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Unit 6: Service Tax

Corporate assessees are given the liberty to pay tax on the value of taxable service, provided by Notes
them in a month, by the 25th of the following month to enable them to finalize the accounts.
Further, the individual assessees are required to pay the levy only once in a quarter.
The process of registration of assessees has been considerably simplified.
No separate accounts have been prescribed for the purposes of Service Tax. It has been provided
that accounts being maintained by the assessees under any other law in force would be sufficient.
This has placed the Department at considerable inconvenience to itself, so as to minimize
difficulties for the assessees.
The Finance Act, 2001 has introduced self-assessment for service tax returns; thereby sparing the
assessees from the rigours of routine scrutiny and assessment.

Frequency of filing the returns is minimized. Filing of statutory return has been made half
yearly and by the 25th of the month following the half-year. This is in replacement of the
monthly/quarterly returns prescribed earlier.
Penal provisions do exist in respect of Service Tax also. Failure to obtain registrations, failure to
pay the tax, failure to furnish the prescribed returns, suppression of the correct value of the
taxable services and failure to comply with notice do attract penal provisions as prescribed. But,
it is specifically provided that no penalty is imposable on the assessee for any of the above
failures, if the assessee proves that there was reasonable cause for the failure. This provision has
been inserted to take care of the genuine difficulties of the new assessees.

Government’s liberal attitude is more evident in the case of prosecutions. Hardly will there be
any tax statute with revenue implications, where prosecutions of the offenders are not provided.
In the case of the Service Tax also it was thought of and sections 87 to 93 of the Finance Act, 1994,
did provide for prosecution of offenders. However, these provisions were subsequently
withdrawn as a noble gesture towards the assessees.
Service Tax Credit Rules, 2002, have been replaced by the CENVAT Credit Rules, 2004, introduced
by the Finance Act, 2004, where under CENVAT credit has been extended across the sectors i.e.
goods and services.

Did u know? Service tax is levied on specified taxable services and the responsibility of
payment of the tax is cast on the service provider. System of self-assessment of Service Tax
Returns by service tax assessees has been introduced w.e.f. 01.04.2001.

Self Assessment

Fill in the blanks:
1. ......................................was introduced in India in 1994 by Chapter V of the Finance Act.
2. The ......................................has also recommended electronic administration in
implementation of Service Tax to bring transparency in tax administration and avoid
interfacing between service providers and tax authorities.
3. Service tax is levied on specified ......................................services and the responsibility of
payment of the tax is cast on the service provider.

4. The ......................................Superintendent of Central Excise is authorized to cross verify
the correctness of self assessed returns.
5. ......................................assessees are given the liberty to pay tax on the value of taxable
service.

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