Service Sector is now occupying the central stage of any economy so much so that development of the service sector

has become synonymous with the advancement of the economy. The share of service sector in the Indian economy has also increased significantly over the years & the share of service sector in GDP of India is about 70% .

y To fulfill the increasing development all needs of y y y y

the country & its people. To ensure neutrality & horizontal equity in Taxation . To broaden the tax base. To improve revenue productivity of tax system. To evolve a coorinated system of domestic trade taxes both at central and state levels.

1. Service tax is a tax on service . 2. Service means value addition to a product that is

intangible . 3. If there is no service, there is no tax. 4. There is no Service Tax Act as such , Service tax is imposed by amending Chapter-V of Finance Act , from 1994. 5. There is no provision of deduction of tax at source from service tax.

Indirect tax It is a source of revenue for the Government in the form of indirect taxes. No separate Act There is no separate Act for taxing the services . Central Government has the power to make rules to carry out the provisions of the Act . Administered by CBEC It is administered by Central Board of Excise & Customs. Uniform rate There is a uniform rate of tax on all services . Currently it is 10% .

No double taxation Services falling under two or more sub clauses cannot be taxed twice if the service is provided only once . Not applicable in Jammu & Kashmir It is extended to the whole of India except the state of Jammu & Kashmir . Leviable on taxable services Service tax is leviable on taxable services . Small service provider excluded With effect from April 1,2007 , a threshold limit of Rs.10 lakh has been prescribed , up to which value of all taxable services provided by a service provider during a financial year is fully exempt from tax .

Taxable service / value thereof For this purpose, the taxable service and the value of taxable service have been specifically defined . Tax is generally payable by service provider The Act makes the person providing the service to pay service tax in such manner , and within the prescribed period , except in situations provided in rule 2 of the Service Tax Rules. In situations referred to in rule 2 , the person receiving the service is liable to pay service tax . Self assessmentProvisions have been made for self-assessment , rectification , revisions , appeals , penalties, etc., as well as for registration of persons liable to pay tax . Exemption by notification Powers have been given to Government to grant exemptions from service tax in appropriate cases , by means of specific notifications .

Service tax is levied at the rate of 10% of the value of taxable services referred in various sub clauses of section 65(105) and collected in such manner as may be prescribed . Section 66 is the charging section of the Act and provides as under : 1. Service tax is levied @ 10% . 2. It is levied @ 10% of the value of only those taxable services which are referred to in various sub-clauses of clause of section 65. There is no residuary category for taxing all services .

CONTINUED
3 . Taxable services have been defined to mean any service provided or to be provided to a person/client/customer , etc. by the service provider mentioned in various subclauses of section 65(105). The following can be considered as essential characterises of services : a) Existence of two parties Service provider and service recipient b) Service at distinct to sale c) Service provided should be a taxable services d) Consideration for the service . There are no tax on free services 4. The valuation of taxable services for charging service tax is covered under section 67 of the Act .

5. Service tax will be collected in such manner as may be prescribed . The prescribed manner for collection and payment of tax is provided in the Service Tax Rules,1994 . 6. Although , service tax is attracted on service provided or to be provided but the tax has to be paid only on the receipt of the consideration . In case , some amount has been realized in advance , tax has to be paid in advance . 7. Service tax is to be paid on the 5th day (6th day in case of epayment ) next calendar month depending on whether the tax has to be paid monthly or quarterly . However , for quarter ending March/month ending March , it has to be paid by 31st March of the calendar year .

y Education cess : W.e.f. 10-9-2004, an education cess @

2% is to be charged on the service tax on all taxable services vide the Finance No. (2) Act , 2004.
y Secondary and Higher Education Cess (SHEC) : W.e.f. 11-

5-2007 , SHEC @ 1% shall also be charged on the service tax on all taxable service vide . The Finance Act , 2007 .

A. Exemption of taxable services of aggregate value not exceeding Rs. 10,00,000 . B. Exemption to Business Auxiliary Service in respect of production of goods on behalf of client i.e. Job work production . C. Services can be exported without payment of tax . D. Specific exemption Lower rates abatements . E. Services provided to the United Nations or international organizations . F. Services provided to diplomatic missions for their official use. G. Services provided to diplomatic missions for their personal use .

H. Exemption for Services Provided to Units in SEZ. I. Exemption of services provided by TBI or STEP . J. Exemption for the Value of Goods and Materials Sold by the service provider to the recipient of service . K. Exemption to services provided by or to the Reserve Bank of India . L. Exemption to services provided in relation to delivery of contents of a cinema in digitized encrypted form . M. Service Tax not leviable on fee collected by public authorities while performing statutory functions/duties under the provisions of law .

Every person liable to pay the service tax is required to make an application to the concerned Superintendent of Central Excise in Form ST-1for registration with in such time as may be prescribed. Further the Central Government may , by notification in the Official Gazette , specify such other person or class of persons , who shall make an application for registration with in such time and in such manner and in such form as may be prescribed.

y When service tax is imposed on a

new service; and the service provider already has been providing that service. y In case a service provider commences the business of providing the service which has already been made taxable. y In case a service provider is already providing a taxable services and _ starts providing another taxable service ,or _ provides a service which has now become taxable .

y Within 30 days from the date

of levy of service tax y Within 30 days from the date of commencement of business. y No need for fresh registration , Amendment for the same in registration certificate i.e. ST-2 should be applied within 30 days.

Centralized Registration [Rule 4(2)]

Where a person, liable to pay service tax on taxable service, Provides such service from more than one premises or office; or  Receives such service in more than one premises or offices (applicable when service tax is payable by service recipient); or  Is having more than one premises or offices, which are engaged in relation to such services in any other manner, making such person liable for paying service tax. AND Has centralized billing system or centralized accounting system in respect of such service, and such centralized billing or centralized accounting systems are located in one or more premises, he may, at his option, register such premises or offices from where centralized accounting systems are located. The registration under above sub-rule (2), shall be granted by the commissioner of Central Excise in whose jurisdiction the premises or offices, from where centralized billing or accounting is done, are located.

Documents to be attached
An application for registration has to be accompanied along with the following documents:
Application in Form ST-1 triplicate duly signed. Attested Copy of the PAN Card. Proof of Address of the premises which is required to be registered. Copy of the document governing the constitution of the organization (partnership deed in case of partnership firm, Memorandum of Association in case of a company, Trust Deed in case of trusts or associations).  Authority Letter in favour of the person who is to collect the registration certificate on the letter head of the organization applying for registration.  Power of Attorney in case the documents are signed by an authorized representative.
   

Issue of Registration certificate[Rule4(5)]

y Registration certificate to be issued within 7 days. y New PAN Based Service Tax Code. y Charges in Registration Certificate[Rule 4(5 A)] y Fresh registration if business is transferred to other

person [Rule 4(6)] y Assessee Ceases to carry on business [Rule 4(7)]

Registration By Other Persons

The Central Government is empowered to notify the class of dealers other than service providers who shall be required to register with service tax authorities. Accordingly,the Central Govt. has issued notifications for the following person to apply for registration: Input service distributors Small scale provider whose aggregate value of taxable services exceed Rs 9 lakh in a financial year.

Penalty for non-registration

y A person who is liable to pay service tax or is required

to take registration, fails to take registration in accordance with the provisions of section69 or rules made thereunder,shall be liable to pay a penalty of Rs 200 for everyday during which failure continues, subject to maximum of Rs 5000