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Query Id is 358
We are primarily engaged in the manufacture of plastic ophthalmic lenses. The lenses are sold to a marketing company designated by our parent company. The company purchases the lenses from us as well as imports them. Apart from the manufacturing activity, we also undertake coating of lenses, which are supplied to us by the marketing company. We receive lenses, coat them with a solution through a coating process and then return the lenses to the company. The coated lenses are sold in the domestic market. The client here is not a manufacturer within the meaning of excise law. Also, plastic lenses are exempt from excise duty under Notification No. 6/2006. In this context: Does the coating service fall under "provision of services on behalf of a client"? If yes, will we have to pay sales tax with effect from April 1, 2005? For the service tax paid for the past services, can we debit the client? What is the setoff we can get against input services (such as courier, telephone, etc) for these services? 24-09-2006, YD, E-Mail

Query Id is 354
Terminal handling charges (THCs) are primarily levied on export cargo. It was clarified in these columns that THCs will fall under cargo-handling services which, in my opinion, is also the correct head. If this is the appropriate head under service tax, then, under cargo handling, export cargo should be exempt from service tax. The exemption lies in the very definition of cargo handling itself, which also means that one cannot charge service tax on terminal handling services. Accordingly, no service tax is leviable on export cargo on THCs due to this exemption by shipping lines. The issue in the industry on this is that shipping lines presume THCs to fall under business support service, which is why shipping lines charge service tax. The fact of classification of the service should always be determined from the substance and the nature of the service rendered rather than the head in the taxing statute. Unfortunately, the new definition or the new entrant "business support services" has caused much ripples. Also, not much thought has been given to Section 65A before levying service tax on THCs. What happens if shipping lines charge service tax under "business support services"? Then, cargo-handling agency/forwarders will not be able to charge it back to back due to the export exemption

Query Id is 344
According to clause (105)(s) of Section 65, taxable service means any service provided (to be provided) to a client by a practising chartered accountant in his professional capacity in any manner. The gross amount was chargeable to service tax w.e.f. October 16, 1998. However, by Notification No. 59/98-ST dated October 16, 1998, as amended by Notification No. 15/2002-ST of August 1, 2002, w.e.f. August 16, 2002, exemption from whole of service tax leviable thereon was granted to the taxable services provided by a chartered accountant in his professional capacity for services other than specified in the said Notification. Thereafter, by Notification No. 6/2005-ST dated March 1, 2005, exemption of Rs 4 lakh was granted to chartered accountants. Considering these notifications, is a chartered accountant liable to pay service tax for the services offered by him during financial year 2005-06 if, say, his audit receipts are Rs 3.50 lakh and his income tax consultation receipts are Rs 3 lakh, assuming that for financial year 2004-05 he has paid service tax on audit receipts of Rs 3.25 lakh? 07-09-2006

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