Declared Services in Service Tax–An Analysis

The definition of service in the first instant is very wide to cover any transaction done for a consideration. However, there exist few declared services service taxactivities which would overlap with the other levies of state with a marginal difference, thereby questioning the constitutional validity of the levy under service tax. In some cases there may be a doubt whether that activity could possibly called a service at all.

To rest the doubt about the validity of a transaction to be considered as service, the authorities have intended to declare such activities to be a service. To give an instance, the first declared service, renting of immovable property service‖ was challenged as to whether it was a service; as well as the competence of the Union to levy the tax on a property, which is a subject to state governance.

Similarly most of the declared services were challenged. For all events and purposes these transactions shall be deemed to be service.

Declared Services – Definition

Declared Services are defined under Section 65B (22) of the Finance Act, 1994 to mean any activity carried out by a person for another person for consideration and declared as such under Section 66E of the Finance Act, 1994. It means for a service to come under the category of declared services, it has to satisfy two basic conditions conjunctively

  • it must be an activity by one person to another for consideration
  • it must be specified(i.e. declared) under section 66E

Declared Services under Section 66E

The below mentioned 9 activities when carried out by a person for another for consideration would amount to provision of service.

  1. Renting of immovable property;
  2. Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration is received after issuance of certificate of completion by a competent authority;
  3. temporary transfer or permitting the use or enjoyment of any intellectual property right;
  4. development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software;
  5. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
  6. transfer of goods by way of hiring, leasing, licensing or any such manner without transfer of right to use such goods;
  7. activities in relation to delivery of goods on hire purchase or any system of payment by installments;
  8. service portion in execution of a works contract;
  9. service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as part of the activity.

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