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Unit 6: Service Tax

by law principles for determining the modalities of levying the Service Tax by the Central Govt. Notes
& collection of the proceeds thereof by the Central Govt. & the State, the amendment vide
Constitution (95th Amendment) Act, 2003 has been made.
Consequently, new article 268A has been inserted for Service Tax levy by Union Govt., collected
and appropriated by the Union Govt., and amendment of Seventh Schedule to the Constitution,
in list I-Union list after entry 92B, entry 92C has been inserted for taxes on services as well as in
article 270 of the Constitution the clause (1) of article 268A has been included.

6.1 Section 65A

Section 65A discusses about the classification of taxable services which can be detailed as under:
(1) For the purposes of this Chapter, classification of taxable services shall be determined
according to the terms of the sub-clauses of clause (105) of section 65.
(2) When for any reason, a taxable service is, prima facie, classifiable under two or more sub-
clauses of clause (105) of section 65, classification shall be effected as follows:

(a) the sub-clause which provides the most specific description shall be preferred to sub-clauses
providing a more general description;
(b) composite services consisting of a combination of different services which cannot be classified
in the manner specified in clause (a), shall be classified as if they consisted of a service which
gives them their essential character, in so far as this criterion is applicable;
(c) when a service cannot be classified in the manner specified in clause (a) or clause (b), it shall
be classified under the sub-clause which occurs first among the sub-clauses which equally merit
consideration.
6.2 Director General (Service Tax)

Considering the increasing workload due to the expanding coverage of service tax, it has been
decided to centralise all the work and entrust the same to a separate unit supervised by a very
senior official. Accordingly, the office of Director General (Service Tax) has been formed in the
year 1997. It is headed by the Director General (Service Tax).

Functions and Powers

The functions and powers of Director General (Service Tax) are:

 To ensure that proper establishment and infrastructure has been created under different
Central Excise Commissionerate to monitor the collection and assessment of service tax.
 To study the staff requirement at field level for proper and effective implementation of
service tax.
 To study as to how the various service taxes are being implemented in the field and to
suggest measures as may be necessary to increase revenue collection or to streamline
procedures.
 To undertake study of law and procedures in relation to service tax with a view to simplify
the service tax collection and assessment and make suggestions thereon.
 To form a database regarding the collection of service tax from the date of its inception in
1994 and to monitor the revenue collection from service tax.

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