Manual for Scrutiny of Service Tax Returns 2009 - Central Excise ...

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(Continued from previous page)Sr. Scrutiny Activity Verification Methodology ObservationsNo.(i) (ii) (iii) (iv)classification of theservices provided.classification of the services providedin conjunction with Board’sCirculars/Modus Operandi Circularsand views taken by the jurisdictionaladjudicating authorities on the issue.2 Examine whether the Verify the eligibility and entitlement In case of any doubt, aservices claimed as of the exemption notification in the reference may be made toexempted / non-taxable light of Board’s Circulars / Modus the AC / DC (Service Tax)by the taxpayer Operandi Circulars. If required, call for detailed examination.are genuinely exempted. for the invoices, product catalogues /literature and description of suchservices.3 Examine the correctness Check whether the conditions In case of any doubt, aof exemption notification stipulated in the exemption reference may be made tobeing availed by the notification are fulfilled. the AC / DC (Service Tax) /taxpayer.anti-evasion for detailedexamination.4 Examine the eligibility of Check the correctness of the claim of In case of any doubt athe services claimed to be the taxpayer of treating the rendering reference may be made toexported by the taxpayer. of service as export of service in terms the AC / DC (Service Tax) /of Export of Service Rules, 2005. If anti-evasion for detailedrequired, call for catalogues, contract/ examination.agreement, other documents.D. RECONCILIATION1 Match the gross billed Matching to be made taking both the In case of any discrepancy,amount on the income ST-3 returns and comparing the gross reasons are to beside of Profit & Loss billed amounts provided in the ascertained from theAccount with both ST-3 returns with the gross service income taxpayer. If the reasonsreturns covering a declared on the income side of the advanced are unsatisfactory,financial year. Profit & Loss Account of the same a reference may be madefinancial year.to the AC / DC (ServiceTax) for further referenceto audit / anti-evasion.(Continued on next page)MANUAL FOR SCRUTINY OF SERVICE TAX RETURNS 2009A IV.1.3
(Continued from previous page)Sr. Scrutiny Activity Verification Methodology ObservationsNo.(i) (ii) (iii) (iv)2 Match the taxable billed Call for break-up of the gross billed In case of any discrepancy,amount shown in ST-3 amount 4 shown in Profit & Loss reasons may be ascertainedreturns with the Account in respect of the following from the taxpayer. If thecorresponding entry on categories: explanation provided isthe income side of Profit (i) Dutiable services, unsatisfactory, a reference& Loss Account. (ii) Exempted services (including may be made to the AC /non-taxable services), DC (Service Tax) for(iii) Export services,further reference to(iv) Others. audit / anti-evasion.Match the taxable billed amountgiven in (i) above with theinformation furnished in the twoST-3 returns taken together to thecover the entire financial year.3 Match the sum of the Call for the break-up of the opening In case of any discrepancy,‘taxable incomes received’ balance (OB) and closing balance reasons may bein the two ST-3 returns (CB) of sundry debtors 5 covering ascertained from thetogether with the receivables as shown in the Profit & taxpayer. If differencecorresponding entry on Loss Account for the financial year in persists, a reference maythe income side of the respect of following categories: be made to the AC / DCProfit & Loss Account. (i) Dutiable service recipients, (Service Tax) for further(ii) Exempted service recipients, reference to audit / anti-(iii) Export of services recipients, evasion.(iv) Other recipients.Calculate the taxable income amountreceived during the financial year byadding/subtracting the differencebetween O.B. and C.B. of sundrydebtors to the taxable billed amountin respect of Dutiable Services asascertained in respect of D(2)(i) above.Match the above calculated taxableincome amount with the receivableamount furnished in the two ST-3returns of the same financial yeartaken together.(Continued on next page)4Normally in the Profit & Loss Account, the figures given in gross income represent total income. Therefore, the break-up of allcategories is necessary to conduct reconciliation with the financial records.5Normally in the Profit & Loss Account the figures of C.B. & O.B. are in respect of all categories of debtors. Therefore, the breakupof all categories is required to facilitate scrutiny.A IV.1.4MANUAL FOR SCRUTINY OF SERVICE TAX RETURNS 2009
Page 2 and 3: For Departmental circulation onlyMa
Page 4 and 5: ContentsPrefaceivCHAPTER 1: Introdu
Page 6 and 7: Chapter 1: Introduction1.1 SELF ASS
Page 8 and 9: 2) A detailed scrutiny programme al
Page 10 and 11: Chapter 2: Policy Guidelines forRet
Page 12 and 13: ANNEXE 2.1: FORMAT FOR PRELIMINARY
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Page 16 and 17: ANNEXE 2.3: MINI RISK PARAMETERS FO
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Page 20 and 21: 3.1.2C These returns marked for rev
Page 22 and 23: 4.2B In selecting the returns, the
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