THE LAW OF SERVICE TAX IN INDIA
-BY CA SUDHIR HALAKHANDI-
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NOTICE BOARD
SPECIAL APPEAL TO THE IPCC STUDENTS
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-CA SUDHIR HALAKHANDI-
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THE ADMINISTRATION OF SERVICE TAX
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1. THE FINACNE ACT, 1994
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CA SUDHIR HALAKHANDI: - GOOD Morning students!! As I told you
in my earlier class that no separate service tax Act was provided in
our country and in 1994 the service tax was introduced through Chapter
V of the Finance Act, 1994. So students we have Income Tax Act, 1961
for Tax on Income and on the same lines for all the practical purpose
you can say Finance Act, 1994 as the Act for tax on Services. When ever
you required to mention any provision related to Tax on services you
have to write Finance Act 1994.
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CHETAN: - Sir, once I read somewhere that service tax is a tax of future
and also you have stated that the collection from service tax is increasing
from year to year then why we dont have a separate service tax Act.
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CA SUDHIR HALAKHANDI: - Yes Chetan It seems to be amazing but
it is a fact that there is no separate service tax Act in our country.
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CHETAN: - Is there any possibility of having a Separate service Tax Act
in future?
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CA SUDHIR HALAKHANDI: - See now we are moving towards Goods and
Service Tax A tax replacing the Central excise, Service Tax and VAT
and it is declared by the Finance Minister that the GST will be
introduced in 2010 hence now there is no possibility of having a separate
Service Tax Act but see students practically it is not making any difference
and Finance Act 1994 has served all the purposes of service tax Act.
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VIBHA: - Sir, whole the Finance Act, 1994 was devoted to Service Tax?
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CA SUDHIR HALAKHANDI: - No! Chapter V of the Finance Act was
used to introduce service tax in 1994 and later chapter VA was added
to Finance Act 1994 by the Finance Act, 2003.
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VIBHA: - Please elaborate the whole scheme of the Act.
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CA SUDHIR HALAKHANDI: - Yes see the composition of these chapters:-
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CHETAN: - Sir, Now it is clear from above that Chapter V and VA of Finance
Act, 1994 are the applicable as Act for Taxes on Services. The Chapter V of
the Finance Act, 1994 was introduced in 1994 and Chapter VA was added by the
Finance Act, 2003 in Finance Act, 1994. Is it OK sir!
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CA SUDHIR HALAKHANDI: - Yes Chetan! You have understood well
this concept and now add one more thing to it that when Education cess
was introduced in 2004 it was also made applicable through chapter VI
of Finance Act, 2004 on Service tax also AND further By Finance Act
2007 Secondary and Higher education cess was also imposed on service
tax.
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2. RULES ON SERVICE TAX
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CA SUDHIR HALAKHANDI: - To carry out the various provisions of
the Act, rules are necessary and the Government got the power to make
rules from the Act. There are two sections in the Finance Act 1994 which
gives power to the central Government to make rules for carrying out
various provisions of the Act and these are :-
And by suing these powers the Government has formulated the following
rules which were amended from time to time:-
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KSHITIJ: - Sir, What is the importance of rules?
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CA SUDHIR HALAKHANDI: - The statutory provisions are contained
in the Act and rules are made to carry out these provisions and these
rules should always be read with the provisions of the Act. The rules
can not override the provisions of the Act and further these rules can
not have any conflict with the Act.
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ROHIT: - Sir, Please tell us what is the basic difference between the Act and
rules?
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CA SUDHIR HALAKHANDI: - Yes, I have already prepared for this question
and in my search on web I got the reply of your question in very simple
language through a web-site discussion and I am sharing it with you:-
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3. NOTIFICATIONS
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RAMAN :- And what about Notifications sir ?
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CA SUDHIR HALAKHANDI: - The government has also got the powers from
the Act to issue notifications to
By using these powers the Government Issue the Notifications form time
to time to exempt the services or to make rules to carry out the provisions
of the Act.
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4. CIRCULARS AND OFFICE LETTERS (INSTRUCTIONS) ON SERVICE TAX
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ROHIT: - And circulars and orders Sir?
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CA SUDHIR HALAKHANDI: - The administration of service tax is
in the hands of Central Excise and customs (CBEC) and CBEC issue circulars
and office Letters (instructions) from time to time to clarify taxability
and scope of various services and also the scheme of administration
of Service Tax.
Here note that these circulars and instructions should be in the line
of provisions of the Act and in any case these should be read with the
provisions of the Act. In any case these circulars and office letters
can not override the provisions of the Act.
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5. ORDERS ON SERVICE TAX
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CA SUDHIR HALAKHANDI: - The Rule 3 of the Service tax Rules 1994
empowered the Central Board of Excise and Customs (CBEC) to appoint
officers to exercise the powers under Chapter V of the Finance Act,
1994 and from time to time CBEC has issued orders from time to time
to define the jurisdiction of the officers for the purpose of administration
of Ser vice tax .
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6. TRADE NOTICES ON SERVICE TAX
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VIBHA: - And what about Trade Notices sir?
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CA SUDHIR HALAKHANDI:-The Service Tax/central Excise commissionerates
issue trade notices from time to time to explain the various instructions
received by them from the CBEC to explain the same to the various trade
associations in the form of trade notices. The trade notices along with
the circulars and notifications are also distributed to the field officers
for their proper adherence. The individual tax payers or citizen can
also apply and get the copies of these trade notices.
These contents of trade notices includes the text of Notifications,
circulars, letters, orders, name of banks in which service tax can be
deposited, clarifications regarding service tax matters etc.
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END
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