Service Tax

“Service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include

  • any activity that constitutes only a transfer in title of Goods or Immovable property by way of sale, gift or in any other manner
  • service provided by an employee to an employer in the course of the employment.

Taxability Of Services

The taxability of services tax has been specified in section 66B of the Act to mean

  • provided or agreed to be provided by a person to another
  • in the taxable territory (the whole of territory of India other than the State of Jammu and Kashmir)
  • and such service should not be specified in the negative list.

Negative list

  • Services by way of renting of residential dwelling for use as residence
  • Service of transportation of passengers, with or without accompanied belongings
  • Services by way of transportation of goods
  • Trading of goods
  • Any process amounting to manufacture or production of goods
  • Selling of space or time slots for advertisements other than advertisements broadcast by radio or television
  • Service by way of access to a road or a bridge on payment of toll charges
  • Betting, gambling or lottery
  • Admission to entertainment events or access to amusement facilities
  • Services by way of extending deposits, loans or advances insofar as the consideration is represented by way of interest or discount
  • Specified services relating to education
  • Funeral, burial, crematorium or mortuary services including transportation of the deceased
  • Services by Government or a local authority, Reserve Bank of India, foreign diplomatic mission located in India
  • Services relating to agriculture
  • Transmission or distribution of electricity by an electricity transmission or distribution utility


Under service tax penalty can be imposed on various matters. Non-registration, non-maintenance of books of accounts, not furnishing proper information, etc. attract penalty to be levied under service tax. In order to avoid these penal provisions assessee should compile with all the provisions under service tax properly and avoid mistakes. The penalties under this are not mandatory and can be waived off or reduced for sufficient reasons.

Not obtaining Registration –

A person who is liable to pay service tax, or required to take registration, and who fails to get registration under service tax, shall be liable to pay a penalty which may extend to Rs. 10,000 or Rs. 200 for every day during which the default continues (whichever is higher).

Non – maintenance of Books –

Failure to maintain books or retain the books of accounts or other documents as required shall be liable to a penalty of Rs. 10,000.

Failure to pay tax electronically when required –

If a person, who is required to pay tax electronically, through internet banking, fails to pay tax electronically, then he shall be liable to a penalty which may extend to Rs. 10,000.

Issuing incorrect invoice or not accounting invoices in his books of accounts –

If a person issues invoice in accordance with the provisions of the act or rules made there under with incorrect or incomplete details or fails to account for an invoice in his books of account, he shall be liable to a penalty which may extend to Rs. 10,000.


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