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Automated Teller Machine Services (ATM) [Sec 65(105)(zzzk)]
Effective upto 30th June, 2012
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Landmark Service Tax Judgment - Automated Teller Machine Services (ATM)

INTRODUCED: With Effect From 1st May 2006
 
Contents
Scope
Exemption
Relevant Notifications / Circulars
Landmark Judgements
Accounting Code
Service Tax 00440346
Interest
00440347
Penalty 00441441
 
DEFINITION:

According to Section 65 (105) (zzzk), any service provided or to be provided; to any person, by any other person, in relation to automated teller machine operations, maintenance or management service, in any manner is a ‘taxable service’.

According to Section 65 (9b), “Automated teller machine operations, maintenance or management service” means any service provided in relation to automated teller machines and includes site selection, contracting of location, acquisition, financing, installation, certification, connection, maintenance, transaction processing, cash forecasting, replenishment, reconciliation and value-added services.

According to Section 65 (9a), “Automated teller machine” means an interactive automatic machine designed to dispense cash, accept deposits of cash, transfer money between bank accounts and facilitate other financial transactions. (Write above 65 9b)

 
SCOPE:
TOP

ATMs (Automated Teller Machines) may be owned by banks and other financial institutions who outsource a number of activities related to ATMs such as operations, maintenance or management of hardware and soft ware, cash replenishment etc. In other cases, there is comprehensive outsourcing of entire ATM related services. Such outsourced services are taxable under this category. Some of the specific areas of outsourcing are mentioned in the definition of ATM operations, maintenance or management 

Service Tax is not levied on use of ATM; therefore, the persons who are using ATM services are not charged Service Tax. The taxable service is operation, maintenance or management of ATM

 
SERVICE TAX EXEMPTIONS:
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(a)  Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/-  (Service Tax Notification No. 8/2008-ST dated 01.03.2008)

(b)  Services provided to the United Nations or International Organisations

(c)  Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers

(d)  Services which are exported as per ‘Export of Services’ Rules

(e)  Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.

(f)  Services provided by Reserve Bank of India

(g)  Out of total value of service provided proportionate value of goods and material provided by the Service Provider

 
RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES:
TOP
Service Tax CBEC Instruction Letter (File No. 334/4/2006-TRU) dated 28-02-2006
 
LANDMARK SERVICE TAX JUDGMENTS:
TOP
Diebold Systems (P) Ltd. Vs Commissioner of Service Tax, Chennai (STO 2007 CESTAT 1077)
INDIA SWITCH COMPANY PVT. LTD. Vs COMMISSIONER OF SERVICE TAX (STO 2006 CESTAT 863)
 
 
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Case Laws Related

  • STO 2007 CESTAT 1077
  • Work Contract : Commissioning of ATM : Incidental activity of installation and commissioning of ATMs is not chargeable to service tax in addition to levy of sales tax on the subject matter of the works contracts. Works contract could not be vivisected for a part of it to be subjected to taxation. Charging provisions are to be found in the statute itself and, where there is none in the statute, they cannot be supplemented by Notifications.

  • STO 2006 CESTAT 863
  • Service Tax: Banking and other Financial Services: Scope and liability: The leasing of ATM fell within the definition of "banking and other financial services" given under Section 65(11) of the Finance Act, 1994 during the period of dispute. The appellants had applied for registration and obtained, on their own accord, from the department for the said services. It was only towards the end of the period of dispute that they applied for de-registration. Thus, for the period of dispute, the appellants were liable to pay tax to the exchequer in respect of the services for which they were registered with the department.(Para 2).

    Pre-deposit ordered.

     
     

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