Friday, 27 September 2019

Recent Updates On Service Tax

This article is written by Lee Hishamuddin and Gledhill (LHAG) and was first published in their SST e-Alert in September 2019. Reproduced with permission from LHAG.

 Three subsidiary legislation related to service tax came into effect on 1.9.2019 which are:-

a) Service Tax (Amendment) Regulations 2019.
b) Service Tax (Imposition of Tax for Taxable Service in respect of Designated    areas and Special Cases) (Amendment) Order 2019.
c) Service Tax (Compounding of offences) (Amendment) Regulation 2019.

The above regulations and order is aim to provide further explanation to the current law by pointing out some of the existing legal gaps.

A) Service Tax (Amendment) Regulations 2019.

Regulation 6A: Valuation of taxable service to include service tax

First schedule, para 1A: Clarification that only one application  needs to be done if a taxable person provides more than one taxable services which exceeds the threshold value prescribed.

First Schedule, para 3A: Replaced so that 'intra-group relief' will also be available for companies who obtain taxable services under items (a) to (i) in column 2 in group G.

B) Service Tax (Imposition of Tax for Taxable Service in respect of Designated areas and Special Cases) (Amendment) Order 2019. 

Introduction of a new item 6 by which provisions of food and beverages in special areas by any person operating at night club, dance hall, cabaret or public house (1st, 2nd, 3rd class licensed under the Excise Act 1976) or beer house (1st and 2nd class under the Excise Act 1976) falls under taxable services.

C) Service Tax (Compounding of offences) (Amendment) Regulation 2019.  

Under regulation 4(2), Taxpayers will now be granted 14 days or extended extension approved by the Director General for compoundable offences. Previously, there were no extension given. 

Item (viA) has been inserted in the first schedule to enable offences committed by non- taxable person who fails to submit a declaration, submits an incorrect declaration and fails to pay the service tax due and payable. 

Form 2 (Offer to Compound Offences) and Form 3 (Acceptance of Offer to Compound Offences) under the Second Schedule have been replaced.

For any questions in relation to tariff classification in respect of sales tax, please contact our Tax, SST & Customs partners at 

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