Please Help: Bundled Service
Posted Date : 24-Jul-2013 , 02:10:00 pm | Posted By: Krishna Chandra Santi
Category :
Service Tax | Answers :
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What is bundled service? |
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| Posted By : Adil Malik |
27-Jul-2013, 11:30:47 |
| Bundled Service' means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services. An example of ‘bundled service’ would be air transport services provided by airlines wherein an element of transportation of passenger by air is combined with an element of provision of catering service on board. Each service involves differential treatment as a manner of determination of value of two services for the purpose of charging service tax is different.
Two rules have been prescribed for determining the taxability of such services in clause (3) of section 66F of the Act. These rules, which are explained below, are subject to the provisions of the rule contained in sub-section (2) of section 66F, viz a specific description will be preferred over a general description as explained in para 7.1.2 above.
1. Services which are naturally bundled in the ordinary course of business
The rule is – ‘If various elements of a bundled service are naturally bundled in the ordinary course of business, it shall be treated as provision of a single service which gives such bundle its essential character’.
Illustrations -
• A 5-star hotel in Gurgaon (Haryana) provides a 4-D/3-N package with the facility breakfast. This is a natural bundling of services in the ordinary course of business. The service of hotel accommodation gives the bundle the essential character and would, therefore, be treated as service of providing hotel accommodation.
2. Services which are not naturally bundled in the ordinary course of business
The rule is – ‘If various elements of a bundled service are not naturally bundled in the ordinary course of business, it shall be treated as provision of a service which attracts the highest amount of service tax.’
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