8.2. APPLICABILITY OF SRVICE TAX
1. Territorial Application – State of Jammu & Kashmir excluded
The provisions related to Service Tax are applicable to the whole of India except to the State of Jammu & Kashmir. As a result, the services provided within the territorial limits of the State of Jammu & Kashmir are excluded from the ambit of the levy of service tax.
In other words as clarified by the Department that any service provider who has his place of business in the State of Jammu & Kashmir but provides taxable services to the clients in other parts of the country are liable for payment of service tax. Further any service provider who has his place of business in any of the Indian States other than the State of Jammu & Kashmir who provides the services to the persons in the State of Jammu & Kashmir , is not liable to pay service tax. Accordingly when the recipient of the taxable service is in the State of Jammu & Kashmir , the service is outside the service tax net.
2. Levy of Service Tax
The Service Tax is livable on notified service tax providers in respect of the value of the taxable service. In other words, service tax is levied only in respect of notified service providers and not on all service providers. Further a taxable service cannot be subjected to service tax twice under different classifications and is liable to tax only once.
3. Levy of Service Tax- Threshold Exemption
With effect from 1-4-2008, i.e. from the Financial Year 2008-2009, the threshold exemption is raised upto Rs. 10 lakhs vide Notification NO.8/2008-ST,dt. 1-3-2008.
The expression ‘aggregate value of taxable services’ means the aggregate value of services for which service tax is payable and exclusive of services which are exempt from service tax by way of any general / specific exemption.
The eligibility to avail threshold limit exemptions of Rs. 8 lakhs, Rs. 10 lakhs as the case may be is burdened with various conditions. They are ,
No CENVAT Credit is availed on the service tax paid on input services used to render the subject taxable service.
Similarly no CENVAT Credit is availed in respect of capital goods and inputs till the date of exhausting threshold exemption.
Only capital goods and inputs received after the completion of availing exemption limit can alone qualify for input credit.
Input Credit in respect of goods lying in stock or unutilized input credit lying in the books to the credit of the service provider should not be utilized and shall also be reversed to the extent to service tax payable.
The aggregate value taxable services rendered by the service provider shall not exceed Rs. 9 lakhs in the preceding Financial Year.
With effect from 1-4-2008, i.e. from the Financial Year 2008-2009, the threshold exemption is raised upto Rs.10 lakhs vide Notification No. 8/2008-ST,dt. 1-3-2008.
C-4. Levy of Service Tax- Not applicable
The levy of service tax on taxable services will not extend to the following receipt as there is no element of service in such receipts and / or consideration is involved.
Value of goods and materials sold by the service provider subject to the condition that they should be quantified and shown separately in the invoice.
Reimbursement of out-of-pocket expenses on actual basis subject to the condition that such expenses are specified separately in the bills raised by the service providers under certain circumstances.
Taxable service provided free of charge without any consideration thought the service is otherwise taxable.