Complaint Against Cheque Bouncing

This is a sample Complaint against Cheque dishonour. The .pdf format can be downloaded from here.

 

IN THE COURT OF THE LEARNED CHIEF METROPOLITAN MAGISTRATE AT KOLKATA

Complaint Case No.          of  ______

Police Station:___________

______________________
______________________
_______________________

                            .... COMPLAINANT.

-VERSUS-

______________________
______________________
_______________________

         ....ACCUSED.

Charge under section 138 read with section 142 of the Negotiable Instruments Act, 1881 as amended upto-date.

The humble petition of complaint on behalf of the complainant abovenamed

MOST RESPECTFULLY SHEWETH:-

1.    The complainant/petitioner is a law abiding citizen of India and _________________ by profession.

2.    Sometime in the month of _____________ the accused person requested the complainant to provide him some financial help as an interest-free loan to the tune of Rs. ________/- (Rupees __________) only to fulfill his urgent necessity and promised to repay the said amount within three months.

3.    Upon the request made by and believing in the promise of the accused the complainant provided him such loan/financial accommodation of Rs. ______/- (Rupees ___________________) only.

4.    In discharge of the existing legal debts and/or liabilities as aforesaid one A/c payee cheque was issued by the accused in favour of the complainant.

A detail of the said cheque is given below:-

Cheque No.    Date    Drawn on    Amount (Rs.)

………….    ……….  ...................    …………….

5.    Upon presentation of the said cheque for encashment within its validity period with the complainant’s banker, __________________, the same was dishonoured and returned unpaid alongwith the Cheque Returning Memo dated ___________ with the endorsement “Insufficiency of funds in the account”. The Compalinant was intimated about such dishonour by Debit Advice Memo dated ___________.

6.    The fact of such dishonour of the cheque had been communicated to the accused person by a notice U/s. 138(b) of N.I. Act, 1881 as amended upto-date issued by the Complainant and the said notice was despatched by Regd. Post with A/D on __________ demanding the payment of the amount of the said cheque i.e. Rs. _______/- (Rupees _____________) only within 15 days from the date of receipt of the said notice.

7.    The Complainant submits that the said demand notice was duly duly received by the accused person on ________,  but inspite of this the accused person failed and neglected to make payment as demanded therein.

8.    The accused person has therefore succeeded in deceiving the complainant malafidely, intentionally, purposely and mischieviously.

9.    The accused has thus committed an offence punish¬able under section 138 of the Negotiable Instruments Act, 1881 as amended upto-date.

10.    This petition of complaint is not barred by the Law of Limitation.

11.    The cause of action of this case arose within the jurisdiction of this Learned Court. Hence, this Learned Court is the competent authority and has jurisdiction to try the offence in this instant case.

12.    This petition of Complaint is made bonafide and for the ends of justice.

Sample Agreement for Sale

Here is a format Agreement for Sale. The .pdf format can be downloaded from here.

AGREEMENT FOR SALE

1.    Date:
2.    Place:
3.    Parties:
3.1    ___________________, son of ____________, by Nationality – Indian, by faith – _______, by Occupation-   _______, resident of ______________ ____________.
(Vendor, includes successors-in-interest and assigns)

AND

3.2    ___________________, son of ____________, by Nationality – Indian, by faith – _______, by Occupation-   _______, resident of ______________ ____________.
 (Purchaser, includes successors-in-interest and/or assigns)
[Vendor, Purchaser collectively Parties and individually Party.]

NOW THIS AGREEMENT FOR SALE WITNESSES, RECORDS, GOVERNS AND BINDS THE CONTRACTUAL RELATIONSHIP BETWEEN THE PARTIES AS FOLLOWS:

4.    Background:
4.1    Ownership of the Vendor: The Vendor is the sole and absolute owner of, otherwise well and sufficiently entitled to ALL THAT piece and parcel of Homestead land admeasuring _______________ be the same a little more or less together with a brick-built structure measuring about ________ Sq. ft. standing thereon, situate and lying at and being Premises No. ____, _______ Road, within the local limits of the ___________ Municipality, District - ______, in the State of West Bengal, described in the 1st Schedule below (Said Property). The Vendor became owner of the said property by purchase from the erstwhile owner thereof by virtue of a Deed of Conveyance dated _______ duly registered at the office of the ____________ and recorded in Book No. I, Being No. ______ for the year ____.
4.2    Mutation: The Vendor also got his name mutated in the records of the ________ Municipality as the owner of the Said Property, vide Memo. No. ___________ dated _______ issued by the _________ Municipality.
4.3    Desire to Sell the Said Property: Because of some cogent reasons the Vendor has now become interested to sell and/or alienate the Said Property to the intending purchaser thereof.
5.    Representations and Warranties of the Vendor:  
5.1    Vendor Absolute Owner: The Vendor is the absolute owner of the Said Property and no other person has any right, title or interest on and over thereof.
5.2    Said Property Free from all Encumbrances: The Said Property to be transferred is free from all claims, demands, encumbrances, possessory rights (permissive or adverse), mortgages, charges, liens, attachments, lis pendens, uses, easements, trusts, prohibitions, court proceedings either in execution or pending, revenue recovery proceedings, wealth tax, Income tax dues, Income tax attachment, Financial Institution charges, claims and liabilities whatsoever or howsoever made or suffered by the Said Property or any person or persons having or lawfully, rightfully or equitably claiming any estate or interest therein through under or in trust for the Vendor or the Vendor’s Predecessors-in-title.
5.3    Possession with Vendor: The Vendor is in vacant and peaceful possession of the Said Property.
5.4    No Prejudicial Act by Vendor: The Vendor has not any time done or executed or knowingly suffered or been party or privy to any act, deed, matter, or thing whereby the Said Property hereby agreed to be transferred or any part thereof can or may be impeached, encumbered or affected in title.
5.5    Compliance with Local Laws: The Vendor has fully complied with all the applicable local laws in respect of the Said Property and the proposed sale of the Said Property to the Purchaser is not in violation of any laws including but not limited to local and other laws.
5.6    No Acquisition or Requisition: The Vendor has not received any notice from any authority for acquisition or requisition and declares that the Said Property is not affected by any scheme of the Government or Statutory Body.
5.7    No Notification or Vesting: No part or portion of the Said Property has been notified or planned for any development scheme of the Government or any Statutory Body and/or vested in the State by operation of law.
5.8    No Previous Agreements: The Said Property is not the subject matter of any previous agreement, whether oral or in writing and as such the Vendor is competent to deal with the Said Property and sell the same without any claim or hindrance.
5.9    No Litigation: No part or portion of the Said Property is affected by any pending proceeding, civil, criminal or revenue and thus the Said Property is not affected by the doctrine of lis pendens or any prohibitory order or any mandatory order.
5.10    Vendor has Good Right: Notwithstanding any act, deed or thing whatsoever done as aforesaid, the Vendor has good right, full power, absolute authority and indefeasible title to enter into this Agreement in the manner specified herein, according to the true intent and meaning of these presents.
5.11    Statutory Clearances: The Vendor is in a position to obtain all statutory clearances, consents and permissions required, if any, to transfer the Said Property to the Purchaser.
5.12    No Personal Guarantee: The Said Property is not affected by or subject to any personal guarantee for securing any financial accommodation.
5.13    No Order of Prohibition: There is no order of Court or any other statutory authority prohibiting the Vendor from entering into this Agreement and transferring of the Said Property or any part thereof.
6.    Basic Understanding:
6.1    Announcement by Vendor: The Vendor has announced and has offered to sell the Said Property to the Purchaser.
6.2    Reliance on Representations: Relying on the aforesaid representations and warranties of the Vendor, the Purchaser has agreed to purchase the Said Property.
6.3    Discussions and Negotiations: Discussions and negotiations have taken place between the Vendor and the Purchaser for purchase of the Said Property and essential terms and conditions in this regard have been finalized, which the Parties are recording hereunder.
6.4    Agreement to Sell and Purchase: Pursuant to such discussions and negotiations, the Vendor has agreed to sell and the Purchaser has agreed to purchase from the Vendor Said Property on the consideration stated hereinafter. Conclusive and comprehensive terms and conditions superseding all previous documents and understandings, if any, are now being recorded by this Agreement.

Surrender of Tenancy Agreement - A Format thereof

Here is a format of the Surrender of Tenancy Agreement. Free .pdf format can be downloaded from here.

MEMORANDUM OF AGREEMENT

1.    Date: _____________________
2.    Place: ____________________
3.    Parties:

3.1    _____________________, son of _________________, by faith – _____,  by Nationality – Indian, by Occupation - ________, residing at _______________________________________.

(Tenant/First Party, includes successors-in-interest and/or assigns)

AND

3.2        ____________________, son of _________________, by faith – _____, by Nationality – Indian, by Occupation - ________, residing at ______________________________________.

(Landlord/Second Party, includes successors-in-interest and/or assigns)

Tenant, Landlord collectively Parties and individually Party.

NOW THIS MEMORANDUM OF AGREEMENT WITNESSES AS FOLLOWS:

4.    Background:

4.1    Ownership of the Second Party: The Second Party is the sole and absolute owner of and/or otherwise well and sufficiently entitled to the land and building situate and lying at the Premises known as ____________________________________ (Said Premises).

4.2    Tenancy of the First Party: The First Party is a monthly tenant in respect of a _______ [character of use] room having an area of _______ Sq. ft. be the same a little more or less on the ______ floor of the building in the Said Premises [Tenanted Portion] , at a monthly rental of Rs. __/- (Rupees _____________) only, payable according to English calendar month. The Tenanted Portion is described in the 1st Schedule below.

4.3    Proposal and Acceptance: The Landlord has now approached the Tenant to surrender the tenancy and all other rights incidental thereto due to some exigencies and the Tenant has agreed to surrender the tenancy and all other rights in the Tenanted Portion as well as to vacate the same by delivering khas and peaceful possession of the Tenanted Portion to the Landlord, subject to payment of a sum of Rs. _______/- (Rupees _______________) only (Consideration) by the Landlord to the Tenant towards the reimbursement the cost for shifting and rehabilitation.

4.4    Mutual Understanding & Recording of the Terms: The Parties upon negotiation have amicably arrived at the terms and conditions for such surrender of tenancy and conclusive and comprehensive terms and conditions superseding all previous documents and understandings, if any, are now being recorded by this Memorandum.   

NOW IT IS HEREBY AGREED AND DECLARED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:

1.    Surrender of the Tenancy: The Tenant doth hereby agree to surrender his tenancy in respect of the Tenanted Portion, described in the 1st Schedule below in favour of the Landlord, upon payment of the Consideration by the Landlord.

2.    Payment of the Consideration: The Landlord shall pay to the Tenant a total sum of Rs.__________/- (Rupees ____________) only towards the cost of shifting and rehabilitation charges and/or compensation for the inconvenience suffered by the Tenant to vacate the Tenanted Portion in favour of the Landlord in the manner specified in the Payment Schedule, described in the 2nd Schedule below.

3.    Advance Payment: The Landlord at or before hereof has paid to the Tenant a sum of Rs.__________/- (Rupees ______________) only as an advance and part payment of the Consideration and the Tenant doth hereby as well as by the receipt and memo hereunder written, admit and acknowledge thereof.

4.    Effective Date: The Tenant shall cease to have all his right, title and interest in the Tenanted Portion including the right of his monthly tenancy on and with effect from __________ (Effective Date).
5.    Delivery of Possession: Within __________ from the date hereof the Tenant shall vacate and hand over peaceful and khas possession of the Tenanted Portion to the Landlord and shall obtain written receipt and acknowledgement thereof from the Landlord.
6.    Release from the Liability: Both the Parties release and discharge each other from all liabilities arising under the Tenancy or any variation of the terms of the tenancy with effect from the Effective Date.

Format Notice of Cheque Dishonour

Often we receive payment by cheque, unfortunately sometimes it gets dishonoured by the banker for insufficiency of funds in the drawer's account or for some other reasons. As a result we become bound to send legal notice to the drawer of the cheque.

Here is a format of such legal notice below, the format can be also downloaded in  free .pdf version from here.

FORMAT OF THE NOTICE

REGD./SPEED POST WITH A/D.

Ref. No. __________                            Date: ________ 

To
Mr. _____________
________________
________________

Re:    Notice U/S. 138 (b) of the Negotiable Instruments

        Act, 1881 as amended up-to-date.

Sir,
    Please take notice that in discharge of your existing legal liability and/or debts, you issued one A/c. payee cheque under your signature in my favour.

   Details of the said cheque are as follows: -

Cheque No. Cheque Date        Drawn on          Amount  

...............      .............           ________ Bank     ...........
                                             _______ Branch
                                             _____________   

    The abovementioned cheque on due presentation through my banker for encashment within its validity period, was returned unpaid vide cheque return memo dated ____________ with the endorsement “_________”.

It may further be mentioned that under Section 139 of the said Act, there is a presumption that the cheque above mentioned had been issued in discharge of a legally enforceable debt/liability owed by you.

In view of the aforesaid,  I do hereby call upon you and demand you to pay me the aforementioned amount of Rs. ________/- (Rupees ________________________) only, the amount of the said dishonoured cheque by pay order or bank draft or in cash within 15 days from the date of receipt of this notice, failing which, I will be constrained to institute legal proceedings against you under the provisions of Negotiable Instruments Act, 1881 as amended up-to-date, which will render you liable to be punished with imprisonment which may extend to two year or with fine which may extend to twice the amount of the cheque or with both.

Royalty Agreement - A Format

This is a format of Royalty Agreement. This is specifically drafted as an agreement to be entered into by and between an Author and a Book Publisher. A free .pdf version can be downloaded also from here.

FORMAT OF ROYALTY AGREEMENT

_______________________________________

AGREEMENT

1.    Date: 

2.    Place: 

3.    Parties:
3.1  ________ (Name), son / wife of ___________________, by Nationality–_______, residing at ____________________________ (with Police Station).
(Author, includes successors-in-interest and assigns)

AND

3.2    M/S.__________________________, a _______________ Concern, having its office at _______________________________ (with Police Station), being represented by its _________________, ______________________.
(Publisher, includes successors-in-interest and/or assigns)

Author and Publisher collectively Parties and individually Party.

NOW THIS AGREEMENT WITNESSES, RECORDS, GOVERNS AND BINDS THE CONTRACTUAL RELATIONSHIP BETWEEN THE PARTIES AS FOLLOWS:

4.    Subject Matter of the Agreement:
4.1    Subject Property: A book in the form of a manuscripts or _______, under the name and style of _______________, written/authored by the Author and a copy whereof is set forth on Schedule A annexed hereto and made part hereof (Said Book).

5.    Basic Understanding:
5.1    Author’s Proposal: Author is willing to grant and/or assign the right of the publication, sales and distribution of the Said Book to Publisher. Author doth hereby represent and warrant as stated hereinafter.
5.2    Acceptance by Publisher: Publisher doth accept the proposal of Author relying on his/her representation and warranties.
5.3    Discussions and Negotiations: Discussions and negotiations have taken place between Author and Publisher in respect of the subject matter hereof and essential terms and conditions in this regard have been finalized and agreed, which the Parties are recording hereunder.
5.4    Agreement: Pursuant to such discussions and negotiations, Author has agreed to grant and/or assign the right of the publication, sales and distribution of the Said Book to Publisher for the consideration stated hereinafter. Conclusive and comprehensive terms and conditions superseding all previous documents and understandings, if any, are now being recorded by this Agreement.

6.    Representations and Warranties of the Author:  
6.1    Sole Authorship: Author is the sole writer/author of the Said Book.
6.2    Original Work of Author: Said Book is the own original work and creation of Author and is not a copy of any other copyrighted work.
6.3    Author Absolute Owner: Author has not sold, assigned, leased licensed or in any manner disposed of or encumbered the rights herein granted to Publisher 
6.4    Author has Good Right: Notwithstanding any act, deed or thing whatsoever done, the Author has good right, full power, absolute authority and indefeasible right to enter into this Agreement in the manner specified herein, according to the true intent and meaning of these presents.

7.    Transfer:

Goods & Services Tax (GST)

Goods and Services Tax (GST) was recommended by the Thirteenth Finance Commission. In December, 2009 the Task Force submitted its report (Report of the Task Force on Goods & Services Tax), wherein the 'dual levy' system was recommended.

The Goods and Services Tax (GST) is planned to be implemented from the next financial year. The Finance Minister of  India, Pranab Mukherjee on July 21, 2010 proposed for a three-tier structure for the Goods and Services Tax (GST) , the new indirect tax regime.

The three-rate structure of the Goods and Services Tax (GST) - 20 per cent for goods, services will attract 16 per cent and 12 per cent for the essential items. The revenue from the Goods and Services Tax (GST) will be shared equally by both the Central and the State.

Upon implementation of the Goods and Services Tax (GST), the other Central and State taxes like excise, VAT, Service Tax etc. will be revolved thereon.  

Source: THE TIMES OF INDIA

Name Misspelt on Cheque Leaf - Remedy thereof

Very often we have to face the situation. We have received our payment through cheque, but unfortunately the spelling of the name of the payee thereon is wrong. And obviously when we present the cheque for encashment to our banker, we find to our astonishment the cheque amount is lying uncredited in the account, even in spite of due encashment thereof.

We must be careful to check it beforehand prior to depositing the cheque to the bank. Sometimes we know it won’t be wise enough to return the cheque to the drawer thereof for getting the correction done or receiving a fresh cheque. Somehow it is time consuming also. 

Instead when depositing the cheque, we have the option to give an undertaking thereby indemnifying the bank authority in the event of any future claim or dispute in respect of the said cheque amount and requesting to credit the account with the amount of the cheque. I think, this is a handy remedy of the issue.

A format of the undertaking is given below in the form of an application. The free .pdf format is also downloadable from here.
THIS WRITING IS NOT A LEGAL ADVICE. YOU SHOULD CONSULT WITH A LEGAL ADVISOR IF YOU HAVE PROBLEM RELATING TO THE ISSUE DISCUSSED HEREIN.

THE FORMAT ABOVEREFERRED TO:

RBI Guideline on Cheque Writing - Impact on Cheque Dishonour

One should change his cheque writing behaviour as the RBI's new cheque writing Guideline has become effective on and from  the 1st July, 2010. Section 1.8 of the Annexure to  RBI Circular DPSS.CO.CHD.No.1832/04.07.05/2009-2010 dated February 22, 2010 specifically deals in "Prohibiting alterations / corrections on cheques". The Section is reproduced hereunder:

"Prohibiting alterations / corrections on cheques : No changes / corrections should be carried out on the cheques (other than for date validation purposes, if required). For any change in the payee’s name, courtesy amount (amount in figures) or legal amount (amount in words), etc., fresh cheque forms should be used by customers. This would help banks to identify and control fraudulent alterations."

As such the bank will return or reject a cheque having alteration on - (i) Payee's name, (ii) Amount in figure and (iii) Amount in words.  However, in terms of the said Section the date alteration will be allowed.

Impact of the new guideline : One must be very careful in writing a cheque, as any casual mistake will result in dishonour of the cheque by the bank and such dishonour will cost both in time and money. 

Other aspects of the new cheque writing guideline : In case of a dishonour of a cheque under certain circumstances, Section 138 (Dishonour of cheque for insufficiency, etc., of funds in the accounts) of THE NEGOTIABLE INSTRUMENTS ACT, 1881 is attracted. The Section provides for punishment to the drawer of the cheque being dishonoured under the circumstances specified in the Section. 

Now this is to see whether the dishonour of cheque by the bank in view of the aforesaid guideline also attracts that Section 138 or not. We have to wait till such occasion of cheque dishonour and the matter is decided in the Hon'ble Court.

Service Tax on Construction Services

With the enactment of the Finance Act, 2010, certain changes have been brought in the matter of Service Tax. Section 76 and 77 of the said Act (14 of 2010) are related to Service Tax issues. This has a reference to my previous post.

Now I am on the point of the Construction Services.

As referred there: "In the Finance Act, changes have been made in the construction services, both commercial construction and construction of residential complex, using ‘completion certificate’ issued by ‘competent authority’. Before the issuance of completion certificate if agreement is entered into or any payment is made for sale of complex or apartment in residential complex, service tax will be leviable on such transaction since the builder provides the construction service. Completion certificate issued by a Government authority was prescribed as demarcation by introducing an Explanation in the Finance Act. During the post budget discussions, it was pointed that practice regarding issuance of completion certificates varies from state to state. Considering the practical difficulties, the scope of the phrase ‘authority competent’ to issue completion certificate has been widened by issuing an order for removal of difficulty ( Refer M.F.(D.R) Order No.1/2010 dated 22nd June 2010). Completion certificate issued by an architect or chartered engineer or licensed surveyor can be now taken to determine the service tax liability."

Issuance of notifications after enactment of the Finance Act, 2010

Government of India

Ministry of Finance

Department of Revenue

Tax Research Unit

***

Gautam Bhattacharya

Joint Secretary, Tax Research Unit

Telephone No.011-23093027

Fax No.011-23093037

E-mail: g.bhattacharya @ nic.in

D.O.F.No.334/03/2010-TRU

New Delhi, dated 1^st July 2010

Dear Madam/ Sir,

            Subject: Issuance of notifications after enactment of the Finance Act, 2010:

            The Finance Bill 2010 was enacted on 8^th May 2010. Section 76 and 77 of the Finance Act, 2010 (14 of 2010) pertain to service tax issues. Certain new taxable services were introduced and certain changes in the scope of the existing taxable services (under section 65, with consequential changes in section 66 of the Finance Act, 1994) were made under section 76 of this Act. The provisions of section 76 (A) & (B) (except retrospective provisions relating to commercial coaching and training and renting of immovable property services) were to come into effect from a date to be notified, which is also known as appointed date. This date has been notified to be the 1^st day of July 2010 (Refer Notification No.24/2010-Service Tax dated the 22^nd June 2010).

2. Services provided or payments made prior to the effective date;

2.1        Vide Finance Act, 2010, eight new services were added to the list of taxable services while the scopes of nine existing services were modified. As these changes become effective from 01.07.2010, activities that are covered under taxable service categories due to above additions or modifications, would start attract service tax from this date. It is however, possible that a part or full payment of the consideration for such services provided after the appointed date has already been received prior to that date, i.e. advance payments. The examples are: where a domestic air journey performed after 1^st July 2010, but the ticket is issued on payment prior to such date or where a construction activity falls within the taxable service only after the said date but the payment (full or in part) has been made before this date. While legally tax is payable on such amounts received, it has been decided to specifically exempt service tax on that partial or full amount which is received by the service provider/ person liable to pay the tax (and not by an agent, who in turn transfers such amount to such person after this date) before 01.07.2010, pertain to a service which has become taxable on account of the provisions of the Finance Act, 2010 and is provided on or after 01.07.2010. Any amount received after 01.07.2010 by the service provider/ person liable to pay the tax would be subjected to tax. (Refer Notification No.36/2010-Service Tax dated the 28^th June 2010 as corrected vide corrigendum dated 29^th July, 2010). 

3. Transport of passenger by Air service:

3.1        As stated in the Letter D.O.F.No.334/1/2010- TRU, dated 26^th February 2010, in Budget 2010, service tax on transport of passengers by air was extended to cover all domestic and international air passengers embarking in India with effective tax rates as given below:

(a) ten percent (current rate of service tax) of the gross value of the ticket or rupees one hundred per journey, whichever is less, for passengers travelling       in any class, within India;

(b) ten percent (current rate of service tax) of the gross value of the ticket or rupees five hundred per journey, whichever is less, for passengers embarking in India for an international journey in economy class:

The aforesaid rates are subject to non-availment of CENVAT credit. (Refer Notification No.26/2010-Service Tax dated 22^nd June 2010). All charges except  statutory levies (levied under a law for time being in force), if any mentioned in a ticket is to be taken as ‘gross value of the ticket’ for this purposes.

3.2        Exemption from service tax has also been provided on journeys to and from North-Eastern States (i.e. Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura) from the service tax (Refer Notification 27/2010 - Service Tax date 22^nd June 2010). Considering that Bagdogra airport, though located in West Bengal being the gateway airport for Sikkim, has also been accorded this benefit. 

3.3        Doubts have been raised that in case a ticket covers more than one domestic journey/flight/sector (say Mumbai-Delhi-Mumbai), whether Rs. one hundred would be charged for each journey/flight/sector (i.e. in the aforementioned example one for Delhi-Mumbai flight and one for Mumbai-Delhi flight) or would it be charged once for the entire ticket. In this regard, it is clarified that since the taxable activity relates to ‘embarkation in India for domestic journey….’, each time such embarkation in India takes place the tax is chargeable. In other words tax would be separately chargeable for each journey/flight/sector. In this regard the clarifications issued vide circular No. 96/7/2007-ST dated 23.07.2007 has no application as the said circular did not cover situations of multiple embarkations in India. Similarly, in  round trip tickets involving multiple journies/flights/sectors with one of the sector involving embarkation or disembarkation at North-Eastern States /Bagdogra, the journey/flight/sector that involves embarkation or disembarkation at North-Eastern States /Bagdogra would alone be covered under aforesaid exemption.

3.4        Since the scope of air transport of passenger service has been modified vide Finance Act, exemption, which were available earlier to crew of the aircraft operator, and international transit passengers by way of definition in the Act have been retained vide Notification (Refer Notification No.25/2010-Service Tax).

3.5          The scheme of tax on passengers embarking in India for an international journey in higher classes (i.e. other than economy class) remains unchanged.                                                        

3.6        As per the provisions of Rule 4A of the Service Tax Rules, 1944, invoice/ bill/ challan is required to be issued by the provider of taxable service within 14 days of the provision of the taxable service or the receipt of the consideration. In case of air-travel, the airlines or the agent may not issue a separate invoice to the passenger but may issue the ticket showing the price of such ticket as well. In such a case, the requirement of an invoice would cast an additional compliance burden on the service provider.  Hence the said rule is amended to provide that in case of this taxable service, the ticket (in any form, including electronic form whatever may be the name) showing the name of the passenger, description of the journey (details like place of embarking and disembarking, class of travel, flight number, etc.,) and the amount of service tax collected would be deemed to be the invoice/ bill /challan for the purposes of the rule (Refer Notification No.39 / 2010-Service Tax as corrected vide corrigendum dated 30 th July 2010).

4. Port and Airport Service

4.1        In the Finance Bill, 2010, with intent to ease the classification disputes, the definitions of port, other port and airport services were amended to comprehensively cover under their ambit, all services provided within an airport or a port or other port irrespective of whether or not such activities are authorised by the authorities or whether or not they are otherwise classifiable as distinct taxable services. In effect all services that are wholly rendered within the prescribed area of the port or other port or an airport, are to be classified within the ambit of ‘port services’ or ‘airport services’.

4.2        During the post budget interactions with the stakeholders, apprehensions were expressed that that the change may have certain unintended effects and certain services (including certain essential services) hitherto exempted, may attract service tax unintentionally. Further, it was also pointed that the abatements and exemptions presently available under individually defined taxable services would get denied when provided within airport or port merely as they would now be taxable under newly introduced taxable services.

4.3        In order to address these genuine concerns, the following measures have been taken,-

(i)             Certain basic activities undertaken within airports and ports have been kept out of the tax by exempting them. (Refer Notification No.31/2010 - Service Tax dated the 22^nd  June 2010);

(ii)            Service tax paid on certain taxable services that are used in relation to or for export of goods are eligible for refund under Notification No. 17/09-ST. Presently, the list of eligible services under the said notification includes port service but does not include ‘airport service’. In order to correct the anomaly, the said notification has been amended to include ‘airport service’ in the list of eligible services under the said refund scheme (Refer Notification No. 37/2010-Service Tax, dated the 28^th  June 2010).

(iii)           Commercial and Industrial construction service in relation to airport is excluded from service tax, in the definition itself. As such services would now be classified as ‘airport service’ when provided wholly within the airport, exclusion has been now provided by way of an exemption notification (Refer notification No. 42/2010-Service tax, dated the 28 th June, 2010)

(iv)          Construction of ports was not excluded under the erstwhile definition from exclusion similar to that was available for airports. To bring parity in this matter, commercial and industrial construction service provided within the port area, in relation to construction, repair, alteration, renovation of wharves, quays, docks, stages, jetties, piers and railways is exempt from the whole of service tax  (Refer Notification No. 38 /2010-Service Tax, dated the 28^th  June 2010).

(v)           Currently abatements are available to certain services such as ‘Renting of a cab’, 'Erection, Commissioning & Installation Service’, ‘Goods Transport Agency service’ and ‘construction services’.  Similar abatements would be available to such services, when provided wholly within an airport or a port or other port, under the new definition of airport or port or other port services. (Notification No. 40/2010-ST dated 28^th June, 2010 as corrected by corrigendum dated 30^th June, 2010 and notification no. 43/2010-ST, dated 28^th June, 2010 refers) 

(vi)          Exemptions/exclusions are available to warehousing of agriculture products and cold storage facilities under 'Storage & Warehousing Service, transport of export goods in an aircraft by an aircraft operator  and site formation and clearance, excavation and demolition services etc. when provided in the course of construction Port or airport. These benefits would continue to be available when such services are provided wholly within port/airport and are classified under port/ airport service (Refer Notification No. 41/2010-ST, dated 28^th June, 2010 refers).

4.4        All other services carried out within a port or other port or an airport would be subjected to service tax under the category of port/other port/airport services.

5. Sponsorship Service

            As per the provisions of the Finance Act, 2010, the definition of existing taxable service, namely ‘the Sponsorship Service’ was amended to remove the exclusion available for sponsorship pertaining to sports. The measure was taken to prevent exclusion benefiting certain sponsored sports events, which are organized by private organizations or business entities as commercial ventures. However exemption is provided for sponsorship services with reference to certain sports championships or tournaments, such as national tournament (Refer Notification No. 30/2010 - Service Tax dated 22^nd June, 2010).

6. Construction services:

6.1        In the Finance Act, changes have been made in the construction services, both commercial construction and construction of residential complex, using ‘completion certificate’ issued by ‘competent authority’. Before the issuance of completion certificate if agreement is entered into or any payment is made for sale of complex or apartment in residential complex, service tax will be leviable on such transaction since the builder provides the construction service. Completion certificate issued by a Government authority was prescribed as demarcation by introducing an Explanation in the Finance Act. During the post budget discussions, it was pointed that practice regarding issuance of completion certificates varies from state to state. Considering the practical difficulties, the scope of the phrase ‘authority competent’ to issue completion certificate has been widened by issuing an order for removal of difficulty ( Refer M.F.(D.R) Order No.1/2010 dated 22^nd June 2010). Completion certificate issued by an architect or chartered engineer or licensed surveyor can be now taken to determine the service tax liability.

6.2        After the Budget was introduced views were expressed that the tax liability on construction sector has been tightened at a time when the sector was recovering after recession. After considering the issue, abatement available for construction of industrial or commercial complex and also residential complex has been prescribed as seventy five per cent. This means now tax incidence will be the rate of service tax applied on twenty five per cent of gross value of commercial or residential complex or unit, broadly representing the service component in the construction, subject to conditions (Refer Notification 29/2010-Service Tax, dated 22^nd June 2010).  Importantly seventy five percent abatement will be applicable only if the gross value of commercial or residential complex or unit includes cost of land. Otherwise the existing rate of abatement of 67% would continue to apply.

6.3        Exemption has been provided for construction of residential complex service, when the same is rendered as part of Jawaharlal Nehru national Urban Renewal Mission (JNNURM) and Rajiv Awaas Yojana (Refer Notification No.28/2010- Service Tax, dated 22^nd June 2010). These are flagship schemes of the Government of India to provide shelter for the poor and the disadvantaged and hence taxable service of construction of complex in the context of these two development schemes have been kept out of the ambit of service tax.

7.         Transport of Goods by Rail

7.1        Service tax on transport of goods by railways was introduced vide Finance (No.2) Act, 2009, to bring parity between all modes of transportation of goods. The levy is not yet operational and this levy will now take effect from January 2011 (refer Notification No.33/2010- Service Tax, No.34/2010- Service Tax, No. 35/2010- Service Tax all dated 22^nd June 2010).

8.         Transmission of Electricity:

8.1        Vide Budget notification 11/2010-ST, dated 27^th February 2010, transmission of electricity was exempted from service tax. Subsequent to post budget discussions, taxable service provided by a distribution licencee or a distribution franchisee authorised to distribute power under the Electricity Act, 2003 for distribution of electricity is also exempt from levy of service tax ( Refer Notification No.32/2010-Service Tax dated 22 nd June 2010).

9.         Certain issues arising out of the budgetary changes and the post-enactment legislations (especially taxes pertain to real estate sector) may not have been covered in this communication. While some of the requests/ suggestions are under examination, I look forward to receive your valuable feedback and suggestions on any other unresolved issues. Kindly send them to me, or to Mr. J.M. Kennedy, Director (TRU) or Mr. Samar Nanda, Technical Officer (TRU) within a fortnight so that all such issues can be taken up and clarified wherever needed.       

Regards,                               

                                                                                                                   Yours sincerely,

                                                                                                                  -signed-

(Gautam Bhattacharya)

To

All Chief Commissioners / Directors General

All commissioners of service Tax

All commissioners of Central Excise

All commissioners of Central excise and Customs