GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
TAX RESEARCH UNIT
D.O.F. No. 334/03 /2014-TRU
Joint Secretary (Tax Research Unit)
Tel: 011-23093027; Fax: 011-23093037
Dated: February 17, 2014
Subject: Union Budget 2014(Interim): changes in Service Tax – reg.
In the Interim Union Budget, in Service Tax, two amendments have been made in notification number 25/2012-ST dated June 20, 2012:
1.1 Handling, storage or warehousing of rice : The definition of ‘agricultural produce’ in section 65B(5) of the Finance Act, 1994, leads to a differential treatment between paddy and rice. Paddy is covered by the definition of agricultural produce which loses its essential characteristic after milling into rice. To rationalize the levy and to equate paddy and rice, an exemption has been extended to handling, storage and warehousing of rice also. The mega exemption notification has been amended to insert an entry at sl.no. 40 which reads as “services by way of loading, unloading, packing, storage or warehousing of rice” [amendment Notification No.4/2014-ST dated 17th February 2014].
1.2 Transportation of rice : A clarification has been issued by way of circular [Circular No. 177/3/2014 dated 17th February 2014] that “food stuff” includes rice and hence service tax on transportation of rice by rail or a vessel or by a Goods Transport Agency by way of transport in a goods carriage, is exempt as per sl.nos. 20(i) and 21(d) of Notification 25/2012-ST.
1.3 Milling of rice : In the same circular referred above in para 1.2, it is also clarified that milling of paddy into rice carried out as job work is covered by the exemption at sl.no.30 of notification 25/2012-ST, since such milling of paddy into rice is an intermediate production process.
1.4 Services provided by cord blood banks : Health Ministry had recommended that services provided by the cord blood banks should be treated as health care services and should be exempted. By inserting entry sl.no.2A in the exemption notification No. 25/2012-ST, which reads as “2A. Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation”, an exemption has been extended. This would cover services provided by cord blood banks, such as collection of umbilical cord blood, processing the same for segregation of stem cells, testing and cryo-preservation of stem cells.
2. In case of any doubt pertaining to the above changes, a reference may be made to the undersigned or Shri J.M.Kennedy, Director, TRU at firstname.lastname@example.org
(M Vinod Kumar)
Notification No. 4/2014 – Service Tax Dated: February 17, 2014
In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No.25/2012-Service Tax, dated the 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide G.S.R. 467 (E), dated the 20th June, 2012, namely:-
In the said notification, in the opening paragraph,-
(i) after entry 2, the following entry shall be inserted, namely:
“2A. Services provided by cord blood banks by way of preservation of stem cells or any other service in relation to such preservation;”;
(ii) after entry 39, the following entry shall be inserted, namely:-
“40. Services by way of loading, unloading, packing, storage or warehousing of rice.”.
[F.No. 334 /3/ 2014-TRU]
Under Secretary to the Government of India
Note.– The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 – Service Tax, dated the 20th June, 2012, number G.S.R. 467 (E), dated the 20th June, 2012 and was last amended by notification No.02/2014 – Service Tax, dated the 30th January, 2014 vide number G.S.R. 71(E), dated the 30th January, 2014.
CIRCULAR NO.177/3/2014-ST., Dated: February 17, 2014
Chief Commissioners of Central Excise and Service Tax (All), Director General (Service Tax), Director General (Central Excise Intelligence), Director General (Audit), Commissioners of Service Tax (All), Commissioners of Central Excise and Service Tax (All).
Subject : Rice- exemptions from service tax – regarding.
Doubts have been raised regarding the scope and applicability of various exemptions available to various activities in relation to rice, under the negative list approach. These doubts have been examined and clarifications are given below:
2. These doubts have arisen in the context of definition of ‘agricultural produce’ available in section 65B(5) of the Finance Act, 1994. The said definition covers ‘paddy’; but excludes ‘rice’. However, many benefits available to agricultural produce in the negative list [section 66D(d)] have been extended to rice, by way of appropriate entries in the exemption notification.
3.Transportation of rice:
3.1 by a rail or a vessel : Services by way of transportation of food stuff by rail or a vessel from one place in India to another is exempt from service tax vide exemption notification 25/2012-ST dated 20 th June, 2012 [entry sl.no.20(i)]; food stuff includes rice.
3.2 by a goods transport agency: Transportation of food stuff by a goods transport agency is exempt from levy of service tax [exemption notification 25/2012-ST dated 20 th June, 2012 [entry sl.no.21(d)]; amending notification 3/2013-ST dated 1 st March 2013]. Food stuff includes rice.
4. Loading, unloading, packing, storage and warehousing of rice : Exemption has been inserted in the exemption notification 25/2012-ST dated 20 th June, 2012 [entry sl.no.40]; amending notification 4/2014-ST dated 17 th February 2014 may be referred.
5. Milling of paddy into rice : When paddy is milled into rice, on job work basis, service tax is exempt under sl.no.30 (a) of exemption notification 25/2012-ST dated 20th June, 2012, since such milling of paddy is an intermediate production process in relation to agriculture.
6. Reference may be made to JS, TRU in case of any further doubt. Trade Notice/ Public Notice may be issued.Hindi version to follow.