What is Service Tax? Service Tax Rules 1994


What is Service Tax?

Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994.

Service Tax Rules:

As per the Finance Act, 1994, the government of India creates a set of rules in order to assess and collect service tax in India. Listed below are the rules applicable to service tax in India:

Rule 1: Short Title and Commencement:

  • The rules created to assess service tax may called as Service Tax Rules, 1994.
  • They came into effect from 1st July, 1994.

Rule 2: Definitions:

  • This category of rules includes the definitions of various terms such as “Act”, “assessment” “personal liable for paying service tax” etc. Act refers to the Finance Act, 2014, “assessment” refers to the self-assessment of service tax by the assessee, provisional assessment and reassessment, and “personal liable for paying service tax” refers to the recipient of service.
  • It also includes definition of “quarter” “security services” “renting of immovable property” etc. Quarter refers to the period between 1st January to 31st March or 1st April to 30th June; or 1st July to 30th September; or 1st October to 31st December of a single financial year. “Renting of immovable property” refers to services provided by renting of immovable property and “security services” refers to services relating to the security and property.

Also Check: Service Tax Registration Procedure Online

Rule: 3 Appointment of Officers:

  • As per this rule, the Central Board of Excise and Customs can appoint central excise officers.

Rule 4: Registration:

  • Every service provider who is liable to pay service tax shall apply for registration by using the application Form ST – 1 within 30 days from the date on which service tax is charged. This is very essential.

Rule 4 (A): Information about Taxable Services To Be Provided on Bill, Invoice Or Challan

  • Every service provider offering taxable services will issue an invoice or a bill or a challan signed by him or by another person authorized by him which will contain the basic information such as name, address and registration number of the service provider; name and address of the service recipient; description and cost of taxable service provided and the amount of service tax to be paid.

Rule 4 (B): Consignment Note:

  • Any service provider that provides services related to transportation of goods should issue a consignment note.

Rule 5: Records:

  • Any records containing computerized data maintained and produced by an assessee according to different existing laws shall be accepted by Central Board of Excise and Custom.

Rule 5 (A): Access to Registered Premises:

  • As per this rule, any officer authorized by the commissioner shall have access to any premises in order to complete scrutiny and verification required to protect revenues.

Also Check: Service Tax Return online

Rule (6): Payment of Service Tax:

  • As per this rule, the service tax will be paid to the credit of the central government by the 6th of every month, if paid electronically and 5th of every month, if paid via other means.

Rule 6 (A) Export of Services:

  • It includes the situations under which any services shall considered as export of services. If the provider of service is located in the taxable territory and the recipient is located outside India, the service shall be considered as export of service.

Rule 7: Returns:

  • Every service provider shall submit a half yearly return in Form ST-3 or ST-3A together with a copy of the Form TR-6 filled in triplicate by 25th of the month following the half year.

Rule 7 (A) Returns for taxable services provided by transport operators:

  • Services/goods provided by transport operators shall also furnish a return within a period of six months from the 13th May of 2003, failing which will lead to penalty.

Rule 7 (B) Revision of Return:

  • As per this rule, an assessee can submit a revised return in Form ST-3 to modify or correct any mistakes within 90 days from the date of submission of return.

Rule 7 (C): Amount to be paid for delay in furnishing returns:

  • An amount of Rs.500 needs to be paid to the credit of the central government, if you fail to furnish your return within 15 days from the prescribed date of submission. If it gets delayed by more than 15 days, you need to pay Rs. 1000. If it extends beyond 30 days, you need to pay Rs. 1000 plus Rs.100 per month till the date you finally furnish your returns.

Rule 8: Appeal to Commissioner of Central Excise:

  • You can appeal to Commissioner of Central Excise in Form ST – 4 under section 85 of the Finance Act, 1994.

Rule 9: Form of Appeals to Appellate Tribunal:

  • You can appeal to the Appellate Tribunal under section 86 of the Finance Act, 1994 by using Form ST-5.

Rule 10: Facilities and Procedure for Large Taxpayers:

  • This section of rules include the provisions enjoyed by the large taxpayers. A large taxpayer shall submit returns for each of their registered premises. They may also be required to produce all financial records for verification and security when required.

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