Purchase of second hand automobiles from authorised service stations and company outlets could become marginally costlier with the revenue department saying that such vehicles would come under the purview of service tax.
Prior to June 2005, definition of authorised service station covered only service or repair of motorcars, two-wheeled and light motor vehicles by service stations or centres authorised by the manufacturers. Reconditioning or restoration of an old vehicle was not explicitly covered as a taxable service.
"Amendments have been made to specifically include reconditioning or restoration of motor cars, two-wheeled and light motor vehicles carried out by the authorised service stations or centres under this service tax," the Central Board of Excise and Customs said in an internal circular.
It also clarified that life membership fees paid to a club or an association would be treated in the same way as subscription and liable to service tax.
"Any additional fee should be treated in the same way as subscription. Life membership fees must be treated in the same way as subscription," the Central Board of Excise and Customs said in a circular on issues pertaining to service tax.
Tax experts like J K Mittal, of Assocham's Expert Committee on indirect taxes contend that it would be difficult to implement this clause due to problems in computation particularly where life membership fees have been paid prior to June 16, 2005.
However, amounts charged by a club to its members for sale of items such as food or beverages would not be taxable provided the documents evidencing such sale are available.
An assessee would have to register all locations from where taxable services are provided, or opt for one single registration. Hence, if a bank has its head office at Mumbai and regional offices at Bhopal, Jaipur and Bangalore, then the bank can get each of these regional offices registered (and not only the Mumbai office) for the purpose of discharging the service tax liability.
Regarding applicability of the threshold value of Rs 400,000 for exemption from service tax, the ministry has clarified that, 'the payments received after April, 2005 even if they relate to taxable services provided prior to April, 2005, will be taken into account for the purpose of computation of the threshold limit.'
With regard to construction services, service tax would be payable only on the gross amount charged by the service provider for the construction service provided and would not include the cost of land and stamp duty paid for registration of land.
Similarly, services like repair, alteration, renovation or restoration provided in relation to residential complexes, which are in existence before the levy has come into force and are not new would also be liable to be taxed.
On the point whether construction of roads is liable to service tax, the ministry has clarified that, 'if the contract for construction of commercial complex is a single contract and the construction of road is not recognized as a separate activity as per the contract, then the service tax would be leviable on the gross amount charged for construction including the value of construction of roads.'