Services Provided by Certain Intermediaries- Exemptions
By: Dr. Sanjiv Agarwal
Services
by the following persons in respective capacities are exempt from levy
of service tax vide entry No. 29 of Notification No 25 / 2012- ST dated
20.6.2012-
(a) sub-broker or an authorised person to a stock broker;
(b) authorised person to a member of a commodity exchange;
(c) mutual fund agent to a mutual fund or asset management company;
(d) distributor to a mutual fund or asset management company;
(e) selling or marketing agent of lottery tickets to a distributor or a selling agent;
(f) selling agent or a distributor of SIM cards or recharge coupon vouchers;
(g) business facilitator or a business correspondent to a banking company or an insurance company, in a rural area; or
(h)
sub-contractor providing services by way of works contract to another
contractor providing works contract services which are exempt from
Service Tax.
Meaning of various terms for exemption
"Authorised person" means and includes any person whether being an
individual, partnership firm, limited liability partnership or body
corporate, who is appointed as such either by a stock broker including
trading member or by a member of commodity exchange and who provides
access to trading platform of a stock exchange or a commodity exchange,
as an agent of the stock broker or member of a commodity exchange,
"Banking
company" as defined in section 45A of the Reserve Bank of India Act,
1934, means a banking company as defined in section 5 of the Banking
Regulation Act, 1949) and includes the State Bank of India, any
subsidiary bank as defined in the State Bank of India (Subsidiary Banks)
Act, 1959, any corresponding new bank constituted by section 3 of the
Banking companies (Acquisition and Transfer of Undertakings) Act, 1970,
and any other financial institution notified by the Central Government
in this behalf.
"Business facilitator or business correspondent"
means an intermediary appointed under business facilitator model or
business correspondent model by a banking company or an insurance
company under the guidelines issued by Reserve Bank of India,
"Rural area" means the area comprised in a village as defined in land revenue records, excluding,-
(i)
the area under any municipal committee, municipal corporation, town
area committee, cantonment board or notified area committee; or
(ii) any area that may be notified as an urban area by the Central Government or a State Government,
"Distributor
or selling agent" has the meaning assigned to them in clause I of the
rule 2 of the Lottery (Regulation) Rules, 2010 and shall include
distributor or selling agent authorised by the lottery organizing State.
"Sub-broker"
means a sub-broker who has either made an application for registration
or is registered as a sub-broker in accordance with the rules and
regulations made under the Securities and Exchange Board of India Act,
1992.
"Commodity exchange" is an association defined in section (zj) of Forward Contracts (Regulation) Act, 1952.
As
per clause (1) of section 66 F, reference to a service by nature or
description in the Act will not include reference to a service used for
providing such service. Therefore, if any person is providing services,
in respect of projects involving construction of roads, airports,
railways, transport terminals, bridges, tunnels, dams etc., such as
architect service, consulting engineer service ., which are used by the
contractor in relation to such construction, the benefit of the
specified entries in the mega-exemption would not be available to such
persons unless the activities carried out by the sub-contractor
independently and by itself falls in the ambit of the exemption.
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It has to be appreciated that the wordings
used in the exemption are `services by way of construction of roads
etc' and not `services in relation to construction of roads etc'. It is
thus apparent that just because the main contractor is providing the
service by way of construction of roads, airports, railways, transport
terminals, bridges, tunnels, dams etc., it would not automatically lead
to the classification of services being provided by the sub-contractor
to the contractor as an exempt service.
However, a sub-contractor
providing services by way of works contract to the main contractor,
providing exempt works contract services, has been exempted from service
tax under the mega exemption if the main contractor is engaged in
providing exempt services of works contracts. It may be noted that the
exemption is available to sub-contractors engaged in works contracts and
not to other outsourced services such as architect or consultants.