Blog 2 : Service Tax, Meaning & Applicability :

Sources of Service Tax Laws.

• Finance Act, 1994
• Rules
• Notifications
• Circulars or Instructions
• Orders & Trade Notices

Rates from the beginning are as follows.

Period	Basic Rate	EC	SHEC	Total
01-07-1994 to 13-05-2003	5%	-	-	5%
14-05-2003 to 09-09-2004	8%	-	-	8%
10-09-2004 to 17-04-2006	10%	2%	-	10.20%
18-04-2006 to 10-05-2007	12%	2%	-	12.24%
11-05-2007 to 23-02-2009	12%	2%	1%	12.36%
24-02-2009 to 31-03-2012	10%	2%	1%	10.30%
01-04-2012 onwards (Present Rate)	12%	2%	1%	12.36%

EC : Education Cess

SHEC : Secondery & Higher Education Cess.

Service Tax Not applicable to following. 

1. To the state of Jammu & Kashimir 
2. On Export of Service

Export service to be provided by service provider from taxable territory & used in non taxable territory, & the payment is received in convertible foreign exchange.

Meaning of Service :

• Any activity
• For a consideration
• Carried out by one person to another
• AND includes declared service.

But Excludes :

(1) IMAGE

Immovable property

Money

Actionable Claims

Goods sold (including deemed sale)

Employee to the Employer

(2) Fees payable to a court or a tribunal

Meaning of terms :

Activity :

Could be active or passive & would also include forbearance of act. 
Consideration :

Everything received or receivable including Monitory & Non Monitory benefit for providing of said service.

For  example, No Service Tax on :

1.     Activity Without Consideration – An artist performing on street, Large Govt. activity for citizens.

2.     Payments without activity – Pocket money, reward, gift, etc..

3.     There is no Service Tax on penalty or on fine

Carried on by one person to another : 
Service provided by a person to self is not a service. e.g.

1.     Presenting own file to income tax officer.

2.     From branch to another branch or Head office or vice versa from taxable to taxable territory.

3.     Support service provided by Government.

Declared Service: It includes,

1.     Renting of immovable property

2.     Construction of complex, building, civil structure or a part thereof.

3.     Transfer of intellectual property rights

4.     Development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software.

5.     Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act.

6.     transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods

7.     activities in relation to delivery of goods on hire purchase or any system of payment by installments

8.     service portion in execution of a works contract

9.     service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity

 Immovable Property :

Transfer of title in Land, things attached to the earth.

      Money : following are Exclusions,

-       Principal amount of Deposit or withdrawal from bank.

-       Repayment of Principle sum of loan.

-       Conversion of currency in exchange e.g. Rs. 100 note in smaller denomination, i.e. coins.

     Actionable Claims :

-       Unsecured debts transferred to third person.

-       Righty to participate in the draw to be held in lottery.

     Goods :

-       Transfer of title in Goods or Securities.

-       Transfer of goods (deemed sales)

 Employee to Employer.