Service tax was initially introduced in the year 1994, when service tax was made applicable on only three services. The scope of applicability of service tax has been widened over the years, covering almost 119 services under the ambit of taxability by 2012. However, the concept was based on the positive list of services, wherein the services specified under Section 65(105) of the Finance Act, 1994 (as amended) were taxable. Under this scenario, one had to analyze the various services and to seek whether the service provided is covered under any of the taxable service under the list. A new service tax regime has been introduced with the announcement of budget 2012 wherein all services will be taxed unless they are specified under the negative list entry or are otherwise exempted. Under the new system, the services will be taxed comprehensively, except the few ones which have been specified under the negative list. The Central Board of Excise and Customs [CBEC] has further issued "Mega Exemption Notification" vide Notification No. 25/2012-Service Tax dated 20th June, 2012, enlisting the services which shall be exempt from the payment of service tax with effect from 1st July, 2012. With the enforcement of Finance Act 2012, Section 65 relating to the "definitions" of the various terms relating to the service tax has been omitted. However, two important sections which have been introduced defining the new service tax code are Section 65B which provides for a whole new set of definitions in context of taxable services under the head "Interpretations" and Section 66D which states the "Negative list of service". Further, for the purpose of payment of service tax under the new approach, a new Minor Head- "All taxable Services" has been allotted under the Major Head "0044-Service Tax".1 Need for the new system There have always been disputes about taxability of a particular activity and also its classification in a particular taxable head. The provisions of the Chapter V of the Finance Act, for levying service tax on various activities had been challenged under different grounds before the Courts in India. Some of the major grounds upon which the validity had been challenged includes violation of Article 14 of the Constitution of India, noncompetency of the Parliament to levy tax on the activity within the domain of the State power, discriminatory nature of the provisions etc. Also, the definitions of each service as provided under Chapter V were often vague...
Negative List Of Services - A New Service Tax Regime
|Author:||Mr Manoj Singh and Megha Kapoor|
|Profession:||Singh & Associates|
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