BUSINESS TAXATION

MINI PROJECT
 Hindustan Unilever Limited

Hindustan Unilever Limited (HUL) is India's largest Fast Moving Consumer

Goods Company with a heritage of over 75 years in India and touches the
lives of two out of three Indians.

HUL works to create a better future every day and helps people feel good,
look good and get more out of life with brands and services that are good for
them and good for others.

With over 35 brands spanning 20 distinct categories such as soaps,

detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea,
coffee, packaged foods, ice cream, and water purifiers, the Company is a
part of the everyday life of millions of consumers across India. Its portfolio
includes leading household brands such as Lux, Lifebuoy, Surf Excel, Rin,
Wheel, Fair & Lovely, Pond’s, Vaseline, Lakmé, Dove, Clinic Plus, Sunsilk,
Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s and
Pureit.

The Company has over 15,000 employees and has an annual turnover of
Rs.17,523 crores (financial year 2009 - 2010). HUL is a subsidiary of Unilever,
one of the world’s leading suppliers of fast moving consumer goods with
strong local roots in more than 100 countries across the globe with annual
sales of about €44.3 billion in 2010. Unilever has about 52% shareholding in
HUL.

HUL at a glance

Hindustan Unilever Limited (HUL) is India's largest fast moving consumer

goods company, with leadership in Home & Personal Care Products and
Foods & Beverages.

HUL's brands touch the lives of two out of three Indians. They endow the
company with turnover of Rs.17,523 crores (for the 12 month period – April
1, 2009 to March 31, 2010).

The mission that inspires HUL's more than 15,000 employees, including over
1,400 managers, is to help people feel good, look good and get more out of
life with brands and services that are good for them and good for others. It
is a mission HUL shares with its parent company, Unilever, which holds about
52 % of the equity.

Unilever Vision
HUL work to create a better future every day. HUL help people feel good
look good and get
more out of life with brands and services that are good for them and good for
others.
HUL will inspire people to take small everyday actions that can and up to a
big difference for the world.

HUL will develop new ways of doing business that will allow us to double the
size of our company while reducing our environmental impact.

Heritage in India

In the summer of 1888, visitors to the Kolkata harbor noticed crates full of
Sunlight soap
bars, embossed with the words "Made in England by Lever Brothers". With it
began an
era of marketing branded Fast Moving Consumer Goods (FMCG). In 1931,
Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing
Company, followed by Lever Brothers India Limited (1933) and United
Traders Limited (1935). In November 1956, these three companies merged
to form Hindustan Unilever Limited (then known as Hindustan Lever Limited).

Value Creation

Creating long term value for our shareholders, our people and our business
partners is our
road to sustainable & profitable growth. Sustainable Living HUL’s corporate
responsibility strategy seeks to address HUL's most significant sustainability
impacts of hygiene, nutrition, enhancement of livelihoods, reduction of
greenhouse gases and
water footprint by integrating these objectives into our brands, our people
and our processes.

~ Provided income-generating opportunities to 45,000 Shakti entrepreneurs

in rural areas
across 15 states in 100,000 villages through Project Shakti

~ Lifebuoy Swasthya Chetna has touched 12 omillion people in more than

50000 villages
across India since 2002

~ Fair and lovely foundation has awarded more than 790 scholarships to
women with
limited financial resources for higher studies
~ Pureit covers over 3 million households across India, and provides safe
drinking at
water at a mere 25 paise per litre

~ Reduced CO2 emissions from energy manufacturing operations by 28% in

2009
(measured per tonne of production over 2004 baseline)

~ More than 75% of our units are zero

 HINDUSTAN UNILEVER
– Tax Report Year End Mar 2011

1 a) The Company is maintaining proper records showing full particulars, includin

quantitative
details and situation, of fixed assets.

b) The fixed assets are physically verified by the Management according to a phased
programme designed to cover items at all the locations once in two years which, in o
opinion,
is reasonable having regard to the size of the Company and the nature of its asset
Pursuant to the
programme, fixed assets at certain locations were physically verified by the managemen
during the year and no material discrepancies between the book records and the
physical inventory have been noticed.

c) In our opinion and according to the information and explanations given to us, a
substantial part of fixed assets has not been disposed off by the Company during the yea

2 a) The inventory (excluding stocks with third parties) has been physically verified by
the Management during the year. In respect of inventory lying with third parties, these
have substantially been confirmed by them. In our opinion, the frequency of verification i
reasonable.
 b) The procedures of physical verification of inventory followed by
the Management are reasonable and adequate in relation to the size of the Company
and the nature of its business.

c) On the basis of examination of the inventory records, the Company is maintainin

proper
records of inventory. The discrepancies noticed on physical verification of inventory
as compared to book records were not material.

3 The Company has neither granted nor taken any loans, secured or unsecured, to / from
companies, firms or other parties covered in the register maintained under Section 301 o
the Act. Consequently, clauses (iii)(b), (iii)(c), (iii)(d), (iii)(f) and (iii)(g) of paragraph 4 of
the Orderare not applicable.

4 According to the information and explanations given to us, having regard to th

explanation
that certain items purchased are of special nature for which suitable alternative sources
do not exist for obtaining comparative quotations, there is an adequate internal control
system commensurate with the size of the Company and the nature of its business for th
purchase of inventory, fixed assets and for the sale of goods and services. Further, on the
basis of our examination of the books and records of the Company, and according to
the information and explanations given to us, we have neither come across nor have
been informed of any continuing failure to correct major weaknesses in the aforesaid
internal control system.

5 a) In our opinion and according to the information and explanations given to us,
the particulars of contracts or arrangements referred to in Section 301 of the
Act have been entered in the register required to be maintained under that section.

b) In our opinion and according to the information and explanations given to us,
there are no transactions made in pursuance of such contracts or arrangements and
exceeding Rs. five lakhs in respect of any party during the year, which have been made
at prices which are not reasonable having regard to the prevailing market prices at the
relevant time.

6 The Company has not accepted any deposits from the public within the meaning of
Sections 58Aand 58AAof the Act and the rules framed there under.

7 The Company has an internal audit system commensurate with its size and nature of
business.

8 We have broadly reviewed the books of account maintained by the Company in

respect of products where, pursuant to the Rules made by the Central Government of
India, the maintenance of cost records has been prescribed under clause (d) of sub-sectio
(1)
of Section 209 of the Act, and are of the opinion that prima facie, the prescribed accounts
and records have been made and maintained. We have not, however, made a detailed
examination of the records with a view to determine whether they are accura
orcomplete.

9 a) According to the information and explanations given to us and the records of the
Company examined by us, in our opinion, the Company is generally regular in depositing
undisputed statutory dues including provident fund, investor education and protectio
fund,
employees
state insurance, income-tax, sales tax, wealth tax, service tax, customs duty, excise duty
cess and other material statutory dues as applicable with the appropriate authorities.

b) According to the information and explanations given to us and the records of the
Company examined by us, there are no dues of wealth tax which have not been
deposited on account of any dispute, and the particulars of excise duty, sales tax,
customs duty, income-tax, service tax and cess as at 31st March, 2011 which have not
been deposited on account of a dispute are as follows:

Name of the
statute Nature of dues Amount under dispute
not yet deposited
Rs. Crores

The Central
Excise Act, Excise duty including 57.35
1944 interest and penalty, as
Applicable

46.88

0.26

Central Sales
Tax Act and Sales tax including 97.80

Local Sales
Tax Acts interest and penalty, as
(including
works contract) applicable 14.93
 95.98

Customs Act,
1962 Customs duty including 0.56
interest and penalty, as
applicable

Income-tax Act,
1961 Income tax including 4.39
interest and penalty, as
applicable 9.69

0.31

Service Tax
(Finance Act, Service tax including 0.65
1994) interest and penalty, as
applicable 3.62

Bombay
Provincial Cess on entry of goods 0.05
Municipal
Corporations
Act, 1949
[Amended]

Name of the Statue Periods Forum where the

to which the dispute is pending
amount relates

The Central Excise Act,

1944 1982,1987 Appellate Authority-upto

1991 to 1995 Commissioners level

1997 to 2008

1983 to 1986 Tribunal

1989 to 1991

1994 to 2006

1979 to 1983 Supreme Court

Central Sales Tax Act and

Local Sales Tax Acts
(including works contract) 1976, 1977 Appellate Authority-upto
1983 to 2008 Commissioners level
 1984 to 2004 Tribunal
1983 to 2001 High Courts
1986 to 1998

1999 to 2008

Customs Act, 1962 1995 Appellate Authority-upto

Commissioners level

Income-tax Act, 1961 1979-80 Appellate Authority-upto

1995-96 Commissioners level
1985-86 Tribunal
1991-92
2004-05
2005-06
1988-89 High Courts
1991-92

Service Tax (Finance Act,

1994) 2004 to 2006 Appellate Authority-upto
Commissioners level

2005 to 2009 Tribunal

Bombay Provincial
Municipal Corporations
Act, 1949 [Amended] 2000-01 Appellate Authority-upto
Commissioners level

10 The Company has no accumulated losses as at 31st March, 2010, and

has not incurred any cash losses in the financial year ended on that date or
in the immediately preceding financial year.

11 According to the records of the Company examined by us and the

information and explanations given to us, the Company has not defaulted in
repayment of dues to any financial institution or banker debenture holders
as at the balance sheet date.

12 The Company has not granted any loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.

13 The provisions of any special statute applicable to chit fund / nidhi /

mutual benefit fund / societies are not applicable to the Company.

14 In our opinion, the Company is not a dealer or trader in shares,

securities, debentures and other investments.
 15 According to the information and explanations given to us, the Company
has not given any guarantee for loans taken by others from banks or
financial institutions during the year.

16 According to the information and explanations given to us, on an overall

basis, the term loans have been applied for the purposes for which they were
obtained.

17 On the basis of an overall examination of the balance sheet of the

Company, in our opinion and according to the information and explanations
given to us, there are no funds raised on a short- term basis which have
been used for long-term investment.

18 The Company has not made any preferential allotment of shares to

parties and companies covered in the register maintained under Section 301
of the Act during the year.

19 The Company has not issued any debentures during the year.

20 The Company has not raised any money by public issue during the year.

Financial Highlights of HUL

Hindustan Unilever Limited – December Quarter 2010 Results

25-01-2011 : Sustained double digit growth; Turnover exceeds Rs 5000

crores
• Strong 12% sales growth in Domestic Consumer business
 • Operating Margins lower due to impact of high input cost inflation &
brand investments
• PAT (bei) Rs.587 crore; Net profit Rs.638 crore, down by -1.8%

Hindustan Unilever Limited (HUL) announced its results for December

Quarter 2010. With sustained double digit underlying volume growth in the
Domestic Consumer business (+13%), Net Sales grew 12% during the
quarter and ahead of the market in aggregate.
Home and Personal Care business grew by 11.6% with competitive growth in
both Laundry and Personal Wash. Laundry portfolio was further strengthened
and Rin delivered record volume growth. Personal Wash also grew ahead of
the market with Lifebuoy growing strongly post the relaunch and the
premium portfolio continuing to deliver robust growth.

Personal Products grew strongly at 20%; Growth was broad based across
categories with Skin Care delivering a particularly strong performance. Skin
Care growth was innovation led, both on the core and in emerging segments.
Fair and Lovely, Pond’s White Beauty and Vaseline Healthy White continued
to deliver robust sales growth. Both Hair and Oral performed well across the
key brands. Dove Hair range was relaunched with ‘Fiber Actives’ and in Oral,
a new variant Close-up ‘Fire-Freeze’ was successfully introduced.

Foods business grew 11.3%. In Tea, Red Label was relaunched and continued
to deliver double digit growth. Coffee growth was robust, across conventional
and instant coffee, with price point packs performing particularly well. Knorr
Soupy Noodles sustained its strong momentum and is now available
nationally. Ice-cream grew by 31% with good growth across formats.

Pureit continued to expand its franchise with product offerings across

multiple price and benefit positions. Overall, the water business grew
strongly and in line with action standards.

Input cost inflation continued to rise during the quarter. Cost of goods sold
went up by 220 bps, as a result of steep rise in material costs, especially in
commodity sensitive categories. A&P spend grew by 17% to maintain market
competitiveness and to develop emerging categories. Consequently,
operating margins were lower by 320 bps. Buying efficiencies and cost
saving programs remain a priority and are being further scaled up.

Financial income increased by Rs. 38 crores through further improvement in

working capital and sound treasury management. Profit after tax but before
exceptional items declined by -2.1%, while Net Profit declined by -1.8%.

Harish Manwani, Chairman commented: “Our strategy is working and is

reflected in the consistent double digit underlying volume growth over the
last four quarters and ahead of market growth. We continue to strengthen
our leadership in core categories, even as we invest to build opportunities for
the future. In an inflationary environment, we will manage our business
dynamically, through judicious pricing actions and increased focus on cost
effectiveness, while ensuring that we remain competitive in the market
place.”

Financial Performance : 10 Year Track Record

Sales Tax
Definition: A tax collected by all retailers and certain service providers when they make taxable
retail sales. Sales taxes could include state, county and local taxes.
Sales taxes are levied by many cities, counties and states at varying rates. Most provide specific
exemptions, as for certain classes of merchandise or particular groups of customers. Service
businesses are often exempt altogether. Contact your state and/or local revenue offices for
information on the law for your area so that you can adapt your bookkeeping to the requirements.

Before you open your doors, be sure to register to collect sales tax by applying for a sales permit for
each separate place of business you have in the state. A license or permit is important because in
some states it is a criminal offense to undertake sales without one. In addition, if you fail to
collectsales tax, you can be held liable for the uncollected amount.
If you're an out-of-state retailer, such as a mail order seller who ships and sells goods in another
state, be careful. In the past, many retailers haven't collected sales taxes on the sales of these
goods. Be sure you or your accountant knows the state sales tax requirements where you do
business. Just because you don't have a physical location in a state doesn't always mean you don't
have to collect the sales tax.

Many states require business owners to make an advance deposit against future taxes. Some states
will accept a surety bond from your insurance company in lieu of the deposit.
It's possible for retailers to defer paying sales taxes on merchandise they purchase from suppliers.
Once the merchandise is sold, however, the taxes are due. The retailer adds the sales taxes (where
applicable) to the purchase.

Service tax
Service tax is an indirect tax levied under the Finance Act, 1994, as
amended from time to time, on specified services. At present, there are
approximately 96 categories (including 15 new services introduced by
Budget 2006) of services taxable under the service tax net.

Basic concepts :

Liability of service tax

General background Service tax comes under powers of Entry 97 of List I of
Seventh Schedule to Constitution of India. Service tax
was introduced w.e.f. 1-7-1994 and its scope is being
expanded every year. Service tax is not payable if
service is provided in J&K or if provided outside India.
Taxable event in Service tax is imposed under section 66 of Finance Act,
service tax 1994, which is the charging section [There is no
separate Service Tax Act s such]. ‘Service provided or to
be provided’ is ‘taxable event’. Thus, service tax is
payable when advance is received.
Taxable services Service tax is payable under Finance Act, 1994; on
about 117 taxable services as defined in section 65(105)
of Finance Act, 1994.
Service requires two Service requires two parties. One cannot give service to
parties himself.
Tax only on value of Service tax cannot be levied on value of goods. Service
services not on tax and Vat are mutually exclusive.
value of goods
Rate of service tax General rate of service tax is 10.30% (including
 education cess and SAH education cess) w.e.f. 24-2-
2009 [During period 11-5-2007 to 23-2-2009, it was
12.36%]. In some cases, abatement is available.
Education cess to be Education cess and SAHE cess should be shown
shown and paid separately in invoice and should be paid under separate
separately accounting head.
Person liable to pay service tax
Liability of service Service tax is payable by service provider. In few cases,
provider tax is payable by service receiver, under reverse charge
method [Section 68(2)].
Reverse charge In case of Goods Transport Agency (GTA), Import of
Service, Sponsorship service and Agent of mutual fund
and insurance, service tax is payable by service
receiver.
Value for purpose of service tax
Service Tax on gross Service tax is payable on gross amount charged for
amount charged taxable service provided or to be provided [section 67]
(excluding material cost)..
Tax on Tax is payable on reimbursement of expenses which are
reimbursement of part of service, but not on payments made by service
expenses provider as ‘pure agent’ of service receiver
Service tax not Service tax is not payable on amounts collected by
payable if amount service provider from service receiver which are not part
received only as of service but are paid by service provider to third
agent of service parties for administrative convenience and then
receiver recovered from service receiver, even if all requirements
of definition of ‘pure agent’ are not satisfied.
Value on basis of If value is not ascertainable, valuation can be on basis of
similar service or similar service or on basis of value which shall not be
cost less than cost.
Gross amount Gross amount charged for taxable service is taken as
charged is inclusive inclusive of service tax and then tax should be
of service tax calculated by making back calculations.
Exemption from service tax
Exemption to small Small service providers whose total value of services
service providers provided (including exempt and non-taxable services) is
less than Rs 10 lakhs in previous year are not required
to pay service tax in current financial year till they reach
turnover of Rs 10 lakhs. Clubbing provisions can apply.
Registration is required if turnover exceeds Rs 9 lakhs
per annum.
No exemption if The exemption is not available if service is provided
service provided under brand name of other person.
under brand name
of other
No exemption when This exemption is not available when service tax is
service tax is payable by service receiver under reverse charge
payable under method.
reverse charge
method
Abatement and In case of some services, abatement is available. In case
simplified method of of some services, simplified method of calculating value
payment of taxes of service has been prescribed.
Services to SEZ and Services provided to SEZ unit or developer are exempt if
SEZ Developer wholly consumed within SEZ. In case of services
consumed by SEZ outside SEZ, refund claim has to be
filed.
Services provided Services provided by RBI are exempt but service
by RBI exempt but provided to RBI are not exempt.
services provided to
RBI taxable
Classification of service
Service to be The classification of services will be determined
classified according to terms specified in various sub-clauses of
section 65(105). [section 65A(1)].
Rules for If prima facie, a taxable service is classifiable under two
classification of or more sub-clauses of section 65(105), classification
service shall be effected as per following rules – (a) Specific
description to be preferred over a general description
[section 65(2)(a)] (b) Classification should be as per
essential character in case of composite services
[section 65(2)(b)] (c) Service which appears earlier in list
of section 65(105), if service cannot be classified on
above basis [section 65(2)(c)]
Exception in case of Exception is made in case of port services and airport
port and airport services, where, if service is rendered wholly in port or
services airport, the service will be classified as port/airport
service irrespective of its classification as per section
65A,
Service should be Service should be predominantly a taxable service. A
predominantly composite contract consisting various services cannot
taxable be vivisected.
Composite contract An indivisible/composite contract of goods and services
consisting of goods can be vivisected and service part of it subjected to
and services can be service tax.
vivisected
New service head Introduction of new service head means the service was
means service was not taxable earlier.
not earlier taxable
Service excluded Service specifically excluded from one head cannot be
from one head classified under other head.
Cenvat Credit
Credit of tax/duty Service provider can avail Cenvat credit of service tax
paid on input goods, paid on input services and excise duty paid on inputs
input services and and capital goods. The credit can be utilised for
capital goods payment of service tax on output services.
Any service in Definition of input service is wide. Any service in relation
relation to business to business is ‘input service’.
is input service
Duty paying Credit can be availed on basis of proper and complete
document for specified original duty paying documents.
availing Cenvat
credit
Cenvat credit when If assessee is providing both taxable and exempt
taxable as well as services and if input services are common, Cenvat credit
exempted services can either be taken on proportionate basis or 6%
provided ‘amount’ is required to be paid on value of exempted
services.
Registration
Procedure for Service provider should register within 30 days from
registration date of commencement of providing taxable service.
Application should be in form ST-1 [Rule 4(1)]. Income
Tax PAN, address proof, evidence of constitution of
firm/company, list of directors/partners are the most
important document required. Registration will be
deemed to have been granted if not received within
seven days [Rule 4(5)].
Application for registration is to be filed electronically.
The PAN based registration number is generated by
system immediately. However, registration certificate is
issued by Superintendent in form ST-2 after the
documents are submitted.
Centralised Person providing services from more than one premises
registration or offices can apply for centralised registration, if he has
centralised billing system or centralised accounting
system [Rule 4(2)]
Input Service Input Service Distributors (ISD) require registration. HO
Distributor or branch or depot can register as ISD and distribute
credit to centres which are providing taxable services
Procedures to be followed
Invoice by service Assessee should prepare invoice in respect of his
provider services. The Invoice should be prepared within 14 days
from date of completion of taxable service or receipt of
payment towards the value of taxable service,
 whichever is earlier. Invoice should contain prescribed
details [Rule 4A]
Payment of service If the assessee is an individual or proprietary firm or
tax partnership firm, the tax is payable on quarterly basis
within 5 days at the end of quarter (within 6 days in
case of e-payment) except in March. Service tax is
payable by other assessees by 5th of the month
following the month in which payments are received
toward value of taxable services (by 6th in case of e-
payment) except in March [rule 6(1) of Service Tax
Rules].
Payment of service Service tax on value of taxable services received during
tax in March month of March or quarter of March is required to be
paid by 31st March in case of all the assessees.
Payment of service tax
Service tax payable Service tax is not payable on basis of amounts charged
on receipt basis in the bills/invoice, but only on amounts actually
received during the relevant period, except in case of
associated enterprises. If partial amount is received, tax
will be payable on pro rata basis.
Exception in case of The exception is that in case of service provided to
associated associated enterprises, service tax is payable as soon as
enterprises book entry is made in the books of service provider
(when he is liable) or service receiver (when he is liable
to pay service tax under reverse charge method).
Advance payment of A person liable to pay service tax can pay any amount in
service tax advance towards future service tax liability. After such
payment he should inform Superintendent of Central
Excise within 15 days [Rule 6(1A)]. When he adjusts the
advance, he should indicate details in the subsequent
return filed
GAR-7 challan and Tax is payable by GAR-7 challan using appropriate
e-payment accounting code. E-payment is compulsory to those who
are paying service tax of more than Rs 10 lakhs per
annum. For others, e-payment is optional.
Interest for late Mandatory interest for late payment of service tax is
payment of service 13% [section 75]. It cannot be reduced or waived.
tax
Returns under service tax
Half yearly return Every person liable to pay service tax has to submit half
yearly return in form ST-3 in triplicate within 25 days of
the end of the half-year [Rule 7]. Late fees upto Rs
2,000 are payable if return is filed late.
Self Assessment Assessment is basically self assessment. Provisional
 assessment is permissible.
Demands
Administration by The service tax is administered by excise department.
excise department Adjudication order is issued by excise officer.
Demand if tax short If service tax was short paid, demand can be raised
paid within period of one year from ‘relevant date’. If the
short payment or non-payment was on account of
suppression of facts or wilful mis-statement with
intention to evade, demand can be raised within period
of five years.
Rectification of Order passed by Central Excise Officer can be rectified
order by him within two years. Only mistake apparent from
records can be rectified [section 74].
Penalties and appeals
Penalty for late If service tax is not paid or belatedly paid, penalty will
payment of service be minimum Rs. 200 per day or @ 2% per month,
tax whichever is higher, starting with the first day after due
date till date of actual payment of outstanding amount.
Penalty cannot exceed the service tax which was
payable [section 76]. Penalty can be reduced if sufficient
cause is shown [section 80].
No penalty if service No penalty can be imposed if service tax and interest is
tax and interest paid before show cause notice, except in case of fraud,
paid on own before suppression of facts etc. [Explanation 2 to section 73(3)]
SCN
Penalty for There is heavy penalty for contravention of rules, not
contravention of obtaining registration, not maintaining books of account,
rules not paying tax electronically etc [section 77]. Penalty
can be reduced if sufficient cause is shown [section 80].
No penalty can be imposed if service tax and interest is
paid before show cause notice, except in case of fraud,
suppression of facts etc. [Explanation 2 to section 73(3)]
Penalty for fraud, If non-payment was on account of fraud, suppression of
suppression of facts. facts etc., penalty shall not be less than amount of
Wilful mis-statement service tax but can be upto twice the amount of service
tax amount of service tax not levied or not paid or
erroneously refunded. Penalty will be reduced to 25% if
paid with tax and interest within 25 days of receipt of
order [section 78]. Penalty can be reduced if sufficient
cause is shown [section 80].
Appeals to Appeal against order of authority lower than
Commissioner Commissioner lies with Commissioner (Appeals), by
(Appeals) assessee or as well as by department [section 85].
Next appeal to Appeal against order of Commissioner (Appeals) or
Tribunal Commissioner lies with Appellate Tribunal (Customs,
 Excise and Service Tax Appellate Tribunal) [Section 86].
Further appeal lies with High Court and Supreme Court.
Appeals can be filed both by assessee and department.
Export of Service
No tax on export of No service tax is payable if taxable service is exported
service as per Export of Service Rules.
Refund if tax paid No tax is payable on export of service. If paid, it is
on exported service refundable. Rebate/refund of service tax paid on input
services is obtained if taxable service is exported
Import of service
Tax payable by In case of import of service, tax is payable by recipient
recipient under of services under method of ‘reverse charge’. Tax
reverse charge should be paid by cash i.e. GAR-7 challan and then
Cenvat credit can be availed of the tax so paid, as it is
his input service.
Tax only if service is Tax is payable only when service is received in India.
received in India Services provided and used outside India cannot be
taxed in India.
Conditions to treat a To determine the issue whether a provision of service is
service as ‘import’ ‘import of service’, services have been classified in three
categories. Criteria for each category has been specified
e.g. immovable property India, service performed in
India, recipient is located in India