential complex)exempt from service tax if the monthly contribution of a member does not exceed Rs.3,000.(Notification No.8/ 2007)
• Services provided in relation to testing and analysis of newly developed drugs (includes vaccines and herbal remedies) on human participants by Clinical Research Organization is made exempt from Service Tax.(Notification No.11/2007).
• Services provided by Digital Cinema service provider to the producer or distributor in relation to delivery of content of cinema in digital form are made exempt from service tax. (Notification No.12/2007)
• The person claiming CENVAT Credit is relieved from taking all reasonable steps to ensure that the duty or service tax for which credit has been claimed is paid by the manufacturer or provider of input services by deletion of Rule 9(3)vide Notification No.10/2007-Central Excise.
• If a person opts for exemption from whole of duty or when a product becomes exempt subsequent to receipt of Inputs, then the CENVAT Credit taken on Inputs lying in stock,or in process or contained in final product lying in stock has to be reversed (Rule 11)

• Threshold exemption limit for small service providers increased from Rs.4 Lakhs to Rs.8 Lakhs.[Notification No. 4/2007 ] Other Conditions of Notification No..6/2005 shall apply.
• Threshold Exemption Limit for obtaining Service Tax Registration increased from Rs.3 Lakhs to Rs.7 Lakhs.[Notification Nos.5,6 &7/2007 ]
• New Service Tax Return Form ST-3 introduced vide Notification No.14/2007.
• General Insurance Service providers need not maintain separate input/input services credit accounts to utilize CENVAT Credit proportionate to inputs used in providing taxable services.(Amendment to Rule 6(3))
• Services provided by Technology Business Incubators (i.e.TBI,promoters of innovative ideas of small entrepreneurs) or a Science &Technology Entrepreneurship Park (STEP) to young entrepreneurs to develop and commercialize innovative ideas are exempt from service tax provided they furnish information and the details of incubatees to whom they are providing assistance in the prescribed format. (Notification No.9/2007)

Service tax exemption also allowed to incubatees if they sign an agreement with incubator (Notification No.10/2007) subject to these conditions:

1. The incubatee should be located within the premises of incubator.
2. Total business turnover of incubatee is less than Rs.50 Lakhs during the previous financial year.
3. Exemption allowed to incubatee only for a period of 3 years (computed from the date of signing the agreement with incubator).

• In addition to existing education cess of 2%,a Secondary & Higher Education Cess @1%i.e the rate of Service Tax increased from 12.24%to 12.36%.
• Quantum of Penalty u/s 70 read with Rule 7C for late filing of Service Tax Returns is amended as follows:
• Delay in Days         Amount of Penalty/Additional Fees
  (From due date)
  Upto 15 Days          Rs. 500
  16 tp 30 Days          Rs. 1000
  More than 30           Rs. 1000 + Rs. 100 for each day of
  Days                        delay beyond 30 days (Max of Total
                                  Penalty of Rs. 2000)
• If any wrong CENVAT Credit is taken in respect of input or capital goods,then all such goods shall be liable to confiscation and the person shall be liable for penalty amounting to the duty on the excisable goods or Rs.2000, whichever is greater.Similarly,in respect of input services, person shall be liable to a penalty not exceeding Rs.2000. Thus amount of penalty reduced from Rs.10,000 to Rs.2,000.
• Commissioner has been empowered so as to order Cost Audit Affairs of the Service Tax Assessee ’s to study abnormal utilization of CENVAT Credit.
• Section 38A of Central Excise Act,1944 which provides protection by way of savings for all pending actions under rules and notifications that are repealed,rescinded or amended have also been made applicable to service tax provisions.

Some services are separately carved out from other category of services to be separately /specifically included in the list of Taxable Services:

1. Services provided by a telegraph authority in relation to tele-communication services,
2. Services provided in relation to mining of mineral,oil or gas.
3. Services provided in relation to renting of immovable property for use in the course or furtherance of business or commerce.However,Renting of immovable property by/to a religious body and to an educational body other than commercial training/coaching centre is excluded. Further,in case of composite contracts,entire property shall be treated as rented out for commercial purposes. Exemption is granted from the value of taxable services provided in relation to renting of immovable property to the extent of payment of property tax.(Notification No.24/2007).For this,Rule 6(4C)has been introduced which gives right to service provider for adjustment of excess service tax paid if property tax has not been deducted from service tax liability.This adjustment can be made within one year from payment of such property tax.
   Immovable property does not include:
   i.  Vacant land solely used for agriculture,farming, forestry,mining,etc and the vacant land whether or not having facilities incidental to use of such land.
   ii. Land used for educational,sports,circus, entertainment and parking purposes.
   iii. Building used solely for residential or accommodation purposes.
4. Services provided in relation to execution of a works contract such as construction,renovation of buildings, erection /installation of plant &machineries,turnkey projects etc.(optional composition scheme under which tax is to be paid @2%of the total value of the works contract wherein availment of CENVAT Credit shall not be permissible)
5. Services provided by any person,except a banking company or a financial institution including a non- banking financial company or commercial concern,in relation to asset management including portfolio management and all forms of fund management.
6. Services provided in relation to development or supply of content for use in telecom services,advertising agency services and on-line information &database access or retrieval services.
7. Services provided in relation to design services except interior decorator and fashion designer.

The scope of some existing services have been enlarged vide Notification No.23/2007:

1. Business directories,yellow pages and trade catalogues meant for commercial purposes have been excluded form the definition of ‘Book ’ under sale of space or time for Advertisement Service.
2. Services in relation to pre-recruitment screening, verifying credentials of candidates,authenticity of documents submitted by candidates and verification of antecedents are included under Manpower Recruitment or Supply Service.
3. Marriage functions are also included under mandap keeper service and pandal or shamiana contractor service.Further,Marriage event is included in event management service also.
4. Under Rent-a-Cab service,motor vehicles capable of carrying more than 12 passengers for hire or reward are included within the definition of ‘Cab ’.However it doesn ’t include motor vehicle or maxicab rented to an educational body imparting knowledge or skill other than commercial training or coaching centre.
5. Scope of Management Consultant Service is expanded to include Business Consultancy and it has been renamed as management or business consultant ’s service.
6. Cash management services are included within the scope of banking and other financial services.
7. Services chargeable to Service Tax in relation to Computer Maintenance:
   a) Computer Hardware engineering consultancy
   b) Maintenance or repair of computer software Development of Computer Software continues to be exempt from service tax.(it is distinct from maintenance or repair).

Central Sales Tax on Inter-State Sales to registered dealers (against Form-C)stands reduced from 4%to 3%or the rate of VAT /State Sales Tax applicable in the State of the Selling Dealer,whichever is lower.[w.e.f.1st Apr ’07 ] Further,it is construed that Inter-State Sales without declaration forms shall be taxable at the rate of VAT applicable in the state of the Selling Dealer.(though there are different opinions on this matter.) The rate of CST on Inter-State Sale to unregistered dealers as well as Government Departments shall be the rate of VAT / State Sales Tax applicable in the State of the Selling Dealer.Thus, the facility of inter-state purchases by Government Departments against Form-D stands withdrawn.[w.e.f.1st Apr ’07 ]. The author is a member of the Institute and the views expressed herein are his personal views and do not necessarily represent the views of the Regional Counci.He can be reached at manobhav_verma@yahoo.com .