Service Tax is levied by the government on all citizens. It is one of the most important duties of all citizens. There are various constitutional & legal provisions behind levy of Service Tax in India. The constitutional validity of Service Tax is levied according to the Article 265 of the Constitution. It lays down that no tax shall be levied or collected except by the authority of law. Schedule VII divides this subject into three categories. The very first one is Union list, second one is State list and third one is Concurrent list. There has been an amendment in constitution act 2003.
Service Tax contact Number: http://www.servicetax.gov.in
To facilitate Parliament to devise by law principles for formative the modalities of levying the Service Tax by the Central Govt. and collection of the proceeds thereof by the Central Govt. and the State, the amendment vide Constitution (92nd amendment) Act, 2003 has been made. Now the new article 268 A has been inserted for Service Tax levy by Union Govt., collected and appropriated by the Union Govt., and amendment of seventh schedule to the constitution, in list I-Union list after entry 92B, entry 92C has been inserted for taxes on services as well as in article 270 of the constitution the clause (1) article 268A has been included.
To comprehend the procedure of levy and assessment is easier. Service Tax is levied on particular services and the liability of payment of the tax is generally cast on the service provider but for few exceptions. System of self-assessment of Service Tax Returns by Service Tax assesses has been introduced w.e.f. 01.04.2001. The jurisdictional Superintendent of Central Excise is certified to cross check the rightness of self assessed returns. These tax returns have to be filed half yearly.
The Central Excise officers are certified to carry out surveys to fetch the prospective Service Tax assesses under the tax net. Directorate General of Service Tax at Mumbai oversees the activities at the field level for technical and policy level coordination. The provisions relating to Service Tax were brought into force with effect from 1st July 1994. It extends to the whole of India except the state of Jammu & Kashmir. Service Tax is handled by the Central Excise & Service Tax Commissionerates and the Service Tax Commissionerates working under the Central Board of Excise & Customs, Department of Revenue, Ministry of Finance, and Government of India. LTUs are also collecting Service Tax in respect of the Large Tax Paying units registered with them. The unique feature of Service Tax is reliance on collection of tax, primarily through voluntary compliance.
It is from the very beginning Government has implemented a flexible approach relating to Service Tax administration so that the assesses and the general public increase confidence and trust in the tax measure so that voluntary tax compliance, one of the avowed objectives of the Citizens Charter, is achieved. Substantive and procedural liberalization measures, adopted over the years for this purpose, are obvious manifestations of the above approach. Following are some of the measures adopted in that direction
Under Section 67 of the Finance Act, 1994, Service Tax is levied on the gross or aggregate amount charged by the service provider on the receiver. According to Rule 6(1) of the Service Tax Rules, 1994 has provided that Service Tax shall be paid to the credit of the Government account in respect of the services deemed to be provided as per the rules framed in this regard. Point of Taxation Rules, 2011 has provided the point in time when a service shall be deemed to have been provided; Rule 3 of the said rule provides that for the purposes of these rules, unless otherwise provided, ‘point of taxation’ shall be.
(a) the time when the invoice for the service provided or to be provided is issued: Provided that where the invoice is not issued within 14 days of the provision of the service, the point of taxation shall be date of such completion.
(b) In a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment to the extent of such payment.
Service Tax is envisioned as the tax of the future. Well coordinated taxation on manufacturing, trade (domestic & international) and service without giving rise to cascading effect of taxation would be an ideal worth pursuing in the immediate future. This would bring in VAT in its truest sense, though the ultimate objections usher in the regime of Goods and Service Tax (GST). Continued growth in GDP accompanied by higher rate of growth in service sector promises new & wider avenues of taxation to the Government. If the tax on services reduces the degree of intensity of taxation on manufacturing and trade without forcing the Government to compromise on the revenue needs, then one of the basic objectives of taxing the service sector would be achieved.
Author: Rajat Bhatia
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