Amendment made by Finance Bill, 2015 (w.e.f. notified date)
Finance
Bill, 2015 has amended the definition of ‘service’ under clause (44)
of section 65B. Explanation - 2 has been substituted as under:
‘Explanation 2. - For the purposes of this clause, the expression “transaction in money or
actionable claim” shall not include--
(i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
(ii) any
activity carried out, for a consideration, in relation to, or for
facilitation of, a transaction in money or actionable claim, including
the activity carried out--
(a) by a lottery distributor or selling agent in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner;
(b) by a foreman of chit fund for conducting or organising a chit in any manner.'
Thus,
the scope of transaction in money has been expanded to include both,
transaction in money or actionable claim. By sub clause [a(ii)], a
transaction in money or actionable claim are excluded from the meaning
of ‘service’. With the new explanation, following services or activities
have been carved out of the exclusion clause [a(ii)] and these shall
now be taxable from a notified date :
(b) service or facilitation of transactions in money or actionable claim for a consideration. This would specifically include.
(i) services of a lottery distribution or selling agent as defined in clause (31A) of section 65B inserted by Finance Bill, 2015
(ii)
services of a foreman of chit fund for organizing or conducting a chit
as defined in clause (23A) of section 65B inserted by Finance Bill,
2015.
Amendment made by Finance Bill, 2015 in Consideration (w.e.f. enactment date)
The definition of 'consideration' as provided in clause (a) of explanation to section 67 has been substituted to enlarge its scope and specifically provide that it would include reimbursement of expenses, subject to conditions as prescribed in rules and amount retained as margin or discount by the distributor or selling agent of lotteries, in addition to commission or discount received, i.e. difference in the face value of lottery ticket and price at which such distributor or selling agent gets the ticket. The substituted meaning of 'consideration' reads as under:
(i) any amount that is payable for the taxable services provided or to be provided;
(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;
"Section 67 prescribes for the valuation of taxable services. It is being prescribed specifically in this section that consideration for a taxable service shall include:
(a) all reimbursable expenditure or cost incurred and charged by the service provider. The intention has always been to include reimbursable expenditure in the value of taxable service. However, in some cases courts have taken a contrary view. Therefore, the intention of legislature is being stated specifically in section 67.
The objective of the amendment has been to -
nullify
the decision of Delhi High Court in Intercontinental Consultants and
Technocrats Pvt. Ltd. v. Union of India 2012 (12) TMI 150 - DELHI HIGH
COURT, on taxability of reimbursement of expenses, and
specifically provide for taxing discount (or margin) retained or collected by lottery distributors or selling agents.
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