Can a builder charge service tax?

CHATROOM

The bill should indicate what taxable service has been provided.

I own a commercial flat in a complex built on leasehold land. The promoters recover from each owner his share of insurance, sinking fund, and ground rent paid to DDA. From this year they have started recovering service tax on ground rent also. Is Service Tax payable on ground rent?

From what you say, I can't think of any 'taxable service' that your developers render. Their services may involve site preparation and construction but that is not why they seem to be collecting your money. So, whether they ought to recover any service tax at all, leave alone ground rent, is far from clear. Kindly ascertain what is the taxable service that they render for which service tax is payable. Their bill ought to indicate the taxable service and classification.

Is share of profit (some call it Director's Commission) given to independent Directors of a listed Company annually, as permitted by government rules, liable to service tax?

A director of a listed company is elected by shareholders and a resolution details the terms of appointment. The director does not hold a position by virtue of a contract with the Company. Independent directors are a part of the management and the Company and have to be appointed as per legal requirements. The remuneration, as a share of profit, is a consequence of the terms of appointment. No 'taxable service' is involved in such cases.

Am I right ?
1. Manufacturing company involved in repairs services have to charge 8 per cent VAT on total billed value to the client and pay 12.24 per cent service tax (after 67 per cent abatement) on 33 peer cent of gross value. 2. Company can take credit for VAT on inputs.
3. Company can segregate the manufactured material value (at market rate without under invoicing) and service value, for excise turnover calculations?

The contract you mention seems to be a composite contract, where service tax is payable at 12.24 per cent on the gross value less 33 per cent abatement. Material value cannot be deducted, either for the purpose of service tax payment or turnover calculation, unless they are procured by you as pure agent of the service recipient. Cenvat credit on the materials or related input services is not to be taken or must be reversed whether you avail of abatement or deduction for material value. For amplification on this point, you may refer to letter dated 19th April 2006 from Joint. Secretary (TRU), CBEC.

VAT laws differ from state to state. In the states with which I am familiar, on composite contracts you must pay 2 per cent on the total billed value without taking any input tax credit. The buyer also cannot take input tax credit of the 2 per cent that you pay.

A UK based film production company is taking a movie in India and is engaging an agency for the purpose of organising the shooting locales, etc. For this they would like to understand the following:
1. In case they open an account in India and make payments to the Indian company (the event management company) will this attract service tax? 2. Will the implication undergo a change in case the UK based company transfers money directly from the overseas banking in non-repatriable foreign currency? Please guide us, taking into consideration Service Tax Circular no. 56/5/2003 dated 25th April 2003 and 68/17/2003-ST dated Nov 28, 2003

Event management is a taxable service and the event manager is the person liable for discharging the tax liability. Whether the payment is made directly from overseas or from an account opened in India by the overseas entity is of no consequence, so long as the service is wholly performed in India. The Circular no. 56/5/2003 is of no relevance after notification of 'Export of Service Rules, 2005' on 3.3.2005.

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