The document discusses key aspects of service tax in India such as: 1) Service tax was introduced in 1994 and is an indirect tax levied on services by the Central Government. 2) It is administered by the Central Excise Department and the rate has increased over time from 5% in 1994 to 15% in 2016. 3) From 2012, India adopted a negative list for service tax whereby all services except those specified in the negative list are taxable. 4) Assessees above a certain threshold must register and pay service tax, with penalties for non-compliance.

1. SERVICE TAX
Prepared By: Vidya V Devan
Research scholar
Govt. Law college Ernakulam

2.  Service Tax is an indirect tax levied on services.
 The Service Tax was introduced in India on July 1, 1994 at the
recommendations of Dr. Raja Chelliah Committee on tax reforms.
 Service tax is levied by the Central Government (union list) Entry
97 of Schedule VII of the Constitution of India.(Article 246)
 It was imposed by Chapter V of Finance Act, 1994, which was
introduced by the then Finance Minister Dr. Manmohan Singh.
 There is no separate “Service Tax Act”.
 Section 64 to 105 of chapter V and V A of Finance Act 1994 deals
with service tax.
 The Act is administered by the Central Excise Department.

3.  Though the services sector accounted for 40% of the GDP,
it was never taxed. Based on the recommendations of the
tax reforms committee, Dr. Manmohan Singh. proposed to
impose service tax of 5%
 The service tax rate increased from 5% in 1994 to 15% in
2016.

4.  Service tax is not a tax on profession, trade or employment but is in
respect of services rendered.
 On July 1, 1994, the service tax was introduced on 3 services only.
These were
 Telephone Services,
 Non-Life Insurance Services and
 Stock Brokers’ Services.

5.  From July 1, 2012, the concept of Negative List Regime has
been introduced.
 thereby all the services, other than those mentioned in the
Negative List (as per Section 66D of the Finance Act, 1994
as enacted by the Finance Act, 2012) are liable to service
tax if not specifically exempted otherwise.

6. Meaning of Service
 From the economic and taxation point of view, service is an
activity, (like transportation, communication, repair or
maintenance etc.), carried on by one person for another for
some consideration measurable in money.
 In clause (44) of section 65B of the Finance Act,) defines the
word ‘Service’ as :
 “Service means any activity carried out by a person for another
for consideration and includes a declared service”

7.  but shall not include-
 (a) an activity which constitutes merely,-
 (i) a transfer of title in goods or immovable property, by
way of sale, gift or in any other manner; or
 (ii) such transfer, delivery or supply of any goods which is
deemed to be a sale within the meaning of clause (29A)
of article 366 of the Constitution; or
 (iii) a transaction in money or actionable claim;
 (b) a provision of service by an employee to the employer
in the course of or in relation to his employment;
 (c) fees taken in any Court or tribunal established under
any law for the time being in force.”

8. WHO IS LIABLE TO PAY SERVICE TAX
 Section 65B(12) “Assessee” means a person liable to pay tax and
includes his agent;
 Section 65B (37) “person” includes,—
 (i) an individual,
 (ii) a Hindu Undivided Family,
 (iii) a company,
 (iv) a society,

9. Section 65B (37) “person”..continues
 (v) A limited liability partnership,
 (vi) a firm,
 (vii) an association of persons or body of individuals, whether
incorporated or not,
 (viii) Government,
 (ix) a local authority, or
 (x) every artificial juridical person, not falling within any of the
preceding sub- clauses;

10. NEGATIVE LIST
• From 01.07.2012, there is a paradigm shift in the levy of
service tax.
• Service tax has been imposed on all services other than those
specified in the negative list.
• There are 17 such services specified in the negative list.
1. Services provided by Government or local authority
2. Services provided by Reserve Bank of India
3. Services by a foreign diplomatic mission located in India
4. Services relating to agriculture or agricultural produce
5. Trading of goods

11. 6. Processes amounting to manufacture or production of goods
7. Selling of space or time slots for advertisements other than
advertisements broadcast by radio or television.
8. Service by way of access to a road or a bridge on payment of
toll charges.
9. Betting, gambling or lottery.
10. Admission to entertainment events or access to amusement
facilities.
11. Transmission or distribution of electricity by an electricity
transmission or distribution utility.

12. 12. Services by way of – (i) pre-school education and education
up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a
qualification recognized by law;
(iii) education as a part of an approved vocational education
course.
13. Services by way of renting of residential dwelling for use as
residence;

13. 14. Services by way of –
(i) extending deposits, loans or advances in so far as the consideration is
represented by way of interest or discount;
(ii) inter-se sale or purchase of foreign currency amongst banks or
authorized dealers of foreign exchange or amongst banks and such dealers;
15. Service of transportation of passengers, with or without accompanied
belongings, by
a stage carriage;
• (ii) railways in a class other than – • (A) first class; or • (B) an air
conditioned coach;
• (iii) metro, monorail or tramway; •
(iv) inland waterways; •
(v) public transport, other than predominantly for tourism purpose, in a vessel
between places located in India; and
• (vi) metered cabs, radio taxis or auto rickshaws;

14. 16. Services by way of transportation of goods –
• (i) by road except the services of –
(A) a goods transportation agency; or
(B) a courier agency; •
(ii) by an aircraft or a vessel from a place outside India up to
the customs station of • clearance in India; or •
(iii) by inland waterways;
17. Funeral, burial, crematorium or mortuary services including
transportation of the deceased

15. Charging Provision
Section 66B. Charge of service tax on and after Finance Act,
2012.—
There shall be levied a tax (hereinafter referred to as the
service tax) at the rate of fourteen percent. on the value of
all services, other than those services specified in the
negative list, provided or agreed to be provided in the
taxable territory by one person to another and collected in
such manner as may be prescribed.

16. THRESHOLD EXEMPTION
 • Exemption to Small Service Providers
 • Threshold exemption is raised to Rs. 10 lakhs w.e.f.
1-4-2008.
 Section 96 J to 105 gives a list of services which are
exempted from the payment of service tax.

17. Registration
 • an assessee whose aggregate turn over in a financial year is more
than 9 lakh's should apply for registration.
 • As per the provisions of section 69(1) of the Act, every person
providing a taxable service and liable to pay service tax must
mandatorily make an application for registration to the designated
Superintendent of Central Excise within such time and in such
manner and in such form as may be specified .
 • In a few cases liability to pay service tax has been shifted to the
service receiver or other specified person, in terms of section 68(2)
of the Act, who shall make application for registration.

18. Valuation Of Taxable Services
 Section 66 of the Finance Act, 1994 levis a charge of
charge of service tax on the “value of taxable
services” provided or to be provided.
 As per the provision of the section 67 of the Act, the
value of Taxable Services shall be the gross amount
charged by the services provider for services
provided or to be provided.

19. Furnishing of returns
 • U/s 70(1) of the Act, every person liable to pay service tax shall
himself assess the tax due on the services provided by him.
 • Such person shall furnish to the Superintendent of Central Excise a
return in the prescribed form prepared in the prescribed manner at
the prescribed intervals.
 • Under Rule 7(1) This return is required to be filed on a half yearly
basis.
 The half years for this purpose will cover the periods from 1st April to
30th September and 1st October to 31st March of the relevant year.

20. Authorities
 Central Board of Excise and Customs (CBEC)
 Principal Chief Commissioner or Chief Commissioner
 Principal Commissioner or Commissioner or Commissioner (Appeals)
 Additional Commissioner
 Joint Commissioner
 Deputy Commissioner
 Assistant Commissioner
 Superintendent
 Inspector

21. Penalty for Failure to pay Service Tax
 Sec. 76 of the Finance Act provides for levy of penalty in addition to the tax/
interest.
 • The person is liable to pay a penalty not exceeding ten per cent. of the
amount of such service tax
 No penalty if service tax and interest is paid within 30 days of service of
notice.
 If service tax is paid along with interest and reduced penalty within 30
days of service of order, then 25% of penalty should be paid as mentioned
in the order.
 The penalty can be waived off on submission of valid documents which
describes a proper reason for the delay or non-payment of the service tax.

22.  SECTION 77. Penalty for contravention of rules and provisions of Act for
which no penalty is specified elsewhere. —
 shall be liable to a penalty which may extend to ten thousand rupees or two
hundred rupees for everyday during which such failure continues, whichever
is higher, starting with the first day after the due date, till the date of actual
compliance;
 SECTION 78. Penalty for failure to pay service tax for reasons of fraud, etc.
 is liable to pay a penalty which shall be equal to hundred per cent. of the
amount of such service

23.  SECTION 78A. Penalty for offences by director, etc., of company — Where a
company has committed any of the following contraventions,
 A penalty up to Rs.1 lakh can be imposed on any director, manager, secretary
or any other officer of a company if the company has committed any of the
below contraventions:
 i) Evasion of service tax
 ii) Issuance of invoice, bill or challan without provision of taxable service
 iii)Utilizing the credits of duty without actual receipt of taxable service
 iv)Failure to pay any amount collected as a service tax to the Central
Government beyond a period of 6 months from the date on which the
payment becomes due.

24. Types of assessment
 There were three types of assessment under
service tax :-
 1. Self assessment
 2. Provisional assessment
 3. Best Judgment assessment (Section 72)

25.  Self assessment
 Section 70 (1) Every person liable to pay the service tax
shall himself assess the tax due on the services provided
by him and shall furnish the return
 Provisional Assessment
 Where the assessee for any reason is not able to correctly
estimate his service tax liability for any particular quarter
or month, then he may request in writing to the AC / DC
of Central Excise, as the case may be, giving reasons for
payment of service tax on provisional basis.

26.  and the AC / DC on receipt of such application may allow the assessee
for payment of service tax on provisional basis on such value of
taxable service as may be specified by him.
 Best Judgment Assessment (Section 72)
 Section 72 is reintroduced by the Finance Act, 2008 to authorize the
Central Excise Officer to make assessment in the following case –
 1. Where the person liable to pay service tax fails to furnish the
return under section 70;
 2. Where the person having made the return, fails to assess the tax in
accordance with the provisions of this chapter or rules made there
under.

27.  The Central Excise Officer, may require the person to produce such
accounts, documents or other evidence as he may deem necessary
and after taking into account all the relevant material which is
available or which he has gathered, shall by an order in writing,
 make the assessment of the value of taxable service to the best of his
judgment and determine the sum payable by the assessee or
refundable to the assessee on the basis of such assessment.
 Before making the best Judgment assessment opportunity of being
heard should be provided.