What is service? A type of economic activity that is intangible is not stored and does not result in ownership.

Service is a value addition that can be felt only but cannot be seen. Service tax:
A tax on Services
Service Tax was first brought into force with effect from 1 July 1994. All service providers in India, except those in the state of Jammu and Kashmir, are required to pay a Service Tax in India. Initially only three services were brought under the net of service tax and the tax rate was 5%. Gradually more services came under the ambit of Service Tax. The rate of tax was increased from 5% to 8% w.e.f 14 May 2003. Some of the major services that come under the ambit of Service Tax are: Telephone Stockbroker General Insurance Advertising agencies Courier agencies Consulting engineers Custom house agents Steamer agents Clearing & forwarding agents Air travel agents Tour operators Rent-a-Cab Operators Manpower recruitment Agency Mandap Keepers Architects

Rate of Service Tax

Period 01-07-1994 to 13-05-2003 14-05-2003 to 09-09-2004 10-09-2004 to 17-04-2006 18-04-2006 to 10-05-2007 11-05-2007 to 23-02-2009 24-02-2009 onwards Service Tax 5% 8% 10% 12% 12% 10% EC 2% 2% 2% 2% SHEC Net Rate 1% 1% 5.00% 8.00% 10.20% 12.24% 12.36% 10.30%

Indian Service Tax Service Tax - Statutory Provisions Chapters V and VA of the Finance Act, 1994
CHAPTER V

64. Extent, commencement and application

1. This Chapter extends to the whole of India except the State of Jammu and Kashmir. 2. It shall come into force on such date as the Central Government may, by notification' in the Official Gazette, appoint. 3. It shall apply to taxable services provided on or after the commencement of this Chapter.

Definitions: 1. "Actuary" has the meaning assigned to it in clause (1) of Section 2 of the Insurance Act, 1938 (4 of 1938) 2. "Advertisement" includes any notice, circular, label, wrapper, document, hoarding or any other audio or visual representation made by means of light, sound, smoke or gas 3. Advertising agency" means any commercial concern engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant 4. "Aircraft operator" means any commercial concern which provides the service of transport of goods by aircraft 5. "Airport" has the meaning assigned to it in clause (b) of Section 2 of the Airports Authority of India Act, 1994 6. "airports authority" means the Airports Authority of India constituted, under Section 3 of the Airports Authority of India Act, 1994 (55 of 1994) and also includes any person having the charge of management of an airport or a civil enclave 7. "Air travel agent" means any person engaged in providing any service connected with the booking of passage for travel by air 8. "Assessee" means a person liable to pay the service tax and includes his agent 9. "authorized dealer of foreign exchange has the meaning assigned to " authorized person" in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 10. "authorized service station" means any service station or centre, authorised by any motor vehicle manufacturer, to carry out any service or repair of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer 11. "Banking" has the meaning assigned to it in clause (b) of Section 5 of the Being Regulation Act, 1949 12. "Banking Company" has the meaning assigned to it in clause (a) of Section 45A of the Reserve Bank of India Act, 1934

13. "banking and other financial services" means

(a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other.' body corporate or commercial concern, namely:-(i) (ii) (iii) (iv) (v) financial leasing services including equipment leasing and hire purchase, credit card services, merchant banking services, securities and foreign exchange (forex) broking, asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services, but does not include cash management, advisory and other auxiliary financial services including investment and portfolio research and, advice on mergers and acquisitions and advice on corporate restructuring and strategy, provision and transfer of information and data processing, and other financial services, namely, lending, issue of pay order, demand draft, cheque, letter of credit and bill of exchange, providing bank guarantee, over draft facility, bill discounting facility, safe deposit locker, safe vaults, operation of bank accounts,

(vi)

(vii) (viii)

(b) Foreign exchange braking provided by a foreign exchange broker other those covered. under sub-clause 14. "Board" means the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act 15. "body corporate" has the meaning assigned to it in clause (71) of Section 2 of the Companies Act, 1956 16. "broadcasting" has the meaning assigned to it in cl. (c) of S. 2 of the Prasar bharti (Broadcasting Corporation of India) Act, 1990 and also includes programme selection, scheduling or presentation of sound or visual matter on a radio or. a television channel that is intended for public listening or viewing, as the case may be, and in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes the activity of selling of time slots or obtaining sponsorships for broadcasting of any programme or collecting the broadcasting charges on behalf of the said agency or organisation, by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner 17. "broadcasting agency or organisation" means any agency or organisation engaged in providing service in relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes its branch office or subsidiary or representative in India or any agent appointed in India or any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for' broadcasting of any. programme or obtaining sponsorships for programme or collecting the broadcasting charges on behalf of the said agency or organization 18. beauty treatment" means face and beauty treatment, cosmetic treatment, manicure, pedicure or counselling services on beauty, face care or make-up 19. beauty parlour" means any establishment providing beauty treatment services

20. "business exhibition" means an exhibition (a) to market or (b) to promote or (c) to advertise or (d) to showcase, any product or service, intended for the growth in business of the producer or provider of such product or service 11) "Central Excise Officer" has the meaning assigned to it in clause (b) of section 2 of the Central Excise Act, 1944(1 of 1994); (12) "clearing and forwarding agent" means any person who is engaged in providing any service, either directly or indirectly, connected with clearing and forwarding operations in any manner to any other person and includes a consignment agent; (13) "consulting engineer" means any professionally qualified engineer or an engineering firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to a client in one or more disciplines of engineering; (14) "courier agency" means a commercial concern engaged in the door-to-door transportation of time-sensitive documents, goods or articles utilising the services of a person, either directly or indirectly, to carry or accompany such documents, goods or articles; (15) "credit rating agency" means any commercial concern engaged in the business of credit rating of any debt obligation or of any project or programme requiring finance, whether in form of debt or otherwise , and includes credit rating of any financial obligation, instrument or security which has the purpose of providing a potential investor or any other person any information pertaining to the relative safety of timely payment of interest or principal; (16) "custom house agent" means a person licensed, temporarily or otherwise, under the regulations made under sub-section (2) of section 146 of the Customs Act,1962); (17) "general insurance business" has the meaning assigned to it in clause (g) of section 3 of the General Insurance Business (Nationalization) Act, 1972; (18) "goods" has the meaning assigned to it in clause (7) of section 2 of the Sale of Goods Act, 1930; 1a ] (19)"insurer" means any person carrying on the general insurance business in India; (20) "interior decorator" means any person engaged , whether directly or indirectly ,in the business providing by way of advice ,consultancy ,technical assistance or in any

other manner services related to planning ,designing or beautification of spaces ,whether man-made or otherwise or includes a landscape designer; (21) "management consultant" means any person who is engaged in providing any service ,either directly or indirectly in connection with the management of any organisation in any manner and includes any person who renders advice, consultancy, or technical assistance relating to conceptualizing ,devising, development, modification, rectification or upgrade ion of any working system of any organization; (22) "man dap" means any immovable property as defined in section 3 of the Transfer of Property Act, 1882 (4 of 1882), and includes any furniture, fixtures, light fittings and floor coverings therein let out for consideration for organising any official, social or business function; (23) "man dap keeper" means a person who allows temporary occupation of a mandap for consideration for organising any official, social or business function; (24) "manpower recruitment agency" means any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment of manpower, to a client; (25)" market research agency" means any commercial concern engaged in providing any services ; (26) " maxi cab" has a meaning assigned to it in clause (22) in section (2) of the Motor Vehicles Act ,1988; (27) " mechanised slaughter house" means a commercial concern engaged in the bussiness of slaughtering of animals with the aid of machine; (28) "motor cab" has the meaning assigned to it in clause (2) of section 2 of the Motor Vehicles Act,1988; (29) "pager" means an instrument, apparatus or appliance which is a non-speech, one way personal calling system with alert and has to capability of receiving, storing and displaying numeric or alpha-numeric messages; (30) "policy holder" has the meaning assigned to it in clause (2) of section 2 of the Insurance Act, 1938; (31) "practising chartered accountant" means a person who is a member of the Institute of Chartered Accountants of India and is holding a certificate of practice granted under the provisions of the Chartered Accountants Act. 1949, and includes any concern engaged in rendering services in the filed of chartered accountancy;

(32) "practising cost accountant" means a person who is a member of the Institute of Cost and Works Accountants of India and is holding a certificate of practice granted under the provisions of the Cost and Works Accountants Act ,1959 and includes any concern engaged in rendering services in the field of cost accountancy; (33) "practising company secretary" means a person who is a member of the Institute of Company Secretaries of India and is holding a certificate of practice granted under the provisions of the Company Secretaries Act, 1980 and includes any concern engaged in rendering services in the field of company secretary ship; (34) "prescribed" means prescribed by rules made under this Chapter; (35) "real estate agent" means a person who is engaged in rendering any service in relation to sale, purchase, leasing or renting, of real estate, and includes a real estate consultant; (36) "real estate consultant" means a person who renders in any manner, either directly or indirectly, advice, consultancy or technical assistance in relation to evaluation, conception. design, development, construction, implementation, supervision, maintenance, marketing. acquisition or management, of real estate; (37) "recognised stock exchange" has the meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956; (38) "rent-a-cab scheme operator" means any person engaged in the business of renting of cabs; (39) "securities" has the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 ; (40) "security agency" means any commercial concern engaged in the business of rendering services relating to the security of any property, whether movable or immovable or of any person, in any manner and includes the services of investigations, detection or verification of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel; (41) "service tale" means tax livable under the provisions of this Chapter; (42) "ship" means a sea-going vessel and includes a sailing vessel; (43) "shipping line" means any person who owns or charters a ship and includes an enterprise which operates or manages the business of shipping; (44) "steamer agent" means any person who undertakes, either directly or indirectly,-

(a) to perform any service in connection with the ship's husbandry or dispatch including the rendering of administrative work related thereto; or (b) to book, advertise or canvass for cargo for or on behalf of a shipping line, or (c) to provide container feeder services for or on behalf of a shipping line; (45) "stock-broker" means a stock-broker who has either made an application for registration or is registered as a stock-broker in accordance with the rules and regulations made under the Securities and Exchange Board of India Act, 1992; (46) "sub-broker" means a sub-broker who has either made an application for registration or is registered as a sub-broker in accordance with the rules and regulations made under the Securities and Exchange Board of India Act, 1992; (47) "subscriber" means a person to whom a telephone connection or a pager has been provided by the telegraph authority; (48) "taxable service" means any service provided(a) to an investor, by a stock-broker in connection with the sale or purchase, of securities listed on a recognised stock exchanges; (b) to a subscriber, by the telegraph authority in relation to a telephone connection; (c) to a subscriber by the telegraph authority in relation to a pager; (d) to a policy holder, by an insurer carrying on general insurance business in relation to general insurance business; (e) to a client, by an advertising agency in relation to advertisements in any manner: (f) to a customer, by a courier agency in relation to door-to-door transportation of timesensitive documents, goods or articles; (g) to a client, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering, (h) to a client, by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods; (i) to a shipping line, by a steamer agent in relation to a ship's husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo including container feeder services;

(j) to a client by a clearing and forwarding agent an relation to clearing and forwarding operations in any manner; (k) to a client, by a manpower recruitment agency in relation to the recruitment of manpower in any manner; (1) to a customer, by an air travel agent in relation to the booking of passage for travel by air; (m) to a client, by a mandap keeper in relation to the use of a mandap in any manner including the facilities provided to the client in relation to such use and also in services, if any, rendered as a caterer: (n) to any person by a tour operator in relation to a tour; (o) to any person by a rent-a-cab scheme operator in relation to the renting of a cab; (p) to a client, by an architect in his professional capacity in any manner; (q) to a client, by an interior decorator in relation to planning design or beautification of spaces, whether man-made or otherwise, in any manner, (r) to a client, by a management consultant in connection with the management of any organisation in any manner; (s) to a client by a practising chartered accountant in his professional capacity in any manner; (t) to a client, by a practising cost accountant in his professional capacity, in any manner, (u) to a client, by a practising company secretary in his professional capacity, in any manner; (v) to a client, by real estate agent in relation to real estate, (w) to a client, by a security agency in relation to the security of any property or person, by providing security personnel or otherwise and includes the provision of services of investigation, detection or verification of any fact or activity, (x) to a client, by a credit rating agency in relation to credit rating of any financial obligation, instrument or security; (y) to a client by a market research agency in relation to market research of any product service or utility, in any manner;

(z) to a client, by an underwriter in relation to underwriting in any manner; (za) to any person, by a mechanised slaughter house in relation to the slaughtering of bovine animals; (49) "telegraph authority" has the meaning assigned to it in clause (6) of section 3 of the Indian, Telegraph Act, 1885 and includes a person who has been granted a licence under the first proviso to sub-section (1) of section 4 of that Act; (50) "tour" means a journey from one place to another irrespective of the distance between such places; (51) "tourist" vehicle has the meaning assigned to it in clause (43) of section 2 of the Motor Vehicles Act, 1988; (52) "tour operator" means any person engaged in the business of operating tours in a tourist vehicle covered by a tourist permit granted under the Motor Vehicle Act, 1988 or Rules made there under; (53) "underwriter" has the meaning assigned to it in clause (f) of rule 2 of the Securities and Exchange Board of India (Underwriters) Rules, 1993; (54) "underwriting" has the meaning assigned to it in clause (g) of rule 2 of the Securities and Exchange Board of India (Underwriters) Rules, 1993; (55) words and expressions used but not defined in this Chapter and defined in the Central Excise Act, 1944 or the rules made there under, shall apply, so far as may be, in relation to service tax as they apply in relation to duty of excise

Sec. 66

Charge of Service Tax

taxable service" means any service provided, There shall be levied a tax (hereinafter referred to as the service tax) at the rate of ten per cent of the value of the taxable services with in sub-clauses (a) to (z) and (za) to (zz) and clause (zza) to (zzzh)of clause (105) of section 23 and collected in such manner as may be prescribed;

3 (a) 4 [to any person], by a stock-broker in connection with the sale or purchase of securities listed on a recognised stock exchange; 5 (b) to a subscriber, by the telegraph authority in relation to a telephone connection;

6 (c) to a subscriber, by the telegraph authority in relation to a pager; 7 (d) to a policy holder, by an insurer carrying on general insurance business in relation to general insurance business; 8 (e) to a client, by an advertising agency in relation to advertisement, in any manner; 9 (f) to a customer, by a courier agency in relation to door-to-door transportation of time-sensitive documents, goods or articles; 10 (g) to a client, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering 11 [but not in the discipline of computer hardware engineering or computer software engineering]; 12 (h) to a client, by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods; 13 (i) to a shipping line, by a steamer agent in relation to a ship's husbandry or dispatch or any administrative work related thereto as well as the booking, advertising or canvassing of cargo, including container feeder services; 1 (j) to a client, by a clearing and forwarding agent in relation to clearing and forwarding operations, in any manner; 2 (k) to a client, by a manpower recruitment agency in relation to the recruitment of manpower, in any manner; 3 (l) to a customer, by an air travel agent in relation to the booking of passage for travel by air, 4 (m) to a client, by a mandap keeper in relation to the use of mandap in any manner including the facilities provided to the client in relation to such use and also the services, if any, rendered as a caterer; 5 (n) to any person, by a tour operator in relation to a tour; 6 (o) to any person, by a rent-a-cab scheme operator in relation to the renting of a cab; 7 (p) to a client, by an architect in his professional capacity, in any manner;

8 (q) to a client, by an interior decorator in relation to planning, design or beautification of spaces, whether man-made or otherwise, in any manner; 9 (r) to a client, by a management consultant in connection with the management of any organisation, in any manner; 10 (s) to a client, by a practising chartered accountant in his professional capacity, in any manner; 11 (t) to a client, by a practising cost accountant in his professional capacity, in any manner; 12 (u) to a client, by a practising company secretary in his professional capacity, in any manner; 1 (v) to a client, by a real estate agent in relation to real estate; 2 (W) to a client, by a security agency in relation to the security of any property or person, by providing security personnel or otherwise and includes the provision of services of investigation, detection or verification of my fact or activity; 3 (x) to a client, by a credit rating agency in relation to credit rating of any financial obligation, instrument or security; 4 (y) to a client, by a market research agency in relation to market research of any product, service or utility, in any manner; 5 (z) to a client, by an underwriter in relation to underwriting, in any manner; 6 (za) to a client, by a scientist or a technocrat, or any science or technology institution or organisation, in relation to scientific or technical consultancy; 7 (zb) to a customer, by a photography studio or agency in relation to photography, in any manner; 8 (zc) to a client, by any commercial concern in relation to holding of a convention, in any manner; 9 (zd) to a subscriber, by the telegraph authority in relation to a leased circuit;

10 (ze) to a subscriber, by the telegraph authority in relation to a communication through telegraph; 11 (zf) to a subscriber, by the telegraph authority in relation to a communication through telex; 12 (Zg) to a subscriber, by the telegraph authority in relation to a facsimile (FAX) communication; 13 (zh) to a customer, by a commercial concern, in relation to on-line information and database access or retrieval or both in electronic form through computer network, in any manner, 1 (zi) to a client, by a video production agency in relation to video-tape production, in any manner; 2 (z,j) to a client, by a sound recording studio or agency in relation to any kind of sound recording; 3 (zk) to a client, by a broadcasting agency or organisation in relation to broadcasting in any manner and, in the case of a broadcasting agency or organisation, having its head office situated in any place outside India, includes service provided by its branch office or subsidiary or representative in India or any agent appointed in India or by any person who acts on its behalf in any manner, engaged in the activity of selling of time slots for broadcasting of any programme or obtaining sponsorships for programme or collecting the broadcasting charges on behalf of the said agency or organisation. Explanation.-For the removal of doubts, it is hereby declared that so long as the radio or television programme broadcast is received in India and intended for listening or viewing, as the case may be, by the public, such service shall be a taxable service in relation to broadcasting, even if the encryption of signals or beaming thereof through the satellite might have taken place outside India; 4 (zl) to a policy holder or insurer, by an actuary, or intermediary or insurance intermediary or insurance agent, in relation to insurance auxiliary services concerning general insurance business;]

5 [(zm) to a customer, by a banking company or a financial institution including a non-banking financial company, or any other body corporate or commercial concern, in relation to banking and other financial services;] 6 (zn) to any person, by a port or any person authorised by the port, in relation to port services, in any manner; 7 (zo) to a customer, by an authorised service station, in relation to any service or repair of motor cars or two wheeled motor vehicles, in any manner; 8 [(zp) * * *]

1 (zq) to a customer, by a beauty parlour in relation to beauty treatment; 2 (zr) to any person, by a cargo handling agency in relation to cargo handling services; 3 (zs) 4 [to any person, by a cable operator, including a multisystem operator] in relation to cable services; 5 (zt) to a customer, by a dry cleaner in relation to dry cleaning, 6 (zu) to a client, by an event manager in relation to event management; 7 (ZV) to any person, by a fashion designer in relation to fashion designing; 8 (zw) to any person, by a health club and fitness centre in relation to health and fitness services; 9 (zx) to a policy holder, by an insurer carrying on life insurance business 10 [in relation to the risk cover in life insurance]; 11 (zy) to a policy holder or insurer by an actuary, or intermediary or insurance intermediary or insurance agent, in relation to insurance auxiliary services concerning life insurance business, 12 (ZZ) to a customer, by a rail travel agent in relation to booking of passage for travel by rail; 13 (zza) to any person, by a storage or warehouse keeper in relation to storage and warehousing of goods;

14 (zzb) to a client, by a commercial concern in relation to business auxiliary service; 15 (ZZC) to any person, by a commercial training or coaching centre in relation to commercial training or coaching; 16 (zza) to a customer, by a commissioning and installation agency in relation to 17 [erection,] commissioning or installation; 1 (zze) to a franchisee, by the franchisor in relation to franchise;

2 (ZZf) to any person, by an internet cafe in relation to access of internet, 3 (ZZg) to a customer, by any person in relation to maintenance or repair; 4 (zzh) to any person, by a technical testing and analysis agency, in relation to technical testing and analysis; 5 (zzi) to any person, by a technical inspection and certification agency, in relation to technical inspection and certification; 6 (ZZj) to a customer, by an authorised service station, in relation to any service or repair of any maxicab; 7 (zzk) to a customer, by a foreign exchange broker other than those brokers in relation to banking and other financial services referred to in subclauses (zm) and (zp); 8 (zzl) to any person, by other port or any person authorised by that port in relation to port services, in any manner, 9 [(zzm) to any person, by airports authority or any person authorised by it, in an airport or a civil enclave; (zzn) to any person, by an aircraft operator, in relation to transport of goods by aircraft, (zzo) to an exhibitor, by the organiser of a business exhibition, in relation to business exhibition, (zzp) to a customer, by a goods transport agency, in relation to transport Of goods by road in a goods carriage,

(zzq) to any person, by a commercial concern, in relation to construction service; (zzr) to any person, by the holder of intellectual property right, in relation to intellectual property service; (zzs) to any person, by an opinion poll agency, in relation to opinion poll, (zzt) to a client, by a outdoor caterer; (zzu) to any person, by a programme producer, in relation to a programme; (zzv) to a customer, by any person, in relation to survey and exploration Of mineral, (zzw) to a client, by a pandal or shamiana contractor in relation to a pandal or shamiana in any manner and also includes the services, if any, rendered as a caterer, (zzx) to a customer, by a travel agent, in relation to the booking of passage for travel; (zzy) to any person, by a member of a recognised association or a registered association, in relation to a forward contract;] and the term "service provider" shall be construed accordingly;

section: [67. Valuation of taxable services for charging service tax For the purposes of this Chapter, the value of any taxable service shall be the gross amount charged by the service provider for such service rendered by him. Explanation 2 [1].-For the removal of doubts, it is hereby declared that the value of a taxable service, as the case may be, includes, (a) the aggregate of commission or brokerage charged. by a broker on the sale or purchase of securities including the commission or brokerage paid by the stock-broker to any sub-broker; (b) the adjustments made by the telegraph authority from any deposits made by the subscriber at the time of application for telephone connection or pager or facsimile or telegraph or telex or for leased circuit; (c) the amount of premium charged by the insurer from the policy holder; (d) the commission received by the air travel agent from the airline; (e) the commission, fee or any other sum received by an actuary, or intermediary or insurance intermediary or insurance agent from the insurer; 3 [* * *] (f) the reimbursement received by the authorised service station from manufacturer for carrying out any service of any motor car 4 [, light motor vehicle] or two wheeled motor vehicle manufactured by such manufacturer; 5 [and (g) the commission or any amount received by the rail travel agent from the Railways or the customer] 1 [but does not include(i) initial deposit made by the subscriber at the time of application for telephone connection or pager or facsimile (FAX) or telegraph or telex or for leased circuit; (ii) the cost of unexposed photography film, unrecorded magnetic tape or such other storage devices, if any, sold to the client during the course of providing the service;

(iii) the cost of parts or accessories, or consumable such as lubricants and coolants, if any, sold to the customer during the course of service or repair of motor cars, light motor vehicle or two wheeled motor vehicles; (iv) the airfare collected by air travel agent in respect of service provided by him; (v) the rail fare collected by rail travel agent in respect of service provided by him; (vi) the cost of parts or other material, if any, sold to the customer during the course of providing maintenance or repair service; 2 [* * *] 3 [(vii) the cost of parts or other material, if any, sold to the customer during the course of providing erection, commissioning or installation service, and (viii) interest on loans.]

4 [Explanation 2.-Where the gross amount charged by a service provider is inclusive of service tax payable, the value of taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged.]

Section: 68. PAYMENT OF SERVICE TAX.

(1) Every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

Section 69. REGISTRATION

Every person liable to pay the service tax under this Chapter or the rules made thereunder shall, within such time and in such manner and in such form as may be prescribed, make an application for registration to the Central Excise Officer.

Section: 71. ASSESSMENT

(1) For the purpose of making an assessment under this Chapter, the Central Excise Officer may serve on any person who has furnished a return under section 70, a notice requiring him to produce within such period as may be specified therein, such accounts, documents or other evidence as he may deem necessary for such assessment. (2) The Central Excise Officer, after considering such accounts, documents or other evidence, if any, obtained under sub-section (1) and after taking into account any relevant material which he has gathered, shall, by an order in writing, assess the value of the taxable service and the amount of service tax payable on the basis of such assessment.

72. BEST JUDGMENT ASSESSMENT.

If - (a) any person fails to make the return under section 70, or"; (b) any person having made a return fails to comply with all the terms of a notice issued under sub-section (1) of section 71, or (c) the Central Excise Officer is not satisfied with the correctness or the completeness of the accounts of the assessee, the Central Excise Officer, after taking into account all the relevant material which he has gathered, shall, by an order in writing, make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment.

73. VALUE OF TAXABLE SERVICES ESCAPING ASSESSMENT

If - (a) the Central Excise Officer has reason to believe that by reason of omission or failure on the part of the assessee to make a return under section 70 for any quarter or to disclose wholly and truly all material facts necessary for his assessment for any quarter, the value of taxable service for that quarter has escaped assessment or has been under assessed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Central Excise Officer has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any prescribed period has escaped assessment or has been under assessed, or he may, in cases falling under clause (a), at any time within five years, and in cases falling under clause (b), at any time within six months from the date for filing the return, serve on the assessee a notice and proceed to assess or reassess the value of taxable service. Explanation : Where the services for the notice is stayed by an order of a Court, the period of such stay shall be excluded in computing aforesaid period of five years or six months.
74. RECTIFICATION OF MISTAKE

(1) With a view to rectifying any mistake apparent from the record, the Central Excise Officer who passed any order under the provisions of this Chapter may, within two years of the date on which such order was passed, amend the order. (2) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the Central Excise Officer passing such order may, notwithstanding anything contained in any law for the

time being in force, amend the order under that sub-section in relation to any matter other than the matter which has been so considered and decided. (3) Subject to the other provisions of this section, the Central Excise Officer concerned (a) may make an amendment under sub-section (1) of his own motion; or (b) shall make such amendment if any mistake is brought to his notice by the assessee or the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals). (4) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this section unless the Central Excise Officer concerned has given notice to the assessee of his intention so to do and has allowed the assessee a reasonable opportunity of being heard. (5) Where an amendment is made under this section, an order shall be passed in writing by the Central Excise Officer concerned. (6) Subject to the other provisions of this Chapter where any such amendment has the effect of reducing the assessment, the Central Excise Officer shall make any refund which may be due to such assessee. (7) Where any such amendment has the effect of enhancing the assessment or reducing the refund already made, the Central Excise Officer shall make an order specifying the sum payable by the assessee and the provisions of this Chapter shall apply accordingly.
75. INTEREST ON DELAYED PAYMENT OF SERVICE TAX

Every person, liable to pay the tax in accordance with the provisions of section 68 or rules made thereunder, who fails to credit the tax or any part thereof to the account of the Central Government within the period prescribed, shall pay simple interest at the rate of one and one-half per cent. for every month or part of the month by which such crediting of the tax or any part thereof is delayed.

76. PENALTY FOR FAILURE TO PAY SERVICE TAX

Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, and interest on that tax in accordance with the provisions of section 75, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of service tax that he failed to pay .

77. PENALTY FOR FAILURE TO FURNISH PRESCRIBED RETURN.

If a person fails to furnish in due time the return which he is required to furnish under section 70 or the rules made thereunder, he shall pay, by way of penalty, a sum which shall not be less than one hundred rupees but which may extend to two hundred rupees for every week or part thereof during which such failure continues.

78. PENALTY FOR SUPPRESSING VALUE OF TAXABLE SERVICE.

If the Central Excise Officer in the course of any proceedings under this Chapter is satisfied that any person has, with intent to evade payment of service tax, suppressed or concealed the value of taxable service or has furnished inaccurate value of such taxable service, he may direct that such person shall pay by way of penalty, in addition to service tax and interest, if any, payable by him, a sum which shall not be less than, but which shall not exceed twice, the amount of service tax sought to be evaded by reason of suppression or concealment of the value of taxable service or the furnishing of inaccurate value of such taxable service : Provided that if the value of taxable service (as determined by the Central Excise Officer on assessment) in respect of which value has been suppressed or concealed or inaccurate value has been furnished exceeds a sum of twenty-five thousand rupees, the Central Excise Officer shall not issue any direction for payment by way of penalty without the previous approval of the Commissioner Central Excise.

79. PENALTY FOR FAILURE TO COMPLY WITH NOTICE.

If the Central Excise Officer in the course of any proceedings under this Chapter is satisfied that any person has failed to comply with a notice under sub-section (1) of section 71, he may direct that such person shall pay, by way of penalty, in addition to any service tax and interest, if any, payable by him, a sum which shall not be less than ten per cent, but which shall not exceed fifty per cent, of the amount of the service tax, if any, which would have been avoided if the value of taxable service stated in the return by such person had been accepted as the correct value of taxable service.
80. PENALTY NOT TO BE IMPOSED IN CERTAIN CASES.

Notwithstanding anything contained in the provisions of section 76, section 77, section 78 or section 79, no penalty shall be imposable on the assessee for any failure referred to in the said provisions if the assessee proves that there was reasonable cause for the said failure.
81. OFFENCES BY COMPANIES.

(1) Where an offence under this Chapter has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Chapter, if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Chapter has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation : For the purposes of this section, (a) "company" means any body corporate and includes a firm or other association of individuals; and (b) "director" in relation to a firm means a partner in the firm.
82. POWER TO SEARCH PREMISES

(1) If the Commissioner of Central Excise has reason to believe that any documents or books or things which in his opinion will be useful for or relevant to any proceeding under this Chapter are secreted in any place, he may authorise any other Central Excise Officer to search or may himself search for such documents or books or things.

(2) The provisions of the Code of Criminal Procedure, 1973 (2 of 1974), relating to searches, shall, so far as may be, apply to searches under this section as they apply to searches under that Code.
83. APPLICATION OF CERTAIN PROVISIONS OF ACT (1 OF 1944).

The provisions of the following sections of the Central Excises Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise :9C, 9D, 11, 11B, 11BB, 12A, 12B, 12C, 12D, 12E, 14, 15, 35F to 35O (both inclusive), 35Q, 36, 36A, 36B, 37A, 37B, 37C, 37D and 40.
84. REVISION OF ORDERS BY THE COMMISSIONER CENTRAL EXCISE.

(1) The Commissioner of Central Excise may call for the record of a proceeding under this Chapter which has been taken by the Central Excise Officer subordinate to him and may make such inquiry or cause such inquiry to be made and, subject to the provisions of this Chapter, pass such order thereon as he thinks fit. (2) No order which is prejudicial to the assessee shall be passed under this section unless the assessee has been given an opportunity of being heard. (3) The Commissioner Central Excise shall communicate the order passed by him under sub-section (1) to the assessee, the Central Excise Officer and the Board. (4) No order under this section shall be passed by the Commissioner of Central Excise in respect of any issue if an appeal against such issue is pending before the Commissioner of Central Excise (Appeals). (5) No order under this section shall be passed after the expiry of two years from the date on which the order sought to be revised has been passed.
70. FURNISHING OF RETURNS.

Every person liable to pay the service tax shall furnish or cause to be furnished to the Central Excise Officer, a return in such form and in such manner and at such frequency as may be prescribed.
85. APPEALS TO THE COLLECTOR OF CENTRAL EXCISE (APPEALS).

(1) Any person aggrieved by any assessment order passed by the Central Excise Officer under section 71, section 72 or section 73, or denying his liability to be assessed under this Chapter, or by an order levying interest or penalty under this Chapter, may appeal to the Commissioner of Central Excise (Appeals) . (2) Every appeal shall be in the prescribed form and shall be verified in the prescribed manner. (3) An appeal shall be presented within three months from the date of receipt of the decision or order of the Central Excise Officer, relating to service tax, interest or penalty under this Chapter :

Provided that the Commissioner of Central Excise (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of three months, allow it to be presented within a further period of three months. (4) The Commissioner of Central Excise (Appeals) shall hear and determine the appeal and, subject to the provisions of this Chapter, pass such orders as he thinks fit and such orders may include an order enhancing the service tax, interest or penalty : Provided that an order enhancing the service tax, interest or penalty shall not be made unless the person affected thereby has been given a reasonable opportunity of showing cause against such enhancement. (5) Subject to the provisions of this Chapter, in hearing the appeals and making orders under this section, the Commissioner of Central Excise (Appeals) shall exercise the same powers and follow the same procedure as he exercises and follows in hearing the appeals and making orders under the Central Excises and Salt Act, 1944 (1 of 1944).

86. APPEALS TO APPELLATE TRIBUNAL. (1) Any assessee aggrieved by an order passed by a Commissioner of Central Excise under section 84, or an order passed by a Commissioner of Central Excise (Appeals) under section 85, may appeal to the Appellate Tribunal against such order. (2) The Board may, if it objects to any order passed by the Commissioner of Central Excise under section 84, or the Commissioner of Central Excise may, if he objects to any order passed by the Commissioner of Central Excise (Appeals) under section 85, direct the Central Excise Officer to appeal to the Appellate Tribunal against the order. (3) Every appeal under sub-section (1) or sub-section (2) shall be filed within three months of the date on which the order sought to be appealed against is received by the assessee, the Board or by the Commissioner of Central Excise, as the case may be. (4) The Central Excise Officer or the assessee, as the case may be, on receipt of a notice that an appeal against the order of the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals) has been preferred under sub-section (1) or sub-section (2) by the other party may, notwithstanding that he may not have appealed against such order or any part thereof, within forty-five days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Commissioner of Central Excise or the Commissioner of Central Excise (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3). (5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4) if it is satisfied that there was sufficient cause for not presenting it within the period. (6) An appeal to the Appellate Tribunal shall be in the prescribed form and shall be verified in the prescribed manner and shall, except in the case of an appeal referred to in sub-section (2) or a memorandum of cross-objections referred to in sub-section (4), be accompanied by a fee of two hundred rupees. (7) Subject to the provisions of this Chapter, in hearing the appeals and making orders under this section, the Appellate Tribunal shall exercise the same powers and follow the same procedure as it exercises and follows in hearing the appeals and making orders under the Central Excises and Salt Act, 1944 (1 of 1944). 87. WILLFUL ATTEMPT TO EVADE SERVICE TAX, ETC. If a person willfully attempts in any manner whatsoever to evade collection or payment of any service tax, interest or penalty chargeable or imposable under this Chapter, or to suppress or conceal the total value of taxable services, he shall, without prejudice to any penalty that may be imposable on him under any other provisions of this Chapter,

be punishable with imprisonment for a term which may extend to seven years and with fine. Explanation. - For the purposes of this section, a willful attempt to evade payment of any service tax, interest or penalty chargeable or imposable under this Chapter shall include a case where any person (i) has in his possession or control any books of account or other documents (being books of account or other documents relevant to any proceeding under this Chapter) containing a false entry or statement; or (ii) makes or causes to be made any false entry or statement in such books of account or other document; or (iii) willfully omits or causes to be omitted any relevant entry or statement in such books of account or other documents; or (iv) causes any other circumstances to exist which will have the effect of enabling such person to evade payment of any service tax, interest or penalty chargeable or imposable under this Chapter.
88. FAILURE TO FURNISH PRESCRIBED RETURNS.

If a person fails to furnish the return which he is required to furnish by a notice given under sub-section (2) of section 70, he shall, without prejudice to any penalty that may be imposable on him under any other provision of this Chapter, be punishable with imprisonment for a term which may extend to three years and with fine.

89. FALSE STATEMENT IN VERIFICATION, ETC.

If a person makes a statement in any verification under this Chapter or any rule made thereunder, or delivers an account or statement, which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with imprisonment for a term which may extend to three years and with fine.
90. ABETMENT OF FALSE RETURN, ETC.

If a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any taxable service which is false and which he either knows to be false or does not believe to be true or to commit an offence under section 87, he shall be punishable with imprisonment for a term which may extend to seven years and with fine.

91. CERTAIN OFFENCES TO BE NON-COGNIZABLE.

Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), an offence punishable under section 87 or section 88 or section 89 or section 90 shall be deemed to be noncognizable within the meaning of that Code.
92. INSTITUTION OF PROCEEDINGS.

A person shall not be proceeded against for any offence under section 87 or section 88 or section 89 or section 90 except with the previous sanction of the Principal Commissioner of Central Excise.
93. POWER TO GRANT EXEMPTION FROM SERVICE TAX.

(1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette, exempt generally or subject to such conditions as may be specified in the notification, taxable service of any specified description from the whole or any part of the service tax leviable thereon. (2) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by special order in each case, exempt any taxable service of any specified description from the payment of whole or any part of the service tax leviable thereon, under circumstances of exceptional nature to be stated in such order.
94. POWER TO MAKE RULES.

(1) The Central Government may, by notification in the Official Gazette, make rules for carrying out the provisions of this Chapter. (2)In particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely: (a) collection and recovery of service tax under sections 66 and 68; (b) the time and manner and the form in which application for registration shall be made under section 69; (c) the form, manner and frequency of the returns to be furnished under section 70; (d) the form in which appeal under section 85 or under sub-section (6) of section 86 may be filed and the manner in which they may be verified; (e) the manner in which the memorandum of cross objections under sub-section (4) of section 86 may be verified; (f) any other matter which by this Chapter is to be or may be prescribed.

(3) The power to make rules conferred by this section shall on the first occasion of the exercise thereof include the power to give retrospective effect to the rules or any of them from a date not earlier than the date on which the provisions of this Chapter come into force. (4) Every rule made under this Chapter and every notification issued under section 93 shall be laid, as soon as may be, after it is made or issued, before each House of Parliament, while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or notification or both Houses agree that the rule should not be made or the notification should not be issued, the rule or notification shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification.
95. POWER TO REMOVE DIFFICULTIES.

(1) If any difficulty arises in giving effect to the provisions of this Chapter, the Central Government may, by order published in the Official Gazette, not inconsistent with the provisions of this Chapter, remove the difficulty : Provided that no such order shall be made after the expiry of a period of two years from the date on which the provisions of this Chapter come into force. (2) Every order made under this section shall be laid, as soon as may be after it is made, before each House of Parliament.
96. CONSEQUENTIAL AMENDMENT.

In the Economic Offences (Inapplicability of Limitation) Act, 1974 (12 of 1974), in the Schedule, after Entry 7 relating to the Central Excises and Salt Act, 1944 (1 of 1944),the following entry shall be inserted, namely :

Sales tax
In this Act, unless the context otherwise requires, (a) appropriate State means

(i) in relation to a dealer who has one or more places of business situated in the same State, that State;

(ii) in relation to a dealer who has 1[***] places of business situated in different States, every such State with respect to the place or places of business situated within its territory;

[***]

[(aa) business includes

(i) any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture, whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any gain or profit accrues from such trade, commerce, manufacture, adventure or concern; and

(ii) any transaction in connection with or incidental or ancillary to, such trade, commerce, manufacture, adventure or concern;

(ab) crossing the customs frontiers of India means crossing in the limits of the area of a customs station in which imported goods or export goods are ordinarily kept before clearance by customs authorities.

Explanation.For the purposes of this clause, customs station and customs authorities shall have the same meanings as in the Customs Act, 1962 (52 of 1962);]

[(b) dealer means any person who carries on (whether regularly or otherwise) the business of buying, selling, supplying or distributing goods, directly or indirectly, for cash or for deferred payment, or for commission remuneration or other valuable consideration, and includes

(i) a local authority, a body corporate, a company, any co-operative society or other society, club, firm, Hindu undivided family or other association of persons which carries on such business;

(ii) a factor, broker, commission agent, del credere agent, or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not, who carries on the business of buying, selling, supplying or distributing, goods belonging to any principal whether disclosed or not; and

(iii) an auctioneer who carries on the business of selling or auctioning goods belonging to any principal, whether disclosed or not and whether the offer of the intending purchaser is accepted by him or by the principal or a nominee of the principal.

Explanation 1.Every person who acts as an agent, in any State, of a dealer residing outside that State and buys, sells, supplies, or distributes, goods in the State or acts on behalf of such dealer as

(i) a mercantile agent as defined in the Sale of Goods Act, 1930 (3 of 1930), or

(ii) an agent for handling of goods or documents of title relating to goods, or

(iii) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment,

and every local branch or office in a State of a firm registered outside that State or a company or other body corporate, the principal office or headquarters whereof is outside that State, shall be deemed to be a dealer for the purposes of this Act.

Explanation 2.A Government which, whether or not in the course of business, buys, sells, supplies or distributes, goods, directly or otherwise, for cash or for deferred payment or for commission, remuneration or other valuable consideration, shall except in relation to any sale, supply or distribution of surplus, un-serviceable or old stores or materials or waste products or obsolete or discarded machinery or parts or accessories thereof, be deemed to be a dealer for the purposes of this Act;]

(c) declared goods means goods declared under section 14 to be of special importance in interState trade or commerce;

(d) goods includes all materials, articles, commodities and all other kinds of movable property, but does not include 5[newspapers] actionable claims, stocks, shares and securities.

[(dd) place of business includes

(i) in any case where a dealer carries on business through an agent by (whatever name called), the place of business of such agent;

(ii) a warehouse, godown or other place where a dealer stores his goods; and

(iii) a place where a dealer keeps his books of account;

(e) prescribed means prescribed by rules made under this Act;

(f) registered dealer means a dealer who is registered under section 7;

[(g) sale, with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or deferred payment or for any other valuable consideration, and includes,

(i) a transfer, otherwise than in pursuance of a contract, of property in any goods for cash, deferred payment or other valuable consideration;

(ii) a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract;

(iii) a delivery of goods on hire-purchase or any system of payment by instalments;

(iv) a transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration;

(v) a supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration;

(vi) a supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, but does not include a mortgage or hypothecation of or a charge or pledge on goods;]

(h) sale price means the amount payable to a dealer as consideration for the sale of any goods, less any sum allowed as cash discount according to the practice normally prevailing in the trade, but inclusive of any sum charged for anything done by the dealer in respect of the goods at the time of or before the delivery thereof other than the cost of freight or delivery or the cost of installation in cases where such cost is separately charged:

[Provided that in the case of a transfer of property in goods (whether as goods or in some other form) involved in the execution of a works contract, the sale price of such goods shall be determined in the prescribed manner by making such deduction from the total consideration for the works contract as may be prescribed and such price shall be deemed to be the sale price for the purpose of this clause;]

[(i) sales tax law means any law for the time being in force in any State or part thereof which provides for the levy of taxes on the sale or purchase of goods generally or on any specified goods expressly mentioned in that behalf and includes value added tax law, and general sales tax law means any law for the time being in force in any State or part thereof which provides for the levy of tax on the sale or purchase of goods generally and includes value added tax law;]

(j) turnover used in relation to any dealer liable to tax under this Act means the aggregate of the sale prices received and receivable by him in respect of sales of any goods in the course of inter-State trade or commerce made during any prescribed period 9[and determined in accordance with the provisions of this Act and the rules made thereunder]; [(ja) works contract means a contract for carrying out any work which includes assembling, construction, building, altering, manufacturing, processing, fabricating, erection, installation, fitting out, improvement, repair or commissioning of any movable or immovable property;]
7

(k) year, in relation to a dealer, means the year applicable in relation to him under the general sales tax law of the appropriate State, and where there is no such year applicable, the financial year.

WHEN IS A SALE OR PURCHASE OF GOODS SAID TO TAKE PLACE IN THE COURSE OF INTER-STATE TRADE OR COMMERCE.

A sale or purchase of goods shall be deemed to take place in the course of inter-State trade or commerce if the sale or purchase, (a) occasions the movement of goods from one State to another; or (b) is effected by a transfer of documents of title to the goods during their movement from one State to another. Explanation 1 : Where goods are delivered to a carrier or other bailee for transmission, the movement of the goods shall, for the purposes of clause (b), be deemed to commence at the time of such delivery and terminate at the time when delivery is taken from such carrier or bailee. Explanation 2 : Where the movement of goods commences and terminates in the same State it shall not be deemed to be a movement of goods from one State to another by reason merely of the fact that in the course of such movement the goods pass through the territory of any other State.

WHEN IS A SALE OR PURCHASE OF GOODS SAID TO TAKE PLACE OUTSIDE A STATE. -

(1) Subject to the provisions contained in section 3, when a sale or purchase of goods is determined in accordance with sub-section (2) to take place inside a State, such sale or purchase shall be deemed to have taken place outside all other States. (2) A sale or purchase of goods shall be deemed to take place inside a State, if the goods are within the State (a) in the case of specific or ascertained goods, at the time the contract of sale is made; and (b) in the case of unascertained or future goods, at the time of their appropriation to the contract of sale by the seller or by the buyer, whether assent of the other party is prior or subsequent to such appropriation. Explanation.Where there is a single contract of sale or purchase of goods situated at more places than one, the provisions of this sub-section shall apply as if there were separate contracts in respect of the goods at each of such places.

5. WHEN IS A SALE OR PURCHASE OF GOODS SAID TO TAKE PLACE IN THE COURSE OF IMPORT OR EXPORT. -

(1) A sale or purchase of goods shall be deemed to take place in the course of the export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of title to the goods after the goods have crossed the customs frontiers of India. (2) A sale or purchase of goods shall be deemed to take place in the course of the import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.
1

[(3) Notwithstanding anything contained in sub-section (1), the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India shall also be deemed to be in the course of such export, if such last sale or purchase took place after, and was for the purpose of complying with, the agreement or order for or in relation to such export.] [(4) The provisions of sub-section (3) shall not apply to any sale or purchase of goods unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the exporter to whom the goods are sold in a prescribed form obtained from the prescribed authority. (5) Notwithstanding anything contained in sub-section (1), if any designated Indian carrier purchases Aviation Turbine Fuel for the purposess of its international flight, such purchase shall be deemed to take place in the course of the export of goods out of the territory of India. Explanation.For the purposes of this sub-section, designated Indian carrier means any carrier which the Central Government may, by notification in the Official Gazette, specify in this behalf.]

6. LIABILITY TO TAX ON INTER-STATE SALES. -

[(1)] Subject to the other provisions contained in this Act, every dealer shall, with effect from such date2 as the Central Government may, by notification in the Official Gazette, appoint, not being earlier than thirty days from the date of such notification, be liable to pay tax under this Act on all sales 3[of goods other than electrical energy] effected by him in the course of inter-State trade or commerce during any year on and from the date so notified:
4

[Provided that a dealer shall not be liable to pay tax under this Act on any sale of goods which, in accordance with the provisions of sub-section (3) of section 5 is a sale in the course of export of those goods out of the territory of India.]

[(1A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter-State trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.] [(2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), where a sale of any goods in the course of inter-State trade or commerce has either occasioned the movement of such goods from one State to another or has been effected by a transfer of documents of title to such goods during their movement from one State to another, any subsequent sale during such movement effected by a transfer of documents of title to such goods to a registered dealer, if the goods are of the description referred to in sub-section (3) of section 8, shall be exempt from tax under this Act: Provided that no such subsequent sale shall be exempt from tax under this sub-section unless the dealer effecting the sale furnishes to the prescribed authority in the prescribed manner and within the prescribed time or within such further time as that authority may, for sufficient cause, permit, (a) a certificate duly filled and signed by the registered dealer from whom the goods were purchased containing the prescribed particulars in a prescribed form obtained from the prescribed authority; and (b) if the subsequent sale is made to a registered dealer, a declaration referred to in sub-section (4) of section 8: Provided further that it shall not be necessary to furnish the declaration referred to in clause (b) of the preceding proviso in respect of a subsequent sale of goods if, (a) the sale or purchase of such goods is, under the sales tax law of the appropriate State exempt from tax generally or is subject to tax generally at a rate which is lower than three per cent. or such reduced rate as may be notified by the Central Government, by notification in the Official Gazette, under sub-section (1) of section 8 (whether called a tax or fee or by any other name); and (b) the dealer effecting such subsequent sale proves to the satisfaction of the authority referred to in the preceding proviso that such sale is of the nature referred to in this subsection.]

[(3) Notwithstanding anything contained in this Act, no tax under this Act shall be payable by any dealer in respect of sale of any goods made by such dealer, in the course of inter-State trade or commerce, to any official, personnel, consular or diplomatic agent of (i) any foreign diplomatic mission or consulate in India; or

(ii) the United Nations or any other similar international body, entitled to privileges under any convention or agreement to which India is a party or under any law for the time being in force, if such official, personnel, consular or diplomatic agent, as the case may be, has purchased such goods for himself or for the purposes of such mission, consulate, United Nations or other body. (4) The provisions of sub-section (3) shall not apply to the sale of goods made in the course of inter-State trade or commerce unless the dealer selling such goods furnishes to the prescribed authority a certificate in the prescribed manner on the prescribed form duly filled and signed by the official, personnel, consular or diplomatic agent, as the case may be.]

7. REGISTRATION OF DEALERS.

(1) Every dealer liable to pay tax under this Act shall, within such time as may be prescribed for the purpose, make an application for registration under this Act to such authority in the appropriate State as the Central Government may, by general or special order, specify, and every such application shall contain such particulars as may be prescribed.
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[(2) Any dealer liable to pay tax under the sales tax law of the appropriate State, or where there is no such law in force in the appropriate State or any part thereof, any dealer having a place of business in that State or part, as the case may be, may, notwithstanding that he is not liable to pay tax under this Act, apply for registration under this Act to the authority referred to in sub-section (1), and every such application shall contain such particulars as may be prescribed. Explanation.For the purposes of this sub-section, a dealer shall be deemed to be liable to pay tax under the sales tax law of the appropriate State notwithstanding that under such law a sale or purchase made by him is exempt from tax or a refund or rebate of tax is admissible in respect thereof.]

[(2A) Where it appears necessary to the authority to whom an application is made under sub-section (1) or sub-section (2) so to do for the proper realisation of the tax payable under this Act or for the proper custody and use of the forms referred to in clause (a) of the first proviso to sub-section (2) of section 6 or sub-section (1) of section 6Aor 3[sub-section (4) of section 8], he may, by an order in writing and for reasons to be recorded therein, impose as a condition for the issue of a certificate of registration a requirement that the dealer shall furnish in the prescribed manner and within such time as may be specified in the order such security as may be so specified, for all or any of the aforesaid purposes.]

(3) If the authority to whom an application under sub-section (1) or sub-section (2) is made is satisfied that the application is in conformity with the provisions of this Act and the rules made thereunder 2[and the condition, if any, imposed under sub-section (2A), has been complied with] he shall register the applicant and grant to him a certificate of registration in the prescribed form which shall specify the class or classes of goods for the purposes of sub-section (1) of section 8.
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[(3A) Where it appears necessary to the authority granting a certificate of registration under this section so to do for the proper realisation of tax payable under this Act or for the proper custody and use of the forms referred to in sub-section (3A), he may, at any time while such certificate is in force, by an order in writing and for reasons to be recorded therein, require the dealer, to whom the certificate has been granted, to furnish within such time as may be specified in the order and in the prescribed manner such security, or, if the dealer has already furnished any security in pursuance of an order under this sub-section or sub-section (2A), such additional security, as may be specified in the order, for all or any of the aforesaid purposes.]

[(3B) No dealer shall be required to furnish any security and sub-section (2A) or any security or additional security under sub-section (3A) unless he has been given an opportunity of being heard. (3BB) The amount of security which a dealer may be required to furnish under subsection (2A) or sub-section (3A) or the aggregate of the amount of such security and the amount of additional security which he may be required to furnish under sub-section (3A), by the authority referred to therein shall not exceed (a) in the case of a dealer other than a dealer who has made an application, or who has been registered in pursuance of an application, under sub-section (2), a sum equal to the tax payable under this Act, in accordance with the estimate of such authority, on the turnover of such dealer for the year in which such security or, as the case may be, additional security is required to be furnished; and (b) in the case of a dealer who has made an application, or who has been registered in pursuance of an application, under sub-section (2), a sum equal to the tax leviable under this Act, in accordance with the estimate of such authority on the sales to such dealer in the course of inter-state trade or commerce in the year in which such security or, as the case may be additional security is required to be furnished, had such dealer been not registered under this Act.]

[(3C) Where the security furnished by a dealer under sub-section (2A) or sub-section (3A) is in the form of a surety bond and the surety becomes insolvent or dies, the dealer shall, within thirty days of the occurrence of any of the aforesaid events, inform the authority granting the certificate of registration and shall within ninety days of such occurence furnish a fresh surety bond or furnish in the prescribed manner other security for the amount of the bond.] [(3D) The authority granting the certificate of registration may by order and for good and sufficient cause forfeit the whole or any part of the security furnished by a dealer, (a) for realising any amount of tax or penalty payable by the dealer; (b) if the dealer is found to have misused any of the forms referred to in sub-section (2A) to have failed to keep them in proper custody: Provided that no order shall be passed under this sub-section without giving the dealer an opportunity of being heard.]

[(3E) Where by reason of an order under sub-section (3D), the security furnished by any dealer is rendered insufficient, he shall make up the deficiency is such manner and within such time as may be prescribed.] [(3F) The authority issuing the forms referred to in sub-section (2A) may refuse to issue such forms to a dealer who has failed to comply with an order under that sub-section or

sub-section (3A), or with the provisions of sub-section (3C) or sub-section (3E), until the dealer has complied with such order or such provisions, as the case may be.]
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[(3G) The authority granting a certificate of registration may, on application by the dealer to whom it has been granted, order the refund of any amount or part thereof deposited by the dealer by way of security under this section, if it is not required for the purposes of this Act.] [(3H) Any person aggrieved by an order passed under sub-section (2A), sub-section (3A), sub-section (3D) or sub-section (3G) may, within thirty days of the service of the order on him, but after furnishing the security, prefer, in such form and manner as may be prescribed, an appeal against such order to such authority (hereinafter this section referred to as the appellate authority) as may be prescribed: Provided that the appellate authority may, for sufficient cause, permit such person to present the appeal (a) after the expiry of the said period of thirty days; or (b) without furnishing the whole or any part of such security.]

[(3-I) The procedure to be followed in hearing any appeal under sub-section (3H), and the fees payable in respect of such appeals shall be such as may be prescribed.] [(3J) The order passed by the appellate authority in any appeal under sub-section (3H) shall be final.]

[(4) A certificate of registration granted under this section may (a) either on the application of the dealer to whom it has been granted or, where no such application has been made, after due notice to the dealer, be amended by the authority granting it if he is satisfied that by reason of the registered dealer having changed the name, place or nature of his business or the class or classes of goods in which he carries on business or for any other reason the certificate of registration granted to him requires to be amended; or (b) be cancelled by the authority granting it where he is satisfied, after due notice to the dealer to whom it has been granted, that he has ceased to carry on business 8[or has ceased to exist or has failed without sufficient cause, to comply with an order under subsection (3A) or with the provisions of sub-section (3C) or sub-section (3E) or has failed to pay any tax or penalty payable under this Act], or in the case of a dealer registered under sub-section (2) has ceased to be liable to pay tax under the sales tax law of the appropriate State or for any other sufficient reason.] (5) A registered dealer may apply in the prescribed manner not later than six months before the end of a year to the authority which granted his certificate of registration for the cancellation of such registration, and the authority shall, unless the

dealer is liable to pay tax under this Act, cancel the registration accordingly, and where he does so, the cancellation shall take effect from the end of the year.

8. RATES OF TAX ON SALES IN THE COURSE OF INTER-STATE TRADE OR COMMERCE. 8A. DETERMINATION OF TURNOVER. -

(1) In determining the turnover of a dealer for the purpose of this Act, the following deductions shall be made from the aggregate of the sale prices, namely : (a) the amount arrived at applying the following formula : rate of tax aggregate of sale prices ` _____________________________ 100 + rate of tax

PROVIDED that no deduction on the basis of the above formula shall be made if the amount by way of tax collected by a registered dealer, in accordance with the provisions of this Act, has been otherwise deducted from the aggregate of sale prices. Explanation : Where the turnover of a dealer is taxable at different rates, the aforesaid formula shall be applied separately in respect of each part of the turnover liable to a different rate of tax; (b) the sale price of all goods returned to the dealer by the purchasers of such goods, (i) within a period of three months from the date of delivery of the goods, in the case of goods returned before the 14th day of May, 1966; (ii) within a period of six months from the date of delivery of the goods in the case of goods returned on or after the 14th day of May, 1966 : PROVIDED that satisfactory evidence of such return of goods and of refund or adjustment in accounts of the sale price thereof is produced before the authority competent to assess or, as the case may be, reassess the tax payable by the dealer under this Act; and (c) such other deductions as the Central Government may, having regard to the prevalent market conditions, facility of trade and interests of consumers, prescribe. (2) Save as otherwise provided in sub-section (1), in determining the turnover of a dealer for the purposes of this Act, no deduction shall be made from the aggregate of the sale prices.

9. LEVY AND COLLECTION OF TAX AND PENALTIES. -

[9. Levy and collection of tax and penalties.(1) The tax payable by any dealer under this Act on sales of goods effected by him in the course of inter-State trade or commerce, whether such sales fall within clause (a) or clause (b) of section 3, shall be levied by the Government of India and the tax so levied shall be collected by that Government in accordance with the provision of sub-section (2), in the State from which the movement of the goods commenced:
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[Provided that, in the case of a sale of goods during their movement from one State to another, being a sale subsequent to the first sale in respect of the same goods and being also a sale which does not fall within sub-section (2) of section 6, the tax shall be levied and collected

(a) where such subsequent sale has been effected by a registered dealer, in the State from which the registered dealer obtained or, as the case may be, could have obtained, the form prescribed for the purposes of 3[sub-section (4) of section 8] in connection with the purchase of such goods; and (b) where such subsequent sale has been effected by an unregistered dealer in the State from which such subsequent sale has been effected.] (2) Subject to the other provisions of this Act and the rules made thereunder, the authorities for the time being empowered to assess, re-assess, collect and enforce payment of any tax under general sales tax law of the appropriate State shall, on behalf of the Government of India, assess re-assess, collect and enforce payment of tax, including any 4[interest or penalty,] payable by a dealer under this Act as if the tax or 4[interest or penalty] payable by such a dealer under this Act is a tax or 4[interest or penalty] payable under the general sales tax law of the State; and for this purpose they may exercise all or any of the powers they have under the general sales tax law of the State; and the provisions of such law, including provisions relating to returns, provisional assessment, advance payment of tax, registration of the transferee of any business, imposition of the tax liability of a person carrying on business on the transferee of, or successor to, such business, transfer of liability of any firm or Hindu undivided family to pay tax in the event of the dissolution of such firm or partition of such family, recovery of tax from third parties, appeals, reviews, revisions, references, 5[refunds, rebates, penalties,] 6[charging or payment of interest,] compounding of offences and treatment of documents furnished by a dealer as confidential, shall apply accordingly: Provided that if in any State or part thereof there is no general sales tax law in force, the Central Government may, be rules made in this behalf make necessary provision for all or any of the matter specified in this sub-section. [(2A) All the 8[provisions relating to offences, interest and penalties] (including provisions relating to penalties in lieu of prosecution for an offence or in addition to the
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penalties or punishment for an offence but excluding the provisions relating to matters provided for in section 10 and 10A) of the general sales tax law of each State shall, with necessary modifications, apply in relation to the assessment, re-assessment, collection and the enforcement of payment of any tax required to be collected under this Act in such State or in relation to any process connected with such assessment, reassessment, collection or enforcement of payment as if the tax under this Act were a tax under such sales tax law.]
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[(2B) If the tax payable by any dealer under this Act is not paid in time, the dealer shall be liable to pay interest for delayed payment of such tax and all the provisions for delayed payment of such tax and all the provisions relating to due date for payment of tax, rate of interest for delayed payment of tax, of the general sales tax law of each State, shall apply in relation to due date for payment of tax, rate of interest for delayed payment of tax, and assessment and collection of interest for delayed payment of tax under this Act in such States as if the tax and the interest payable under this Act were a tax and an interest under such sales tax law.] (3) The proceeds in any financial year of any tax, 10[including any interest or penalty] levied and collected under this Act in any State (other than a Union Territory) on behalf of the Government of India shall be assigned to the State and shall be retained by it; and the proceeds attributable to Union territories shall form part of the Consolidated Fund of India.]

9A. COLLECTION OF TAX TO BE ONLY BY REGISTERED DEALERS. -

9A. COLLECTION OF TAX TO BE ONLY BY REGISTERED DEALERS. No person who is not a registered dealer shall collect in respect of any sale by him of goods in the course of inter-State trade or commerce any amount by way of tax under this Act, and no registered dealer shall make any such collection except in accordance with this Act and the rules made thereunder.