What is service tax and the reason for coming existence of Section 66E. Need for declaring services and a brief of the declared services yet.

3. Introduced in 1994 with 3 services, namely:- Stock
Brokers Service, General Insurance Service and
Telephone Services. Than Expanded to 120 services.
Govt. brought an end to Selective Taxation Scheme
and brought out Comprehensive Taxation Scheme
(Negative List Regime)
Brought out definition of service in 2012.
Goods and Service Tax (GST) in pipeline, soon to
replace existing tax laws.

4.  Krishi kalyan cess
 Levied on all taxable services @ 0.5% of the TOTAL
VALVUE OF SERVICE.
 This would be levied over and above the Service Tax
and the Swachh Bharat Cess.
 Applicable from 1st June 2016.
 The new cess in going to add an extra Rs.2/- Per
Rs.1000/- of the bill amount.

5. Essential ingredients of the definition “service”
as defined in Section 65B(44):
o Activity
o Carried out by a person for another
o Consideration
o Includes a Declared Service
What is declared service?
 Activity carried out by one person to
another for consideration.
 Must be specified in Section 66E of the
Act.

6.  Overlap of services.
 Validity of transactions.
 Clarity to individual services.
 Facilitate collection of revenue.
Nine activities have been specified in Sec.66E so
far.
As followings

7. IMMOVABLE PROPERTY:
Shall_include: land,
benefits to arise out
of land, and things
attached to the earth,
or permanently
fastened to anything
attached to earth.”
RENTING means:
With or without transfer of
possession/control; allowing,
permitting or granting access; or
use such facility.
Including letting, leasing, licensing
or other similar arrangements in
respect of immovable property.
Section 66E (a)

8. Negative list item:
 Renting/leasing vacant land, with or without a
structure incidental to use for agriculture or
agricultural use.
Renting of residential dwelling for use as
residence.
Renting out property by RBI.
Renting of any property by a Government or a
Local Authority to a non-business entity.
Exemption
o Renting of precincts of religious place.
o Services by hotels etc. with declared tariff less
than Rs. 1,000 or equivalent.
Abatement
o An abatement of 40% is provided in respect of
renting of hotels i.e. 60% of value is liable for service
tax.
o No abatement for pandal and shamiana services.
But if there exists a bundled service,

9. Section 66E(b) says construction
of a complex, building, civil
structure or a part thereof,
including a complex or building
intended for sale to a buyer,
wholly or partly, except where the
entire consideration is received
after issuance of completion
certificate by the competent
authority.
Section 66E (h) says
service portion in execution
of works contract is a
declared service.
Works Contract means:-
• A contract wherein transfer of property in goods
involved in the execution of such contract, subject to
tax as sale of goods.
• Such contract is for purpose of carrying out
construction, erection, installation, completion, repair
and maintenance, alteration of movable or immovable

10. Exemptions vide notification no.25/2012-ST
[for both Construction & Works Contract]
o Construction/ Works Contract Services provided to the
Government, Local Authority or a Governmental Authority
w.r.t.
Historical monuments canal, dam, pipeline, water supply etc.
o Construction etc. For use of General public
Road, Bridge, Pollution control plant, Structure for funeral, cremation
o Construction/Original work pertaining to infrastructure
projects
Railways, single residential unit, Intermediate process of agri.
producesParticulars Abated
Value
Taxable
Value
(i) For residential unit having carpet
area < 2000 sq.ft. AND where the
amount charged is less than Rs. 1
crore;
75% 25%
Abatement in respect of construction services- [Construction]

11. FirstLevel
• Government
transfers right to
use or develop
the land to
developer or
builder
(concessionaire)
for a specific
period.
Developer/
builder will pay
upfront lease
amount or annual
charges to
Government.
SecondLevel
• Builder or
developer will
begin
development and
construction on
land given by
Government.
Since he works
on his own, he is
NOT a service
provider and he
remains owner of
that structure for
that specific
period
(concession
period)
ThirdLevel
• The
concessionaire
enters into
agreement with
several users for
commercially
exploiting the
building
developed/
constructed by
him during lease
period.

12. As per Section 66E(c) of Finance Act,
1994, ‘temporary transfer of or
permitting the use or enjoyment of any
intellectual property right is a declared
service.’
Intellectual Property Right (IPR)
includes copyright, patents,
trademarks, design etc.Exemptions vide notification no.25/2012-ST
Services by way of temporary transfer or permitting the enjoyment of
copyright-
Relating to original literary, dramatic, musical or artistic work; or
of cinematograph films for exhibition in a cinema theatre.
POT:
in respect of royalties and payments pertaining ©, TM etc. & consideration
is not ascertainable at time of provision of service,
PoT: each time when a payment in respect of such use , or an invoice is
issued by SP, whichever is earlier ; [Rule-8 POT Rule 2011]

13. As per Section 66E(d) of the Finance Act, 1994,
development, design, programming, customization,
adaptation, upgradation, enhancement,
implementation of information technology software is
a declared service.
Aspects of IT software
service:
› Sale of pre-packaged or
canned software NO SERVICE
TAX.
› On-site development of
software liable to service tax.
› Licence to use pre-
packaged software, liable to
service tax.

14. As per Section 66E(e) of the Finance
Act, 1994, agreeing to the obligation:
i. To refrain from an act, or
ii. To tolerate an act or a situation, or
iii. To do an act,
Has been specified as declared service.
According to Section 66E(f),
‘transfer of goods by way of
hiring, leasing, licensing or any
such manner without transfer of
right to use such goods is a
declared service.’

15. Activities in relation to delivery of
goods on HP or payment by
instalments’ are declared service.
[Section 66E (g)]
HP is a system/agreement where goods are let out on hire and
under which hirer has option to purchase them and includes an
agreement under which-
•Possession of goods is delivered against periodical
instalments,
•The property is the goods is to pass to such person on the
payment of last instalment and
•Such person has a right to terminate the agreement at any
time before the property so passed.
 Abatement in relation to financial leasing
services including Hire purchases @ 90% of

16. Service portion in an activity wherein
goods, being food or any other article
of human consumption or any drink is
supplied in any manner as a part of the
activity is specified as declared
service. [Section 66E (i)]
Exemptions notification 25/2012-ST:
• Restaurants without air-conditioning or
central air heating.
• Catering meals including mid-day
meals provided to educational
institutions.
• Services in air-conditioned/ central air-
heating canteen of factory.
Service
portion
@40%
Service portion @60%

18. Abhishek Tak
CRO 0326345