Last updated: January 27th, 2024 5:28 PM

Advance Rulings on Service Tax

An applicant can file for advance rulings on service tax if the applicant is setting up a joint venture with a non-resident Indian or if the applicant is a non-resident setting up a business in India. The purpose of the facility for advance rulings is to remove any concerns with respect to service tax applicability and ensure that non-residents are able to determine service tax liability prior to investment in India.

Resident Private Limited Company

Previously, only non-resident applicants and residents in joint-ventures with non-residents were allowed to apply for an advance ruling. However, in 2014, the rules have been amended and now private limited companies are also allowed to apply for advance rulings on service tax matters.

Areas of Advance Rulings

The following are some of the areas of service tax pertaining to which, an advance ruling can be provided:

• Classification of any service as a taxable service;
• Valuation of taxable service for charging service tax;
• Principles to be adopted for determination of the value of taxable service;
• Applicability of notifications issued;
• Admissibility of credit of service tax;
• Determination of the liability to pay service tax on a taxable service;

Advance Ruling Authority

The Advance Ruling Authority acts as a civil court. Hence, the authority has the powers of a civil court under the Code of Civil Procedure, 1908 in the matter of discovery and inspection, enforcing the attendance of any person and examining a person under oath, issuing commissions and compelling production of books of account and other records. The advance ruling is binding not only on the applicant but also on the Commissioner of Central Excise and the Central Excise Officers subordinate to such Commissioner.

Applying for Advance Ruling

An application for advance ruling can be made to the Advance Ruling Authority. On receipt of the application, a copy of the application is forwarded to the concerned Commissioner of Central Excise. Thereafter, the authority has to give the opportunity for hearings and communicate in writing the decision within ninety days of receipt of application. If the Authority finds an advance ruling produced by it has been obtained by the applicant by fraud or misrepresentation of facts, it may order the rulings to be void. In such cases, the advance ruling would then have no validity.

More on Service Tax

Service Tax Registration is a tax registration required for businesses providing services in India. Service tax registration is an indirect tax wherein the service provider pays the tax and recovers the same from the recipient of the taxable service. At present, Service Tax is levied at 12.3% on the value of the taxable service. This includes Education Cess @ 2% on the service tax amount, and Secondary and Higher Education Cess @ 1% on the service tax amount. Service Tax registration is mandatory for every person or business in India that has provided a taxable service of value exceeding Rs.9 lakhs, in the previous financial year. Service Tax Registration is required for the identification of the assessee, deposit service tax, file service tax returns and undertakes various processes required under the Finance Act, 1994. Failure to obtain service tax registration would attract penalty in terms of Section 77 of the Finance Act, 1994.