Background and Introduction.

The Service Tax was introduced in India around 21 years back on July 1, 1994 at the recommendations of Dr. Raja Chelliah Committee on tax reforms. The introduction of this levy in India can be termed as milestone in Indian Tax history.

It was initially introduced on 3 services only. These were Telephone Services, Non-Life Insurance Services and Stock Brokers’ Services. From July 1, 2012, the concept of Negative List Regime has been introduced. Meaning thereby that 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.

The above information is sufficient to indicate the importance of service tax in:

  • The contribution of service sector in the Indian economy;
  • Formation of appropriate fiscal and other policies by the government and
  • The growth of Indian Economy.

Therefore, it is important to understand that what is meant by Service.

“Service means any activity carried out by a person for another for consideration and includes a declared service, 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.”                                                                                                   

Explanation: Click here for further explanation.

 

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