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We know that
Exemption is a scheme of government to make service tax free
Central Government issues exemption notifications to make Service Tax free
There were number of notifications which were difficult to remember and memorize
Hence,these notifications were combined and one single notification was issued for all exemptions.
This notification was called
MEGA EXEMPTION NOTIIFCATION
It was issued vide Notification 25/2012 but was later ameneded by a number of notifications
(latest being notification 12/2015)
Original Notification Notification No. 25/2012-Service Tax, dated 20.06.2012:
AMENDED BY
Notification No. 44/2012 - Service Tax, Dated 07/08/2012;
Notification No.49/2012 - Service Tax, Dated 24/12/2012;
- Notification no. 3/2013 - ST dated 1.3.2013, ;
- Notification No.13/2013 - Service Tax September 10, 2013;
- Notification No. 14/2013-Service Tax, dated, 22.10.2013;
- Notification No. 01/2014 - Service Tax January 10, 2014 ;
- Notification No. 02/2014 - Service Ta x January 30, 2014 ;
- Notification No.06/2014 - Service Tax dated 11th July, 2014 ;
- Notification No.17/2014 - Service Tax, the 20th August, 2014 ;
- Notification No. 06/2015 -Service Tax, Dated 1-3-2015
- Notification No. 12/2015 -Service Tax, Dated 30-4-15
We dont have to study each of these notification separately
Combined effect of all these services needs to be studied
Lets study this amended notification in detail one by one
Exam Questions
Question 1
Good Health Medical Centre, a clinical establishment, offers following services:
(i) Reiki healing treatments. Such therapy is not a recognized system of medicine in terms of section 2(h) of Clinical Establishments Act, 2010.
(ii) Plastic surgeries. One such surgery was conducted to repair cleft lip of a new born baby.
(iii) Air ambulance services to transport critically ill patients from distant locations to the Medical Centre.
(iv) Palliative care for terminally ill patients. On request, such care is also provided to patients at their homes. (Palliative care is given to improve the quality of life of patients who have a serious or life-threatening disease but the goal of such care is not to cure the disease).
(v) Alternative medical treatments by way of yoga
Good Health Medical Centre also operates a cord blood bank which provides services in relation to preservation of stem cells.
Good Health Medical Centre is of the view that since it is a clinical establishment, all the service provided by it as well as all the services provided to it are exempt from payment of
service tax. You are required to examine the situation in the light of relevant statutory provisions.
Health care services provided by, inter alia, a clinical establishment in any recognized system
of medicines in India is exempt from service tax vide Mega Exemption Notification No.
25/2012 ST dated 20.06.2012.
In light of the said provision, eligibility to exemption in respect
of each service offered by Good Health Medical Centre is examined below:
(i) Not Exempt. Since reiki healing is not a recognized system of medicine in terms of
section 2(h) of Clinical Establishments Act, 2010, it would not be exempt under mega
exemption notification and thus, service tax would be payable thereon.
(ii) Health care service does not include inter alia cosmetic or plastic surgery, except
when undertaken to restore or to reconstruct anatomy or functions of body affected due
to congenital defects, developmental abnormalities, injury or trauma.
Therefore, plastic surgeries will not be entitled to the said exemption and thus , service
tax would be payable thereon. However, plastic surgery conducted to repair a cleft lip
will be eligible for exemption under the said notification as it reconstructs anatomy or
functions of body affected due to congenital defects (cleft lip).
(iii) Exempt. Health care service includes services by way of transportation of the patient to
and from a clinical establishment. Thus, air ambulance service to transport critically ill
patients to Good Health Medical Centre would be eligible for exemption under the said
notification.
(iv) Exempt. Health care service means any service by way of diagnosis or treatment or
care for illness, injury, deformity, abnormality or pregnancy in any recognized system of
medicines in India. It is immaterial whether such service is provided at the clinical
establishment or at the home of the patient or at any other place.
(v) Exempt. Since Yoga is a recognized system of medicine in terms of section 2(h) of
Clinical Establishments Act, 2010, the same would be eligible for exemption under the
said notification.
Further, services provided by cord blood banks by way of preservation of stem cells or any
other service in relation to such preservation are exempt from service tax. Therefore, services
provided in relation to preservation of stem cells by the cord blood bank operated by Good
Health Medical Centre will be exempt from service tax.
It is important to note that Mega Exemption Notification No. 25/2012 ST dated 20.06.2012
grants exemption to health care services provided BY a clinical establishment and not to
services provided TO a clinical establishment. Only services provided by common bio-medical
waste treatment facility operates to clinical establishments by way of treatment or disposal of
bio medical waste or the processes incidental thereto are exempt from payment of service tax.
Therefore, Good Health Medical Centre’s contention that since it is a clinical establishment, all
the services provided to it are also exempt from service tax is not correct in law.
Question 2
An individual acts as a referee in a football match organized by Sports Authority of India. He
has also acted as a referee in another charity football match organized by a local sports club,
in lieu of a lump sum payment. Discuss whether he is required to pay any service tax.
Services provided to a recognized sports body by an individual inter alia as a referee in a
sporting event organized by a recognized sports body is exempt from service tax vide Mega
Exemption Notification No. 25/2012 ST dated 20.06.2012.
Since in the first case, the football match is organized by Sports Authority of India, which is a
recognized sports body, services provided by the individual as a referee in such football match
will be exempt under the said notification. However, when he acts as a referee in a charity
football match organized by a local sports club, he would not be entitled to afore-mentioned
exemption as a local sports club is not a recognized sports body and thus, service tax will be
payable in this case.
Question 3
RXL Pvt. Ltd. manufactures beauty soap with the brand name ‘Forever Young’. RXL Pvt. Ltd.
has organized a concert to promote its brand. Ms. Ahana Kapoor, its brand ambassador, who
is a leading film actress, has given a classical dance performance in the said concert. The
proceeds of the concert will be donated to a charitable organization.
Explain whether Ms. Ahana Kapoor will be required to pay any service tax.
Services by an artist by way of a performance in folk or classical art forms of (i) music, or (ii)
dance, or (iii) theatre are exempt from service tax vide Mega Exemption Notification No.
25/2012 ST dated 20.06.2012, if the consideration charged for such performance is not more
than ` 1,00,000. However, such exemption is not available in respect of service provided by
such artist as a brand ambassador.
Since Ms. Ahana Kapoor is the brand ambassador of ‘Forever Young’ soap manufactured by
RXL Pvt. Ltd., the services rendered by her by way of a classical dance performance in the
concert organized by RXL Pvt. Ltd. to promote its brand will not be eligible for the abovementioned
exemption and thus, be liable to service tax. The fact that the proceeds of the
concert will be donated to a charitable organization will not have any bearing on the eligibility
or otherwise to the above-mentioned exemption.
Question 4
High Alps Cable Car Co. runs a cable car to transport pilgrims uphill to a mountain top where
a holy shrine is situated. Examine whether High Alps Cable Car Co. is required to pay any
service tax.
Transport of passengers, with or without accompanied belongings by, inter alia, a ropeway,
cable car or aerial tramway is exempt from service tax vide Mega Exemption Notification No.
25/2012 ST dated 20.06.2012.
Therefore, transporting of pilgrims by cable car to the holy shrine situated at the mountain top
will be exempt from service tax. It may be noted that such services would be exempt
irrespective of the purpose of transport of the passengers i.e., religious or otherwise.
Question 8
Determine the applicability of service tax in each of the following independent cases:
(i) External asset management services received by Reserve Bank of India from overseas
financial institutions.
(ii) Service provided by an Indian tour operator to Mr. B, a Japanese National, for a tour
conducted in Europe.
(iii) Services provided to a Higher Secondary School affiliated to CBSE Board by an IT
company in relation to development of a software to be used for enhancing the quality of
classroom teaching.
(i) Exempt. Services received by Reserve Bank of India from outside India in relation to
management of foreign exchange reserves are exempt from service tax vide Mega
Exemption Notification No. 25/2012 ST dated 20.06.2012. External asset management
services received by Reserve Bank of India from overseas financial institutions is a
specialized financial service in the course of management of foreign exchange reserves.
(ii) Exempt. Services provided by an Indian tour operator to a foreign tourist in relation to a tour
wholly conducted outside India are exempt from service tax vide Mega Exemption Notification
No. 25/2012 ST dated 20.06.2012.
(iii) Taxable. Only the following specific services provided TO an educational institution
(which provides education covered under negative list of services) are exempt from
service tax vide Mega Exemption Notification No. 25/2012 ST dated 20.06.2012:
(a) transportation of students, faculty and staff;
(b) catering, including any mid-day meals scheme sponsored by the Government;
(c) security or cleaning or house-keeping services performed in such educational
institution;
(d) services relating to admission to, or conduct of examination by, such institution.
Services by way of education up to higher secondary or equivalent fall within the purview
of negative list of services. Thus, the education provided by the Higher Secondary
School is not liable to tax. However, the services of a development of software
provided to it are not covered under any of the specific services given above. Thus, the
same will be liable to service tax.
Question 12
Examine the validity of following statements with reference to service tax law:
(i) Consultancy services provided to Government in relation to slum improvement and
upgradation is exempt from service tax.
(iv) Service provided for transport of passengers by air conditioned buses is exempt from
service tax.
(i) The said statement is not valid. Mega Exemption Notification No. 25/2012 ST dated
20.06.2012, provides that services provided, inter alia, to Government by way of water
supply, public health, sanitation conservancy, solid waste management or slum
improvement and up-gradation are exempt but the exemption is not extendable to other
services such as consultancy, designing, etc., not directly connected with these specified
services.
(iv) The said statement is not valid. Mega Exemption Notification No. 25/2012 ST dated
20.06.2012, provides that, transport of passengers, with or without accompanied
belongings, by non-airconditioned contract carriage other than radio taxi, for
transportation of passengers, excluding tourism, conducted tour, charter or hire, is
exempt from service tax. Therefore, any service provided for transpor t of passengers by
air-conditioned contract carriages like buses including the ones used for point to point
travel, attracts service tax.
