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CHAPTER 1 INTRODUCTION

1.1 GENERAL INFORMATION ABOUT THE SECTOR

Management consulting refers to both the industry and the practice of helping

organisations to improve their performance, primarily through the analysis of existing

organisational problems and development of plans for improvement. Organisations

may draw upon the services of management consultants for a number of reasons,

including gaining external (and presumably objective) advice and access to the

consultants' specialized expertise.

As a result of their exposure to and relationships with numerous organisations,

consulting firms are also said to be aware of industry "best practices", although the

transferability of such practices from one organisation to another may be limited by the

specific nature of situation under consideration.

Consultancies may also provide organisational change management assistance,

development of coaching skills, technology implementation, strategy development, or

operational improvement services. Management consultants often bring their own

proprietary methodologies or frameworks to guide the identification of problems, and

to serve as the basis for recommendations for more effective orefficient ways of

performing work tasks.

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1.2 INDUSTRY PROFILE

(a) Origin and development of Industry

Management consulting grew with the rise ofmanagement as a unique field of study. The

first management consulting firm was Arthur D. Little, founded in 1886 by the MIT

professor of the same name and was incorporated in 1909. Though Arthur D. Little later

became a general management consultancy, it originally specialized in technical

research. Booz Allen Hamilton was founded by Edwin G. Booz, a graduate of the Kellogg

School of Management atNorthwestern University, in 1914 as a management consultancy

and the first to serve both industry and government clients.

The first wave of growth in the consulting industry was triggered by the Glass - Steagall

Banking Act in the 1930s, and was driven by demand for advice on finance, strategy, and

organisation. From the 1950s onwards consultancies not only expanded their activities

considerably in the United States but also opened offices in Europe and later in Asia and

South America. After World War II, a number of new management consulting firms

formed, bringing a rigorous analytical approach to the study of management and strategy.

Work carried out at McKinsey, Boston Consulting Group, AT Kearney,Booz Allen

Hamilton, and the Harvard Business School during the 1960s and 1970s developed the

tools and approaches that would define the new field ofstrategic management, setting the

groundwork for many consulting firms to follow. In 1983, Harvard Business School's

influence on the industry continued with the founding ofMonitor Group by six professors.

The industry experienced significant growth in the 1980s and 1990s, gaining considerable

importance in relation to national gross domestic product. In 1980 there were only five

consulting firms with more than 1,000 consultants worldwide, whereas by the 1990s there

were more than thirty firms of this size.

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An earlier wave of growth in the early 1980s was driven by demand for strategy and

organisation consultancies. The wave of growth in the 1990s was driven by both strategy

and information technology advice. In the second half of the 1980s the big accounting

firms entered the IT consulting segment. The then Big Eight, now Big Four, accounting

firms (PricewaterhouseCoopers; KPMG; Ernst and Young; Deloitte Touche Tohmatsu) had

always offered advice in addition to their traditional services, but from the late 1980s

onwards these activities became increasingly important in relation to the maturing market

of accounting and auditing. By the mid-1990s these firms had outgrown those service

providers focusing on corporate strategy and organization. While three of the Big Four

legally divided the different service lines after the Enron scandals and the ensuing

breakdown of Arthur Andersen, they are now back in the consulting business.

The industry stagnated in 2001 before recovering after 2003, with a current trend towards a

clearer segmentation of management consulting firms.

(b) Present Status of Industry

Management consulting has grown quickly, with growth rates of the industry exceeding

20% in the 1980s and 1990s. As a business service, consulting remains highly cyclical and

linked to overall economic conditions. The consulting industry shrank during the 2001-

2003 period, but grew steadily until the recent economic downturn in 2009. Since then the

market has stabilized.

Currently, there are three main types of consulting firms. Large, diversified organizations,

Medium-sized management consultancies and Boutique firms which have focused areas of

consulting expertise in specific industries, functional areas, technologies, or regions of the

world.

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Traditionally, the consulting industry charged on a time and materials basis, billing for staff

consultants based upon the hours worked plus out-of-pocket expenses such as travel costs.

During the late 1990s and early 2000s, there was a shift to more results-based pricing,

either with fixed bids for defined deliverables or some form of results-based pricing in

which the firm would be paid a fraction of the value delivered. The current trend seems to

favour a hybrid with components of fixed pricing and risk-sharing by both the consulting

firm and client.

The use of management consultancy is becoming more prevalent in non-business fields

including the public sector; as the need for professional and specialist support grows, other

industries such as government, quasi-government and not-for-profit agencies are turning to

the same managerial principles which have helped the private sector for years.

An industry structural trend which arose in the early part of the 21st century was the spin-

off or separation of the consulting and accounting units of the large diversified professional

advisory firms most notably Ernst & Young, PwC and KPMG. For these firms, which

began operation as accounting and audit firms, management consulting was a new

extension to their organisation. But after a number of highly publicized scandals over

accounting practices, such as the Enron scandal, these firms began divestiture of their

management consulting units, to more easily comply with the tighter regulatory scrutiny

that followed. In some parts of the world this trend is now being reversed where the firms

are rapidly rebuilding their management consulting arms as their corporate websites clearly

demonstrate.

Over the years, as the Indian industry started maturing, the Indian consulting industry also

started expanding, not only in terms of size, but also in terms of the service offerings. Over

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the period, specialist consulting advice was being sought by clients in India and this opened

the opportunity for a number of specialist organizations to draw on their specialist

knowledge base and resources to meet the demand for specialist consulting services.

Latest Trends in Consulting Industry

Fast Growth

The business world is desperate for consulting help. With excess staff being

cut down, most organizations lack the technical, strategic and project

management skills to handle the benumbing rate of technological and

market change.

The consulting industry is trying its best to accommodate the demand. Big

consulting firms are inhaling new employees, gulping up smaller firms and

merging with peers.

One stop for all your solutions

In addition to a boom in the number of consulting firms, the size of

individual firms is growing in response to another industry trend: one-stop

shopping.

Providers that can't compete on size will still try to offer one-stop shopping

by outsourcing a chunk of a client's project to another firm while

maintaining responsibility for the overall project.

Knowledge management tools, best practices databases and the Internet

make it possible for consultants to draw upon the knowledge of every

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consultant in the organizationas many as 27,000 people in a firm like

PriceWaterHouse Coopers, for example.

Shortage of people

The greatest threat to the growth of consulting firms is their inability to get

enough qualified people.

Some firms are already devising creative solutions such as launching their

own accredited MBA programs - geared toward the specific needs of

consultants.

Smart people are continuing to gravitate toward the consulting profession,

especially with its heightened demand and visibility, not to mention inflated

salaries.

In a down economy, highly successful companies will invest more in customers,

not less. Companies will compete for customer share, not market share. Companies

will realize customer satisfaction doesn't translate to loyalty and will stitch their

customer channels together.

And finally, companies will shift to a long-term focus. Only one thing is for sure

the only thing that is constant in the consulting industry like any other industry

is change!

(c) Future of Industry

Over the decades, the management consulting industry has responded creatively to the

changing needs of clients, leading to the growth of a thriving industry. The insights of

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history provide guidance as consultants seek the innovations to meet the future needs of

clients.

Milan Kubr, an authority on the management consulting industry, reminds us that

Consultants are inventors and creators of their own markets and their future. In the early

years of the industry, consultants built highly flexible businesses on two market realities:

the rise of management as a science, and evolving economic conditions.

As inventors and creators of our own markets and future, management consultants will

continue to rely on the delivery of knowledge and general economic conditions. We can

benefit from examining our past to understand the types of expertise our clients need from

us. This is our source of value, and as history indicates, this changes as our clients needs

change.

The consulting industry could begin to look more like the film industry, with different

firms and individuals collaborating on a specific project, and then going their separate

ways, will be because of the client pressure.

Clients want greater specialization and a clearer view of what consultants do.

Types of services to be important in the future:

According to Czerniawskaone among many consultancy services is about change

management, organizational change.

Clients are looking for more than just completed consulting engagements; they are

looking for help with organization-wide change.

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There are people working on change but for the most part, they are niche

consultants, independent consultants, coaches or mentors. It's small scale and

fragmented.

Strengths and Weaknesses of Indian Consulting

The major strengths of Indian consulting organizations include professional

competence, low cost structure, diverse capabilities, high adaptability and quick

learning capability of Indian consultants

The major weaknesses of Indian consulting organizations, which has hindered the

export growth of consulting sector in the country, are low quality assurance, low

local presence overseas, low equity base, lack of market intelligence, low level of

R&D

CHAPTER 2 PROFILE OF THE ORGANIZATION

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2.1 ORIGIN OF THE ORGANIZATION

Arthur Young was born in Glasgow, Scotland. He graduated in law, but became interested

in banking and investment. In 1890, he moved to the US to pursue his career in accounting.

In 1906, he formed an accounting firm, Arthur Young & Company, with his brother

Stanley.

Alwin C Ernst was born in Cleveland, USA. After leaving school he worked as a

bookkeeper. Then, in 1903, he and his brother Theodore started Ernst & Ernst, a small

public accounting firm.

Both Arthur Young and AC Ernst were innovators and appreciated the importance of

quality in their work. Ernst pioneered the idea that accounting information could be used to

make business decisions and make a difference to clients organizations. He inspired his

people to deliver better service to clients. Young also positioned himself as a business

advisor as much as an accountant.

Both men understood the importance of their people. In 1920, Ernst & Ernsts operating

philosophy stated: The success of Ernst & Ernst depends wholly upon the character,

ability and industry of the men and women who make up the organization. Young

supported the development of professionals. In the 1920s he originated a staff school and,

in the 1930s, the firm was the first to recruit from university campuses.

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Both firms were also quick to enter the global marketplace. As early as 1924, they allied

with prominent British firms: Young with Broads Paterson & Co and Ernst with Whinney

Smith & Whinney. These alliances were the first of many for both firms, which opened

offices around the world to service their international clients.

AC Ernst and Arthur Young never met in life, but died within days of each other in 1948.

However their philosophies lived on and, in 1989, were brought together when the firms

they started combined to create Ernst & Young. The new organization quickly positioned

itself on the leading edge of rapid globalization, new business technologies and continuous

business change.

AC Ernst and Arthur Young would surely be proud of the result a global organization of

152,000 people sharing their ideals and passion to help clients improve their businesses

around the globe.

Key dates for Ernst & Young

1849 - Harding & Pullein founded in England. Joined by Frederick Whinney

1859 Whinney made a partner

1894 Arthur Young starts his first firm, Stuart and Young, in Chicago Harding &

Pullein renamed Whinney, Smith & Whinney

1864 Thomas Clarkson starts a trustee and receivership firm in Toronto

1903 Alwin and Theodore Ernst form Ernst & Ernst in Cleveland, US

1906 Arthur and brother Stanley form Arthur Young & Company in Chicago

1924 Arthur Young allies with Broad Paterson & Co, England Ernst & Ernst allies

with Whinney, Smith & Whinney

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1939 Clarkson allies with Woods Gordon & Co to expand into management

consulting

1944 Clarkson Gordon & Company allies with Arthur Young & Co

1979 Ernst & Whinney forms and becomes the fourth largest accountancy firm in

the world Arthur Youngs European offices join several large local European firms

1989 Arthur Young merges with Ernst & Whinney to create Ernst & Young

2000 Ernst & Young unveils a new, integrated global organization

2006 Ernst & Young integrates its Americas Area

2008 Ernst & Young integrates its EMEIA and Far East Areas

2.2 SERVICE PROFILE OF ORGANIZATION

E&Y India provides the following services to its clients:

1. Advisory

Performance Improvement

Risk

IT

Advisory for financial services

2. Assurance

Accounting compliance and reporting

Climate change and sustainability services

Financial accounting advisory services

Fraud investigation and dispute services

3. Transactions

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Lead advisory

Restructuring

Operational transaction services

Transaction support

Transaction tax

Valuation and business modeling

4. Tax

Cash tax planning

Country tax advisory

Cross border advisory

Customs and international trade

Global compliance and reporting

Global mobility

Performance and reward

Personal taxes

Tax accounting

Tax performance advisory

Transactions taxes

VAT, GST and other Sales taxes

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2.3 MARKET PROFILE OF ORGANIZATION

Ernst & Young is a global leader in assurance, tax, transaction and advisory services.

Worldwide, our 141,000 people are united by our shared values and an unwavering

commitment to quality. We make a difference by helping our people, our clients and our

wider communities achieve their potential.

Ernst & Young operates from 8 cities* in India (www.ey.com/india) with a work force of

over 7500** people, who work towards the firms vision of being the trusted business

advisor that contributes most to the success of people and clients by creating value and

confidence. Global Tax Advisory Services, Risk Advisory Services, Transaction Advisory

Services and Business Advisory Services are the core services offered by the firm in India.

E&Y India serves to the following industries:

Automotive

Government and Public sector

Oil and Gas

Technology

Power and utilities

Telecommunications

Consumer Products

Media and Entertainment

Private Equity

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Financial Services

Real Estate

CHAPTER 3 DISCUSSIONS ON TRAINING

3.1 WORK PROFILE

The work profile during the training period included of the following roles and

responsibilities to be performed:

1. Initial updation: This include checking the service tax amount and entity name

(since there are several entities under Ernst & Young, and the audit was being done

only for one entity Ernst & Young Pvt. Ltd.) on vouchers and updating the same

in excel sheets and mark excel serial nos. on vouchers to ensure that the vouchers

are filed in serial no. .

2. Submission of report for missing and incomplete vouchers.

3. Updation of missing and incomplete vouchers and ensure that they are filed

according to the serial nos. with other vouchers.

4. Last stage updation of filed vouchers with excel sheets to ensure that the vouchers

are properly filed according to the month and year and in serial no. and submitting

the final report of missing vouchers amount to the manager.

One such report for the amount of missing vouchers amount year wise and city wise is

given below:

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Table 3.1: Missing vouchers amount year wise and city wise.

Delhi

1st Half 2nd Half Total

FY 2007-08 801,857 - 801,857

FY 2008-09 687,518 230,290 917,808

FY 2009-10 258,299 128,318 386,617

FY 2010-11 173,861 115,494 289,355

1,921,535 474,102 2,395,637

Mumbai


FY 2007-08 16,120 - 16,120

FY 2008-09 218,198 49,961 268,159

FY 2009-10 6,180 - 6,180

FY 2010-11 - - -

240,498 49,961 290,459

Kolkata


FY 2007-08 1,730 - 1,730FY 2008-09 8,652 14,508 23,160

FY 2009-10 124 - 124

FY 2010-11 1,746 - 1,746

12,252 14,508 26,760

Hyderabad


FY 2007-08 41,647 - 41,647

FY 2008-09 - - -

FY 2009-10 - - -

FY 2010-11 - - -41,647 - 41,647

Missing Voucher (Amount)




The above table shows the total amount of missing vouchers for four different offices of

Ernst & Young namely - New Delhi, Mumbai, Kolkata, Hyderabad for four different years

starting from Financial year 2007-08 to Financial year 2010-11 for 1st and 2nd half.

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3.2 TOOLS AND TECHNIQUES USED

1. MS Office:

MS Excel: Used for computing the amount of vouchers, their tabular

representation and for making various other reports.

MS Word: Preparing final report and for submission of various other

reports.

2. Internet: Various internet websites were consulted for understanding the sector as

well as for data collection. These websites include the website of service tax

department, Ernst & Young, etc.

3.3 KEY LEARNINGS

Service tax audit

The basic objective of audit is to measure the level of compliance of the taxpayer with the

provisions of Chapter V of the Finance Act, 1994 and the rules framed thereunder. It

should be consistent with departmental instructions and make use of professional audit

methodology and procedures.

The basic principles are:

The audit should be conducted in a systematic and penetrative manner.

Emphasis should be on the identified risk areas and on scrutiny of records

maintained in the normal course of business.

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Audit efforts should be based on materiality i.e. degree of scrutiny will depend on

the nature of risk factors identified.

Recording of all checks and findings.

Audit should be normally distinct from anti-evasion operation in as much as it can

detect irregularities only to the extent of their reflection in the books of accounts.

If during the audit, it is seen that the guidelines in this manual are in conflict with

the provisions of the Chapter V of Finance Act, 1994 and the Rules framed under

Section 94 thereof or Notification/instructions because of any changes in the law

and policy subsequent to the issue of this manual, the provisions of the

Act/Rules/Notification and latest Circulars of the Board shall prevail over the

contents of this manual.

The frequency of audit for other taxpayers would be as per following norms:-

Taxpayers with Service Tax payment above Rs.3 crores (Cash + CENVAT)

(MANDATORY UNITS) to be audited every year.

Taxpayers with Service Tax payment between Rs.1 Crore and Rs.3 crores (Cash +

CENVAT) to be audited once every two years.

Taxpayers with Service Tax payment between Rs.25 lakhs and Rs.1 Crore (Cash +

CENVAT) to be audited once every five years.

Taxpayers with Service Tax payment upto Rs.25 lakhs (Cash + CENVAT) 2% of

taxpayers to be audited every year.

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Service tax credit

As per Service Tax credit Rules, 2002, every service provider (output service provider)

shall be eligible to avail credit of the service tax paid by him to other service providers, in

respect of the services (Input service) provided by them to him. Such availment should be

in relation to the rendering of service by the service provider.

Procedural Requirement

If both the input and output services fall under same category of service, credit can

be availed in respect of all such input service for which invoice or bill or challan is

issued on or after 16.8.2002.

If the input and output services fall under the different categories of services, credit

can be availed in respect of input services for which invoice or bill or challan is

issued on or after 14.5.2003.

The output service provider shall be allowed to take such credit only after he makes

payment against the bill to the input service provider.

If the output service provider also provides either any taxable service which is

exempted from payment of service tax or any service which is not at all taxable, the

input services on which service tax is paid might be used both in respect of the

taxable service as well as the exempted/non-taxable service, rendered by the output

service provider. In such a case the following procedure have been prescribed.

The output service provider shall maintain separate accounts in respect of the input

service availed by him and utilized in the rendering of taxable service as well as

exempted/non-taxable service. Credit can be availed only in respect of that quantum

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of input service, which is utilized by the service provider towards rendering taxable

services.

If the output service provider opts not to maintain such records, he can utilize

service tax credit of his service tax liability, only to the extent of 35% of service tax

payable on the output service.

Service tax credit in respect of Telephone connection can be availed only if such

telephone connection is installed in the premises where output service is provided.

In support of the credit availed, the invoice or bill or challan issued by the input

service provider shall be preserved. It should contain the following information: Sl.

No. of the document, date of issue, description and value of the input service, the

service tax paid/payable, service tax registration number and address of the input

service provider.

The output service provider shall maintain proper records with regard to the

availment of service tax credit availed by him.

A half yearly return in the proforma in terms of Rule 5(4) of the Service Tax Credit

Rules, 2002 has to be filed along with half yearly ST-3 return.

The unutilized balance of service tax cannot be claimed as refund.

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CHAPTER 4 STUDY OF SELECTED RESEARCH PROBLEM

4.1 STATEMENT OF RESEARCH PROBLEM

A comprehensive study of the SERVICE TAX AUDIT.

4.2 STATEMENT OF RESEARCH OBJECTIVES:

In the light of above research statement, following objectives can be formulated:

To determine effective ways of carrying out service tax audit.

To determine ways of reducing redundancy of vouchers in files.

To minimize the amount of missing and incomplete vouchers so that maximum

credit against service tax can be taken.

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CHAPTER 5 ANALYSIS

5.1 ANALYSIS OF DATA

Table 5.1: Service tax revenue (All India from 2000-01 to 2009-10)

Financial

Year

Revenue

Rs. Crores

% Growth over

previous year

No. of Services

under tax net

No. of

Assessees

% Growth over

previous year

1994-95 410 Base Year 3 3943 Base Year

1995-96 846 106 6 4866 23.41

1996-97 1022 21 6 13982 187.34

1997-98 1515 48 18 45991 228.93

1998-99 1787 18 26 107479 133.70

1999-00 2072 16 26 115495 7.45

2000-01 2612 23 26 122326 5.91

2001-02 3305 26 41 187577 53.34

2002-03 4125 25 52 232048 23.71

2003-04 7890 91 62 403856 74.04

2004-05 14196 80 75 774988 91.89

2005-06 23053 62 84 846155 9.18

2006-07 37482 63 99 940641 11.17

2007-08 51133 36 100 1073075 14.08

2008-09 60702 19 106 1204570 8.78

2009-10 58319 -3.93 117 1307286 8.53

Source: www.servicetax.gov.in (Revenue as reported by Pr. CCA and Number of

assesses as reported by Zones)

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1. The Service Tax collections have shown a steady rise since its inception in

1994. The tax collections have grown manifolds since 1994-95 i.e. from Rs.

410 crores in 1994-95 to Rs.71174.58 crores in 2010-11.

2. The target for the year 2010-11 was Rs.69400 Crores and the

actual realization was Rs.71174.58 Crores, showing increase of

Rs.1774.58 Crores (2.56%)

3. The total number of taxable services have also increased from 3 in 1994 to

119 as on 1st May, 2011.

4. There is a substantial growth in the assesse base from

3943 numbers in 1994-95.

Table 5.2: Zone wise service tax collection for F.Y. 2008-09 & 2009-10 (Revenue in

Crores.)

SR.NO.

NAME OF THEZONE

REV.2008-09

NO. OFASSESSEES

REV. 2009-10

NO. OFASSESSEES

1 AHMEDABAD 2017.58 62636 1975.44 64419

2 BANGALORE 3455.56 71836 3175.00 77489

3 BHOPAL 1148.91 49396 1046.25 53346

4 BHUBANESHWAR 817.23 16805 784.50 18986

5 CHANDIGARH 948.23 43540 680.96 45464

6 CHENNAI 3620.48 69191 3335.02 70475

7 KERALA 1009.78 23386 907.12 24158

8 COIMBATORE 932.91 61743 765.95 64286

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9 DELHI 10178.93 144699 9895.07 156811

10 SHILLONG 279.92 12399 299.39 13303

11 HYDERABAD 2190.72 40947 2039.34 45578

12 JAIPUR 914.59 53303 817.14 56370

13 KOLKATA 2744.61 51966 2712.79 64996

14 LUCKNOW 769.49 46490 704.90 54438

15 MYSORE 661.51 24059 604.49 23636

16 MEERUT 1145.74 36439 1082.45 45890

17 MUMBAI-I 20205.11 178328 18440.84 188843

18 MUMBAI-II 350.13 3810 315.80 4375

19 NAGPUR 761.88 48511 725.04 52340

20 PUNE 2393.24 73920 2184.01 83075

21 RANCHI 636.26 24392 655.99 27303

22 VADODARA 980.57 38576 963.11 39810

23 VISHAKHAPATNAM 859.48 27654 814.03 31379

24 LTU 1935.58 544 3202.84 516

GRAND TOTAL 60958.44 1204570 58127.47 1307286

Source: www.servicetax.gov.in

As it can be seen, there is a minor variation between the revenue figures provided by the Zones

and those reported by the Pr. C.C.A.

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5.2 SUMMARY OF FINDINGS

Service Tax

Service tax is, as the name suggests, a tax on Services. It is a tax levied on the

transaction of certain services specified by the Central Government under the

Finance Act, 1994.

It is an indirect tax (akin to Excise Duty or Sales Tax) which means that normally,

the service provider pays the tax and recovers the amount from the recipient of

taxable service.

Service tax on taxable services rendered in India are exempt, if payment for such services

is received in convertible foreign exchange in India and the same is not repatriated outside

India. The Cenvat Credit Rules allow a service provider to avail and utilize the credit of

additional duty of customs/excise duty for payment of service tax. Credit is also provided

on payment of service tax on input services for the discharge of output service tax liability.

Constitutional & Legal provisions behind levy of Service Tax in India.

Constitutional Validity

Article 265 of the Constitution lays down that no tax shall be levied or collected

except by the authority of law. Schedule VII divides this subject into three categories-

a) Union list (only Central Government has power of legislation)b) State list (only State Government has power of legislation)

c) Concurrent list (both Central and State Government can pass legislation).

To enable Parliament to formulate by law principles for determining the modalities of

levying the Service Tax by the Central Govt. and collection of the proceeds thereof by the

25


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Central Govt. and the State, the amendment vide Constitution (92nd amendment) Act, 2003

has been made. Consequently, new article 268 A has been inserted for Service Tax levy by

Union Govt., collected and appropriated by the Union Govt., and amendment of seventh

schedule to the constitution, in list I-Union list after entry 92B, entry 92C has been inserted

for taxes on services as well as in article 270 of the constitution the clause (1) article 268A

has been included.

Payment of service tax

The following table shows the rate of service tax applicable at the relevant

period of time.

Table 5.3: Rate of service tax applicable

Sr.No. Period Rate of ServiceTax

Rate ofEducation Cess

Rateof Secondary &

HigherEducation Cess

1. Till 13.05.2003 5% Nil Nil

2. 14.05.2003 to 09.09.2004 8% Nil Nil

3. 10.09.2004 to 17.04.2006 10% 2% of the S.T. Nil4. 18.04.2006 to 31.05.2007 12% 2% of the S.T. Nil

5. 01.06.2007 to 23.02.2009 12% 2% of S.T. 1% of S.T.

6. From 24.02.2009 10% 2% of S.T. 1% of S.T.


In case of Individuals or Proprietary Concerns and Partnership Firm, service tax is

to be paid on a quarterly basis. The due date for payment of service tax is the 5th of

the month immediately following the respective quarter ( in case of e-payment, by

6th of the month immediately following the respective quarter). For this purpose,

quarters are: April to June, July to September, October to December and January to

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March. However, payment for the last quarter i.e. January to March is

required to be made by 31st of March itself.

In case of any other category of service provider other than specified above, service

tax is to be paid on a monthly basis, by the 5th of the following month ( in case of

e-payment, by 6th of the month immediately following the respective

month). However, payment for the month of March is required to be made by

31st of March itself.

The due date for payment of service tax is 6th day of the month following the

relevant month/quarter, if electronically paid and in other cases, 5

th

day of the

month following the relevant month / quarter. It is provided under section 75 of the

Finance Act, 1994 that in case of delayed payments (after due date) the assessee is

required to pay simple interest at the rate prescribed.

Table 5.4: Rate of interest charged on delayed payments

Sr.No. Period Rate of Interest

1. Till 11.05.2001 1.5% per month

2. 11.05.2001 to 11.05.2002 24% per annum

3. 11.05.2002 to 10.09.2004 15% per annum

4. From 10.09.2004 to 31.03.2011 13% per annum

5. From 01.04.2011 18% per annum


Service categories which are taxable under service tax

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The Table below shows the category of services which are taxable with the date of

introduction of such service.

Table 5.5: Categories of Services

Sr.No Service Category Date of

Introduction

1 Advertising 01.11.1996

2 Air Travel Agent 01.07.1997

3 Airport Services 10.09.2004

4 Architect 16.10.1998

5 ATM Operations, Management or Maintenance 01.05.2006

6 Auctioneers' service, other than auction of property

under directions or orders of a count of or auction byCentral Govt.

01.05.2006

7 Authorized Service Station 16.07.2001

8 Auxiliary to General Insurance 16.07.2001

9 Auxiliary to Life Insurance 16.08.2002

10 Banking & Other Financial Services 16.07.2001

11 Beauty Parlor 16.08.2002

12 Broadcasting 16.07.2001

13 Business Auxiliary Service 01.07.200314 Business Exhibition Service 10.09.2004

15 Business Support Service 01.05.2006

16 Cable Operator 16.08.2002

17 Cargo Handling 16.08.2002

18 Chartered Accountant 16.10.1998

19 Cleaning Service 16.06.2005

20 Clearing & Forwarding Agent 16.07.1997

21 Clubs and Associations 16.06.2005

22 Commercial or Industrial Construction 10.09.2004

23 Commercial Training or Coaching 01.07.2003

24 Company Secretary 16.10.1998

25 Construction of Residential Complex 16.06.2005

26 Consulting Engineer 07.07.1997

28
http://www.servicetax.gov.in/st-profiles-ad-agency.htmhttp://www.servicetax.gov.in/st-profiles-airtravel-agent.htmhttp://www.servicetax.gov.in/st-profiles-architect.htmhttp://www.servicetax.gov.in/st-profiles-atm-opr-maint.htmhttp://www.servicetax.gov.in/st-profiles-auctioneers.htmhttp://www.servicetax.gov.in/st-profiles-auctioneers.htmhttp://www.servicetax.gov.in/st-profiles-auctioneers.htmhttp://www.servicetax.gov.in/st-profiles-service-stn.htmhttp://www.servicetax.gov.in/st-profiles-insurance-auxi.htmhttp://www.servicetax.gov.in/st-profiles-insurance-auxi.htmhttp://www.servicetax.gov.in/st-profilesbanking-fin-services.htmhttp://www.servicetax.gov.in/st-profiles-beautyparlour.htmhttp://www.servicetax.gov.in/st-brdcasting.htmhttp://www.servicetax.gov.in/st-profiles-business-auxiservice.htmhttp://www.servicetax.gov.in/st-profiles-business-supp-service.htmhttp://www.servicetax.gov.in/st-profiles-cable-opr.htmhttp://www.servicetax.gov.in/st-profiles-cargo-handlng.htmhttp://www.servicetax.gov.in/st-profiles-CA-CS.htmhttp://www.servicetax.gov.in/st-profiles-cleaningservice.htmhttp://www.servicetax.gov.in/st-profiles-CFA.htmhttp://www.servicetax.gov.in/st-profiles-clubasstn.htmhttp://www.servicetax.gov.in/st-profiles-comm-trng-coaching.htmhttp://www.servicetax.gov.in/st-profiles-CA-CS.htmhttp://www.servicetax.gov.in/st-profiles-res-constctn.htmhttp://www.servicetax.gov.in/st-profiles-consulting-enggr.htmhttp://www.servicetax.gov.in/st-profiles-ad-agency.htmhttp://www.servicetax.gov.in/st-profiles-airtravel-agent.htmhttp://www.servicetax.gov.in/st-profiles-architect.htmhttp://www.servicetax.gov.in/st-profiles-atm-opr-maint.htmhttp://www.servicetax.gov.in/st-profiles-auctioneers.htmhttp://www.servicetax.gov.in/st-profiles-auctioneers.htmhttp://www.servicetax.gov.in/st-profiles-auctioneers.htmhttp://www.servicetax.gov.in/st-profiles-service-stn.htmhttp://www.servicetax.gov.in/st-profiles-insurance-auxi.htmhttp://www.servicetax.gov.in/st-profiles-insurance-auxi.htmhttp://www.servicetax.gov.in/st-profilesbanking-fin-services.htmhttp://www.servicetax.gov.in/st-profiles-beautyparlour.htmhttp://www.servicetax.gov.in/st-brdcasting.htmhttp://www.servicetax.gov.in/st-profiles-business-auxiservice.htmhttp://www.servicetax.gov.in/st-profiles-business-supp-service.htmhttp://www.servicetax.gov.in/st-profiles-cable-opr.htmhttp://www.servicetax.gov.in/st-profiles-cargo-handlng.htmhttp://www.servicetax.gov.in/st-profiles-CA-CS.htmhttp://www.servicetax.gov.in/st-profiles-cleaningservice.htmhttp://www.servicetax.gov.in/st-profiles-CFA.htmhttp://www.servicetax.gov.in/st-profiles-clubasstn.htmhttp://www.servicetax.gov.in/st-profiles-comm-trng-coaching.htmhttp://www.servicetax.gov.in/st-profiles-CA-CS.htmhttp://www.servicetax.gov.in/st-profiles-res-constctn.htmhttp://www.servicetax.gov.in/st-profiles-consulting-enggr.htm


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27 Convention Centre 16.07.2001

28 Cost Accountant 16.10.1998

29 Courier Services 01.11.1996

30 Credit Card, Debit Card, Charge Card or other payment

card related services

01.05.2006

31 Credit Rating Agency 16.10.1998

32 Custom House Agent 15.06.1997

33 Dredging 16.06.2005

34 Dry Cleaning 16.08.2002

35 Erection, Commissioning or Installation 01.07.2003

36 Event Management 16.08.2002

37 Fashion Designer 16.08.2002

38 Forward Contract Services 10.09.2004

39 Franchise Service 01.07.2003

40 Foreign Exchange Broker 01.07.2003

41 General Insurance 01.07.1994

42 Health Club & Fitness Centre 16.08.2002

43 Intellectual Property Service 10.09.2004

44 Interior Decorator 16.10.1998

45 Internet Caf 01.07.2003

46 Internet Telecommunication Service 01.05.2006

47 Life Insurance 16.08.2002

48 Mailing List Compilation and Mailing 16.06.2005

49 Management Consultant 01.07.1997

50 Maintenance or Repair Service 01.07.2003

51 Mandap Keeper 16.10.1998

52 Manpower Recruitment or Supply Agency 07.07.1997

53 Market Research Agency 16.10.1998

54 On-line Information & Database Access or RetrievalService

16.07.2001

55 Opinion Poll Service 10.19.2004

56 Outdoor Caterer 10.09.2004

57 Packaging Service 16.06.2005

58 Pandal or Shamiana Services 10.09.2004

29
http://www.servicetax.gov.in/st-profiles-convention.htmhttp://www.servicetax.gov.in/st-profiles-CA-CS.htmhttp://www.servicetax.gov.in/st-profiles-courier-services.htmhttp://www.servicetax.gov.in/st-profiles-creditcard.htmhttp://www.servicetax.gov.in/st-profiles-creditcard.htmhttp://www.servicetax.gov.in/st-profiles-cr_rtg_agencies.htmhttp://www.servicetax.gov.in/st-profiles-cs-hse-agent.htmhttp://www.servicetax.gov.in/st-profiles-dredging.htmhttp://www.servicetax.gov.in/st-profiles-dry-cleaning.htmhttp://www.servicetax.gov.in/st-profiles-comming-installn.htmhttp://www.servicetax.gov.in/st-profiles-event-mgmt.htmhttp://www.servicetax.gov.in/st-profiles-fashion-designer.htmhttp://www.servicetax.gov.in/st-profiles-franchise-service.htmhttp://www.servicetax.gov.in/st-profiles-gen-insurance.htmhttp://www.servicetax.gov.in/st-profiles-health-fitness.htmhttp://www.servicetax.gov.in/st-profiles-intr-decotr.htmhttp://www.servicetax.gov.in/st-profiles-internetcafe.htmhttp://www.servicetax.gov.in/st-profiles-internet-telephony.htmhttp://www.servicetax.gov.in/st-profiles-mailing-lst-compilatn.htmhttp://www.servicetax.gov.in/st-profiles-mgmtconslt.htmhttp://www.servicetax.gov.in/st-profiles-maint-repair.htmhttp://www.servicetax.gov.in/st-profiles-mandap-keepers.htmhttp://www.servicetax.gov.in/st-profiles-manpwr_recruitment_agency.htmhttp://www.servicetax.gov.in/st-profiles-mkt-rch-agency.htmhttp://www.servicetax.gov.in/st-profiles-online-info.htmhttp://www.servicetax.gov.in/st-profiles-online-info.htmhttp://www.servicetax.gov.in/st-profiles-packaging.htmhttp://www.servicetax.gov.in/st-profiles-convention.htmhttp://www.servicetax.gov.in/st-profiles-CA-CS.htmhttp://www.servicetax.gov.in/st-profiles-courier-services.htmhttp://www.servicetax.gov.in/st-profiles-creditcard.htmhttp://www.servicetax.gov.in/st-profiles-creditcard.htmhttp://www.servicetax.gov.in/st-profiles-cr_rtg_agencies.htmhttp://www.servicetax.gov.in/st-profiles-cs-hse-agent.htmhttp://www.servicetax.gov.in/st-profiles-dredging.htmhttp://www.servicetax.gov.in/st-profiles-dry-cleaning.htmhttp://www.servicetax.gov.in/st-profiles-comming-installn.htmhttp://www.servicetax.gov.in/st-profiles-event-mgmt.htmhttp://www.servicetax.gov.in/st-profiles-fashion-designer.htmhttp://www.servicetax.gov.in/st-profiles-franchise-service.htmhttp://www.servicetax.gov.in/st-profiles-gen-insurance.htmhttp://www.servicetax.gov.in/st-profiles-health-fitness.htmhttp://www.servicetax.gov.in/st-profiles-intr-decotr.htmhttp://www.servicetax.gov.in/st-profiles-internetcafe.htmhttp://www.servicetax.gov.in/st-profiles-internet-telephony.htmhttp://www.servicetax.gov.in/st-profiles-mailing-lst-compilatn.htmhttp://www.servicetax.gov.in/st-profiles-mgmtconslt.htmhttp://www.servicetax.gov.in/st-profiles-maint-repair.htmhttp://www.servicetax.gov.in/st-profiles-mandap-keepers.htmhttp://www.servicetax.gov.in/st-profiles-manpwr_recruitment_agency.htmhttp://www.servicetax.gov.in/st-profiles-mkt-rch-agency.htmhttp://www.servicetax.gov.in/st-profiles-online-info.htmhttp://www.servicetax.gov.in/st-profiles-online-info.htmhttp://www.servicetax.gov.in/st-profiles-packaging.htm


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59 Photography 16.07.2001

60 Port Service ( Major Ports) 16.07.2001

61 Port Services( Other Ports) 01.07.2003

62 Public Relations Service 01.05.2006

63 Rail Travel Agent 16.08.2002

64 Real Estate Agent / Consultant 16.10.1998

65 Recovery Agent 01.05.2006

66 Registrar to an Issue 01.05.2006

67 Rent - a - Cab Operator 16.07.1997

68 Sale of space or time for Advertisement, other thanprint media

01.05.2006

69 Scientific or Technical Consultancy 16.07.2001

70 Security Agency 16.10.1998

71 Share Transfer Agent 01.05.2006

72 Ship Management service 01.05.2006

73 Site Preparation 16.06.2005

74 Sound Recording 16.07.2001

75 Sponsorship service provided to anybody corporate orfirm, other than sponsorship of sports event

01.05.2006

76 Steamer Agent 15.06.1997

77 Stock Broker 01.07.199478 Storage & Warehousing 16.08.2002

79 Survey & Exploration of Minerals 10.09.2004

80 Survey and Map Making 16.06.2005

81 T.V. & radio Programme Production Services 10.09.2004

82 Technical Testing & Analysis 01.07.2003

83 Technical Inspection & Certification Agency 01.07.2003

84 Tour Operator 01.09.1997

85 Transport of goods by Air 10.09.2004

86 Transport of goods by Road 01.01.2005

87 Transport of goods in containers by rail {other thanIndian railwayomitted w.e.f. 01.09.2009}

01.05.2006

88 Transport of goods other than water, through Pipeline orother conduit

16.06.2005

30
http://www.servicetax.gov.in/st-profiles-photophy.htmhttp://www.servicetax.gov.in/st-profiles-port-services.htmhttp://www.servicetax.gov.in/st-profiles-public-relations.htmhttp://www.servicetax.gov.in/st-profiles-rail-travelagent.htmhttp://www.servicetax.gov.in/st-profiles-real_estate_agent.htmhttp://www.servicetax.gov.in/st-profiles-recovr-agent.htmhttp://www.servicetax.gov.in/st-profiles-registrar2issue.htmhttp://www.servicetax.gov.in/st-profiles-rentcab.htmhttp://www.servicetax.gov.in/st-profiles-sale-space-time.htmhttp://www.servicetax.gov.in/st-profiles-sale-space-time.htmhttp://www.servicetax.gov.in/st-profiles-sc-tech-consult.htmhttp://www.servicetax.gov.in/st-profiles-securityagencies.htmhttp://www.servicetax.gov.in/st-profiles-share-xfer-agent.htmhttp://www.servicetax.gov.in/st-profiles-ship-mgmt.htmhttp://www.servicetax.gov.in/st-profiles-site-prepn.htmhttp://www.servicetax.gov.in/st-profiles-snd-record.htmhttp://www.servicetax.gov.in/st-profiles-sponsorship.htmhttp://www.servicetax.gov.in/st-profiles-sponsorship.htmhttp://www.servicetax.gov.in/st-profiles-steamer-agent.htmhttp://www.servicetax.gov.in/st-profiles-stockbroker.htmhttp://www.servicetax.gov.in/st-profiles-storagewarehse.htmhttp://www.servicetax.gov.in/st-profiles-surey-map-making.htmhttp://www.servicetax.gov.in/st-profiles-tech-test.htmhttp://www.servicetax.gov.in/st-profiles-touroptr.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-roads.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-rail.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-rail.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-pipeline.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-pipeline.htmhttp://www.servicetax.gov.in/st-profiles-photophy.htmhttp://www.servicetax.gov.in/st-profiles-port-services.htmhttp://www.servicetax.gov.in/st-profiles-public-relations.htmhttp://www.servicetax.gov.in/st-profiles-rail-travelagent.htmhttp://www.servicetax.gov.in/st-profiles-real_estate_agent.htmhttp://www.servicetax.gov.in/st-profiles-recovr-agent.htmhttp://www.servicetax.gov.in/st-profiles-registrar2issue.htmhttp://www.servicetax.gov.in/st-profiles-rentcab.htmhttp://www.servicetax.gov.in/st-profiles-sale-space-time.htmhttp://www.servicetax.gov.in/st-profiles-sale-space-time.htmhttp://www.servicetax.gov.in/st-profiles-sc-tech-consult.htmhttp://www.servicetax.gov.in/st-profiles-securityagencies.htmhttp://www.servicetax.gov.in/st-profiles-share-xfer-agent.htmhttp://www.servicetax.gov.in/st-profiles-ship-mgmt.htmhttp://www.servicetax.gov.in/st-profiles-site-prepn.htmhttp://www.servicetax.gov.in/st-profiles-snd-record.htmhttp://www.servicetax.gov.in/st-profiles-sponsorship.htmhttp://www.servicetax.gov.in/st-profiles-sponsorship.htmhttp://www.servicetax.gov.in/st-profiles-steamer-agent.htmhttp://www.servicetax.gov.in/st-profiles-stockbroker.htmhttp://www.servicetax.gov.in/st-profiles-storagewarehse.htmhttp://www.servicetax.gov.in/st-profiles-surey-map-making.htmhttp://www.servicetax.gov.in/st-profiles-tech-test.htmhttp://www.servicetax.gov.in/st-profiles-touroptr.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-roads.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-rail.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-rail.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-pipeline.htmhttp://www.servicetax.gov.in/st-profiles-tpt-goods-pipeline.htm


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89 Transport of passengers embarking on internationaljourney by air, other than economy class passengers

01.05.2006

90 Transport of persons by cruise ship 01.05.2006

91 Travel Agent other than Air & Rail Travel 10.09.2004

92 Underwriter 16.10.1998

93 Video Tape Production 16.07.2001

94 Telecommunication 01.06.2007

95 Renting of immovable property 01.06.2007

96 Works contract 01.06.2007

97 Content Development & Supply 01.06.2007

98 Asset Management 01.06.2007

99 Mining Services( Oil & Gas) 01.06.2006

100 Design Services 01.06.2007

101 Information Technology Software services 16.05.2008

102 Investment Management for ULIP 16.05.2008

103 Recognized Stock Exchange 16.05.2008

104 Recognized Associations-Commodity Exchange Services 16.05.2008

105 Clearing & Processing House services 16.05.2008

106 Supply of Tangible Goods services 16.05.2008

107 Cosmetic or Plastic Surgery Services 01.09.2009

108 Transport of Coastal goods, Goods through NationalWaterways or Goods through Inland Waterways

01.09.2009

109 Legal Consultancy Services 01.09.2009

110 Promotion, marketing or organizing of games ofchance including lottery, bingo etc. services

01.07.2010

111 Health services undertaken by Hospitals orMedical establishments

01.07.2010

112 Maintenance of Medical Records services 01.07.2010

113 Promotion of Brand of Goods, Services etc. 01.07.2010

114 Services of Permitting Commercial Use or Exploitation ofany event

01.07.2010

115 Electricity Exchange Services 01.07.2010

116 Copyright Services 01.07.2010

117 Services provided by Builder in relation to preferentiallocation, internal/external development etc

01.07.2010

31
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118Services of Air-conditioned restaurants having license toservice alcoholic beverages in relation to service of foodor beverages.

1.5.2011

119

Services of providing of accommodation in hotels / inns/

cubs/ guest houses/ campsite for a continuous period ofless than three months 1.5.2011


32


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Forms needed for payment of service tax

The following table shows different types of forms needed to pay service tax.

Table 5.6: Forms needed for service tax

Form type Brief Description

G.A.R. 7 G.A.R. Proforma for Service Tax payments (For payments from April, 2007 onwards)[Front] [Reverse]

ST - 1 Application form for registration under Section 69 of the Finance Act, 1994

ST - 2 Certificate of registration under Section 69 of The Finance Act, 1994 (32 of 1994)

ST - 3 Return under Section 70 of the Finance Act, 1994

ST - 3A Memorandum for provisional deposit under rule 6 of the Service Tax Rules, 1994

ST - 4 Form of Appeal to the Commissioner of Central Excise (Appeals)

ST - 5 Form of Appeal to Appellate Tribunal under section 86 of the Finance Act, 1994

ST - 6 Form of memorandum of cross objections to the Appellant Tribunal under section86 of Finance Act, 1994

ST - 7 Form of application to Appellate Tribunal under Section 86(2) [or Sec.86(2A) ofthe Finance Act,1994

AAR (ST-I) Application for Advance Ruling (Service Tax)

ASTR - 1 Application for filing a claim of rebate of service tax and cess paid on taxableservices exported

ASTR 2 Application for filing a claim of rebate of duty paid on inputs, service taxand cess paid on input services

Application Proforma for Application for permission to file ST-3 Return electronically

Form - A Application for refund of CENVAT credit under Rule 5 of the CENVAT Credit

Rules, 2004


33
http://www.cbec.gov.in/st_front_jan09.pdfhttp://www.cbec.gov.in/GAR_st_reverse_sept2010.pdfhttp://www.servicetax.gov.in/forms/st1.pdfhttp://www.servicetax.gov.in/forms/st2.pdfhttp://www.servicetax.gov.in/forms/st3.pdfhttp://www.servicetax.gov.in/forms/st3A.pdfhttp://www.servicetax.gov.in/forms/st4.pdfhttp://www.servicetax.gov.in/forms/st5.pdfhttp://www.servicetax.gov.in/forms/st6.pdfhttp://www.servicetax.gov.in/forms/st7.pdfhttp://www.servicetax.gov.in/forms/aar-st1.pdfhttp://www.servicetax.gov.in/forms/astr-1.pdfhttp://www.servicetax.gov.in/forms/astr-2.pdfhttp://www.servicetax.gov.in/forms/st3-ertn-permissionappln.pdfhttp://www.servicetax.gov.in/forms/formA-ccr2004-refund.pdfhttp://www.cbec.gov.in/st_front_jan09.pdfhttp://www.cbec.gov.in/GAR_st_reverse_sept2010.pdfhttp://www.servicetax.gov.in/forms/st1.pdfhttp://www.servicetax.gov.in/forms/st2.pdfhttp://www.servicetax.gov.in/forms/st3.pdfhttp://www.servicetax.gov.in/forms/st3A.pdfhttp://www.servicetax.gov.in/forms/st4.pdfhttp://www.servicetax.gov.in/forms/st5.pdfhttp://www.servicetax.gov.in/forms/st6.pdfhttp://www.servicetax.gov.in/forms/st7.pdfhttp://www.servicetax.gov.in/forms/aar-st1.pdfhttp://www.servicetax.gov.in/forms/astr-1.pdfhttp://www.servicetax.gov.in/forms/astr-2.pdfhttp://www.servicetax.gov.in/forms/st3-ertn-permissionappln.pdfhttp://www.servicetax.gov.in/forms/formA-ccr2004-refund.pdf


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CHAPTER 6 SUMMARY AND CONCLUSIONS

6.1 SUMMARY OF LEARNING EXPRIENCE

Working with a large organization like Ernst & Young, there were several key learnings

throughout the training period. While some are related to the working environment and

work culture, HR practices, some are related to doing the same work more efficiently.

Report of missing and incomplete vouchers could have been submitted at the end of each

day, or at the end of one updation of one financial year so that one final report could be

presented and there is no redundancy of vouchers, i.e., a same voucher is not filed more

than once.

How the work is done entirely with the help of MS Excel, tabulating the data, computing

the data so that it could be presented in a more precise and usable form for the purpose of

analysis and report making.

Also, coordinating with seniors from time to time to make sure that any important data or

information is not missed out. It enhances your skills as a team member. How the goals and

objectives of the team are communicated to the team members well in advance and they

work towards achieving those goals is an important aspect of working in a team. In this

case, the objective was to minimize the amount of missing and incomplete vouchers so that

more and more amount of service tax can be set off against the amount which the company

has charged from its clients.

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6.2 CONCLUSION & RECOMMENDATIONS

Ernst & Young, being a consultancy service provider company, charges service tax from its

clients for the services rendered by it. This service tax has to be paid to the government.

The firm can however take the credit to the amount of service tax it has paid to its various

service providers for various services rendered by them, such as telecommunications,

courier, car hire, hotel rooms, air travel and the likes. For taking such credit, the firm, i.e.,

Ernst & Young has to furnish all the invoices on which it has paid service tax to its service

providers. It has to present all the necessary bills on which the firm has paid service tax.

Based on the experience of working towards preliminary arrangements for a service tax

audit in Ernst & Young, it was found that there are several ways of doing the same task,

i.e., filing the vouchers in their serial no. and to make sure that all the vouchers whose

details are mentioned in the excel sheet are presented in the files. Moreover, the vouchers

should be complete, i.e., the original invoices should be present in the vouchers to prove

that service tax has been paid by the firm.

During the final updation of vouchers with the excel sheet records, the list of missing

vouchers should not be given for finding them as and when it is found that a particular

voucher is missing, instead it is better to prepare a final report of the missing vouchers once

the vouchers of an entire year has been checked as it happens sometimes that the vouchers

of June month are filed in the file of July month vouchers by mistake. This reduces the

chances of redundancy in vouchers, i.e., the same voucher does not appear more than once

in the file. It reduces both the space and time.

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service tax audit_final report

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