The Hindu Business Line : A function of taxes

The Finance Bill, 2007 has inserted an explanation to Sections 65(66) and 65(67) to the definition of mandap, and mandap keeper clarifying that `social function' includes `marriage'. Thus, any marriage function shall henceforth be considered a social function. This clarification will put to rest all doubts about taxability of a marriage function in a mandap and the service of its keeper. Mandap keepers providing mandap services for a marriage function or ceremony will, therefore, be covered for service tax purpose. Marriage function will include any function in relation to music such as music programme, engagement ceremony, marriage performance or a reception function or any other function.

In M. Madhuri vs CCE Guntur (2005 188 ELT 287 CESTAT, Bangalore), it was held that where the appellant had given her premises for use as a marriage mandap and also as a godown and where appellant had filed a statement of income along with affidavit, and where correctness of computation of value of taxable service was disputed, it was held that service tax could be levied only on the income from marriage / function halls and not from godown rent. Penalty was also reduced.

In Shree Gujarati Samaj Bhawan vs CCE, Bhopal (2007 7 STT 125 CESTAT, New Delhi), the appellant was a social organisation registered under the State Societies Registration Act providing halls and rooms for organising marriages, etc. Following the Supreme Court ruling in the Tamilnadu Kalyana Mandapam Association case, the levy of service tax was upheld on marriage functions under mandap keeper services.

Adjustment of excess Service Tax allowed

What happens when one pays service tax in excess? Can service tax paid in excess earlier be adjusted by oneself?

The Service Tax Rules (Rule 6(4A, 4B) have been amended with effect from March 1, 2007 vide Notification No. 01/2007 of that date to extend the facility of self-adjustment of excess service tax paid to all service assessee but subject to certain conditions. Now, self-adjustment of excess service tax paid is available only to those who have centralised registration and that also only if the adjustment is on account of delayed receipt of details from the branch offices. Thus, self-adjustment of excess service tax paid to all assessees has been expended subject to the following conditions:

Self-adjustment of excess credit is allowed on account of reasons other than interpretation of law, taxability, classification, valuation or applicability of any exemption notification.

Excess amount paid and proposed to be adjusted should not exceed Rs.50,000 for the relevant month or quarter.

Adjustment can be made only in the succeeding month or quarter.

The details of self-adjustment should be intimated to the Superintendent of Central Excise within a period of 15 days from the date of adjustment.

However, assessees who have centralised registration can adjust the excess service tax paid on their own without any monetary limit provided the excess amount paid is on account of delayed receipt of details of payments from branch offices.

Business Consultancy Services

What is meant by management consultancy services? Whether both, business and management related are covered for service tax purposes?

Before the enactment of the Finance Act, 2007, only management consultancy services were taxable for the purpose of service tax. However, Finance Act, 2007 amends the definition to extend the scope to business consultancy also.

According to the new definition, management or business consultant means any person who provides any service, either directly or indirectly, in connection with the management of any organisation or business in any manner and includes any person who renders any advice, consultancy or technical assistance, in relation to financial, human resource, marketing, production, logistics, procurement management and management of information technology resources or other similar areas.

The definition of a `management consultant' has been substituted by the Finance Act, 2007 and redefined to cover both management and business consultants providing services directly or indirectly in connection with management of any organisation or business in any manner. The new definition explicitly includes business consultancy within its scope.

The amendment aims to:

Rename the service as management or business consultants service, and

Explicitly include business consultancy in the definition itself.

Taxable service means any service provided or to be provided to a client, by a management or business consultant in connection with the management of any organisation or business, in any manner and as such, both management consultancy and business consultancy will be covered for levy of service tax.

The term `business' is very common and popular in usage. The derived terms of business are also used comely such as business cards, business cycle, business day, business hours, business like, businessman, business person, business process, business studies etc.

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