Branch Service Tax
General
Whether the branches have followed the proper procedure? If any discrepancy is noticed by the branch auditor, the same has been properly considered at the head office level.
Whether the bank has followed the uniform policy of collection and payment of service tax in respect of all the branches?
Whether the Head Office/Regional Office/Zonal Offices has issued the proper guidelines in respect of taxable and exempted services?
An Illustrative Check List for Bank Branch Auditors with respect to Service Tax is given below:
Whether the branches have taken the Registration of Service Tax within 30 days from the date of levy of service tax or the date of start of business of the branch, whichever is later?
Whether the branches have collected the service tax separately from the customers on the value of the taxable services. If it is inclusive of service tax, has the amount of service tax been properly calculated?
Whether the branches have made the payment of service tax so collected monthly, by 6th day of the following month. For the month of March, the payment should be made by 31st day of March Online payment of service tax is mandatory since 1st October, 2014.
Whether the branch has discharged the interest liability under section 75 of Finance Act, 1994 on late payment of service tax made by the branch?
Whether the branches have filed the return of service tax on half yearly basis, i.e., for the half-year ending on 30th September and on 31st March within 25 days from the end of each half-year, in Form ST-3?
Whether the branches have taken the appropriate amount of CENVAT Credit of the tax/duty paid on the eligible input services, inputs and the capital goods used for rendering output services?
Whether the branches have taken the CENVAT Credit on input services on the basis of proper documents containing all particulars as prescribed by rule 4A of Service Tax Rules, 1994 read with Rule 9 of Cenvat Credit Rules, 2004, i.e., serially numbered invoice / bill, etc. containing the requisite information like Name, address and registration no. of the service provider, Description of the services, Amount of the service tax, Name, address of the bank’s branch, etc.?
Similarly, whether the branches have taken the CENVAT Credit in respect of input and capital goods on the basis of proper duty paying documents containing all particulars as prescribed by Central Excise Rules, 2002 read with Rule 9 of Cenvat Credit Rules, 2004, i.e., serially numbered invoice/bill etc., containing the requisite information like Name, address and registration no. of manufacturer, Description of the goods, Amount of the excise duty, Name and address of the bank’s branch etc.?
Whether the credit is taken in respect of input services at the time of receipt of invoice. Further, in case payment is not made within 3 months from the date of invoice, credit has to be reversed and bank will be eligible to re-avail credit after making payment to vendor.
Whether the credit taken in respect of services covered under full reverse charge mechanism is taken only after making payment of Service Tax.Further, credit in respect of services covered under partial reverse charge mechanism is taken after making payment of services and service tax.
Whether the branches have not availed the credit more than the payment made for service tax, which has been made available on the last day of the respective month?
Whether credit has been reversed for every month an amount equal to 50% of the CENVAT Credit availed on inputs and input services or with effect from 01.04.2016 credit has been reversed in respect of exempted services on actual basis(Rule 6(3B) of Cenvat Credit Rules, 2004)
Whether the Bank has made repayment of CENVAT Credit availed in respect of capital goods removed after being used? Bank is required to pay an amount equal to the CENVAT Credit taken on the said capital goods reduced by 2.5 per cent for each quarter (for computers 10%, 8%, 5% and 1% respectively for each quarter in the first year, second year, third year, fourth & firth year) of a year or part thereof from the date of taking the CENVAT Credit. Further, the aforesaid percentage is to be computed on Straight Line Method. In case, duty calculated on transaction value is more than amount calculated by way of % specified supra, Bank has to pay amount equal to excise duty on transaction value.
In case, capital goods are cleared as waste and scrap, Bank has to pay an amount equal to duty leviable on transaction value.
In case, value of inputs or capital goods before being put to use is written off/provision to write off fully or partially has been made in books, bank has to reverse amount equivalent to CENVAT Credit taken in respect of said input or capital goods.
In case of removal of goods as such, bank has to reverse 100% amount of CENVAT Credit availed.
Where any input or capital goods are removed outside the premises of the bank for providing Banking or Other Financial Services, no reversal of CENVAT Credit is required.
Whether the banks (HO/ZO/RO) have sought registration as input service distributor under Service Tax (Registration of Special Category of Persons) Rules, 2005 for distribution of CENVAT to its various branches where such branches are registered under single registration basis and HO/ZO/RO has availed some common services on behalf of branches? In all such cases auditor shall ensure that the returns are being regularly filed for input service distributor. Auditor shall also ensure that office registered as ‘input service distributor’ is issuing invoice for distributing the CENVAT Credit as per Rule 4A (2) of Service Tax Rules, 1994.
Whether the branches have taken the appropriate credit on the invoice/challan/bill or any other documents issued by the head office, regional office, zonal office as an input service distributor?
Whether the branches have mentioned their service tax registration number on the statement, slips, challan, bill, invoice or any other documents issued to the customer for the services rendered by the Bank?
Whether bank maintains the records specified by it in said submission submitted in terms of Notification no. 45/2007 dated 28.12.2007?
Whether the branches have made arrangements to ensure that service tax is not collected on the interest amount?