| Q.1 |
In
case of maintainance contract entered prior to March, 2003 for
one year on receipt of the service charges for the whole year,
it appears illogical to demand collect service tax on the services
rendered prior to 14.5.2003 as the client has already paid the
amount. Who will pay the service tax and how? |
| Ans. |
There
are cases where maintenance contracts are entered into for a
period of more than one year. Vide Notification No.11/2003
Service Tax dt.20.06.2003, for maintenance contracts entered
into prior to 1st July 2003, exemption has been provided
to that part of the value of service for which bill/invoices
have been raised and the amount has actually been received prior
to the 1st July 2003. For such contracts, all
subsequent payments or payments made against invoice raised
subsequent to the 1st July 2003 will be chargeable
to service tax. |
| Q.2 |
Whether
service tax is applicable on maintenance and repair services
provided by persons other than authorised service centres of
companies? |
| Ans. |
“Maintenance
or repair” means any service provided by :-
| (i) |
any person under a maintenance contract or agreement;
or |
| (ii) |
a manufacturer or any person authorised by him in relation
to maintenance or repair or servicing of any goods or
equipments, excluding motor vehicle. Therefore,
service tax is applicable on maintenance and repair services
provided by all such persons. |
|
| Q.3 |
If
there is a total sub-contract of the service, whether sub-contractor
is supposed to take out a registration and discharge the tax
liability? |
| Ans. |
The sub-contractor
need not take a registration under Service Tax. In all
such cases, Service Tax is to be paid by main service provider. |
| Q.4 |
Whether
maintenance and repair provided without any contract is taxable? |
| Ans. |
The maintenance
or repair service undertaken under a maintenance contract or
agreement is only chargeable to Service Tax. |
| Q.5 |
Whether
Annual Maintenance Contracts (AMC) for maintainance of roads
are excluded from Service Tax ? |
| Ans. |
As roads
are neither goods nor equipment, the AMC for roads would not
be covered under Service Tax. |
| Q.6 |
Whether
Service Tax on maintenance and repair would be charged in cases
where during the guarantee period, the services are provided
to the buyer of the goods while the payments for the same are
received from the supplier of the goods? |
| Ans. |
Irrespective
of the fact that the receiver of the service is different from
the person making payments for such services, the Service Tax
is leviable on the service provided towards maintenance and
repair. Therefore, for the services provided during the
warranty period by the dealer or any other authorized person,
Service Tax would also be leviable on any amount received by
such dealer or such other authorized person from manufacturer
of such goods. |
| Q.7 |
Maintenance
or repair services rendered under contracts entered into prior
to 01.07.2003 are exempted from Service Tax if the bills are
raised, and payment also made, prior to 01.07.2003. Whether
Service Tax would still be chargeable in cases where through
the bills are raised or payment made, after 01.07.2003 but services
were rendered prior to 01.07.2003? |
| Ans. |
It is
a cardinal principle of taxation that no tax can be levied or
collected except by authority of law. Thus, if the levy
of Service tax on a particular service comes into force on a
given date, that service will not be taxable if rendered before
that date. The levy of Service Tax on “Maintenance or
Repair Service” has come into force on 01.07.2003. Accordingly,
any maintenance or repair service rendered prior to 01.07.2003
will not be taxable, irrespective of when the bills are raised
or payment made. This will apply to other services as
well which were rendered prior to the imposition of Service
Tax on them. |
