Small service provider’s (SSP) exemption

As per Notification No. 33/2012-S.T. dated 20.06.2012

Exemption is provided upto 10 lacs in cuirrent year if  total value of all taxable services is upto 10 lacs in last year,

Important points

1. This exemption is for service providers only not in case of reverse charge (where service receiver pays service tax)
2. If more than one service provided, (the aggregate value)total turnover of all services should be taken to calculate 10 lacs limit
3. Exemption scheme is optional. The service provider can opt not to take this exemption, If such option availed, it cannot be withdrawn throughout the year.
4. If brand name of others used while providing services, then this exemption not available.

Whether Credit available if exemption claimed??

• No cenvat available till exemption claimed.
• Cenvat on those input services, inputs and capital goods which are received after SERVICE become taxable is available

Earlier service was taxable, now exemption claimed

If there is stock of inputs on which cenvat was claimed.then an amount equal to such inputs inputs lying in stock or in process  on the date on which he starts availing the said exemption

Note:-Both cenvat on inputs contained in raw material or wip are to be paid.However,capital goods not covered here.

If there is balance in Cenvat account, it will lapse

SSP Exemption for Goods transport company

There is normally reverse charge applicable if consignor or consignee is

• any factory registered under or governed by the Factories Act, 1948 (63 of 1948);
• any society registered under Any Act like Society Registration Act
• any co-operative society under any law;
• First Stage Dealer or Second stage deale r ( any dealer of excisable goods, who is registered under the Central Excise Act, 1944 (1 of 1944) or the rules made there under;)
• any body corporate established, by or under any law; or
• any partnership firm whether registered or not including association of persons;

In other cases,truck operator is liable to pay service tax

Example:- Both consignor and consignee are Individuals

Note:-

(For calculation of Rs 10 lacs limit,only those servce to be taken for which truck operator is liable to pay service tax and not consignot and consignee

Exam Questions

Question 5
ABC Ltd., a carrying and forwarding agency, started its operations on August 1, 20XX. It
utilized the services of Big Carriers, a goods transport agency, in the month of September,
20XX. Big Carriers have communicated to ABC Ltd. that service tax on the services provided
by them is required to be paid by ABC Ltd. under reverse charge. However, ABC Ltd. has
communicated to Big Carriers that it is eligible for small service provider (SSP) exemption in
the current financial year. Consequently, it will not pay service tax under reverse charge also.
You are required to critically examine each stand of the two parties and arrive at the final
conclusion.