INTRODUCTION

   
 

Service tax is tax of 21st Century. In India share of GDP in 2008-09 was - Agriculture - 19.78%, Industry - 24.49%, Services - 55.73% (Source - Economic Survey 2008-09 - Quick estimates). Service tax was imposed on three services w.e.f. 1-7-1994 and its scope is being widened every year.


    HIGHLIGHTS OF THE SERVICE TAX

  1. Service tax is imposed under Finance Act, 1994 as amended from time to time. There is no Service Tax Act.
     

  2. Service tax is payable @ 10% plus education cess of 2%, plus SAH education cess of 1% (total 10.30%) w.e.f. 24TH February 2009 [Section 66]. Service tax rate was 12.36 from 11-5-2007 to 23-02-2009, before hat it was 12.24% from 18-4-2006 to 10-5-2007. Even before that , the rate was 10.2% from 10-9-2004 to 17-4-2006.
      

  3. Service tax is payable on taxable services as defined in various clauses of section 65(105) of Finance Act, 1994. Presently, about 109 services are taxable.
     

  4. Service tax is payable on gross amount charged for taxable service provided or to be provided [Section 67]. If consideration is partly not in money, valuation is required to be done as per Valuation Rules. Tax is payable when advance is received.
     

  5. Small service providers up to Ten lakhs are exempt. Export of service is exempt from service tax under Notification No. 6/2005-ST dated 1-3-2005. Services provided in J&K are not taxable [section 64(1)]
     

  6. CENVAT credit is available of inputs, input services and capital goods used for providing taxable output services.
     

  7. In some cases, receiver of service is liable to pay service tax. This is termed as ‘reverse charge’ [Section 68(2)].
     

  8. Every provider of taxable service should apply for registration in form ST-1 within 30 days from date of levy (in case of new services) and date of commencement of business of providing taxable service In case of existing services [Rule 4(1)]. Registration will be deemed to have been granted if not received within seven days [Rule 4(5)].
     

  9. Assessee providing service from various premises can have centralised registration [Rule 4(2)]
     

  10. Service provider is required to prepare invoice within 14 days, even in respect of advance received [Rule 4A].
     

  11. Tax should be paid by 5th of following month (6th in case of e-payment). If assessee is individual or proprietary or partnership firm, tax is payable on quarterly basis. This facility is not available to HUF. In March, tax is payable by 31st March [Rule 6].
     

  12. If payment of tax is delayed, interest is payable @ 13% [Section 75](It cannot be reduced or waived)
     

  13. Assessee has to submit half yearly return in form ST-3 in triplicate within 25 days of close of half year [Rule 7]
     

  14. Penalty is payable for non-registration, late payment of tax, non-submission of returns etc. Mandatory penalty is payable for suppression of facts, willful misstatement, fraud or collusion [sections 76 to 80]
     

  15. The tax is administered by excise department. Adjudication order is issued by excise officer.
     

  16. First appeal lies with Commissioner (Appeals) [section 85] and second appeal with Appellate Tribunal (Customs, Excise and Service Tax Appellate Tribunal) [Section 86]. Further appeal lies with High Court and Supreme Court.