Finance Act, 1994

SERVICE TAX ACT Chapter V of the Finance Act, 1994

SECTION 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.

SECTION 65. Definitions. — In this Chapter, unless the context otherwise requires, -

(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 [person] engaged in providing any service connected with the making, preparation, display or exhibition of advertisement and includes an advertising consultant;

(3a)  “Aircraft” has the meaning assigned to it in clause (1) of section 2 of the Aircraft

Act, 1934 (22 of 1934);

(3b)   “Aircraft operator” means any person who provides the service of transport of goods or passengers by aircraft;

(3c)  “Airport” has the meaning assigned to it in clause (b) of section 2 of the Airports

Authority of India Act, 1994 (55 of 1994);

(3d)  “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.

(4)             “Air travel agent” means any person engaged in providing any service connected with the booking of passage for travel by air

(5)             “Appellate  Tribunal”  means  the  Customs,  Excise  and  Service  Tax  Appellate

Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962)

(6)             “Architect” means any person whose name is, for the time being, entered in the register of architects maintained under section 23 of the Architects Act, 1972 (20 of

1972) and also includes any commercial concern engaged in any manner, whether

directly or indirectly, in rendering services in the field of architecture

(7)             “Assessee” means a person liable to pay the service tax and includes his agent

(7a) “Auction of property” includes calling the auction or providinga facility, advertising or illustrating services, pre-auction price estimates, short-term storage services, and repair or restoration services in relation to auction of property

(7b) “Associated enterprise” has the meaning assigned to it in section 92A of the

Income-tax Act, 1961, (43 of 1961)

(8)             “Authorised dealer of foreign exchange” has the meaning assigned to “authorised person” in clause (c) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999)

(9)             [******]

(9a)  “Automated teller machine” means an interactive automatic machine designed to dispense cash, accept deposit of cash, transfer money between bank accounts and facilitate other financial transactions

(9b)  “Automated teller machine operations, maintenance or management service” means any service provided in relation to automated teller machines and includes site selection, contracting of location, acquisition, financing, installation, certification, connection, maintenance, transaction processing, cash forecasting, replenishment, reconciliation and value-added services

(9c)  ”Banker to an issue” means a bank included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), carrying on the activities relating to an issue including acceptance of application, application money, allotment money and call money, refund of application money, payment of dividend and interest warrants

(10)           “Banking” has the meaning assigned to it in clause (b) of section 5 of the Banking

Regulation Act, 1949 (10 of 1949)

(11)           “Banking company” has the meaning assigned to it in clause (a) of section 45A of the

Reserve Bank of India Act, 1934 (2 of 1934)

(12)           “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)  Financial leasing services including equipment leasing and hire-purchase;

Explanation.- For the purposes of this item, “financial leasing” means a lease transaction where

—

(i)   contract for lease is entered into between two parties for leasing of a specific asset;

(ii)   such contract is for use and occupation of the asset by the lessee;

(iii)  the lease payment is calculated so as to cover the full cost of the asset together with the  interest charges; and

(iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment

(ii)    *   *   *   *

(iii)  Merchant banking services

(iv)  Securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing

(v)    Asset   management   including   portfolio   management,   all   forms   of   fund management, pension fund management, [custodial, depository and trust services

(vi)   advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy

(vii)  Provision and transfer of information and data processing; (viii) Banker to an issue services; and

(ix)   other financial services, namely, lending, issue of pay order, demand draft, cheque, letter  of  credit  and  bill  of  exchange,  transfer  of  money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults; operation of bank accounts

(b) foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorised dealer in foreign exchange or an authorised money changer, other than those covered under sub- clause(a)

Explanation.-For the purposes of this clause, it is hereby declared that “purchase or sale of foreign currency, including money changing” includes purchase or sale of foreign currency, whether or not the consideration for such purchase or sale, as the case may be, is specified separately.

(13)           “Board” means  the  Central  Board  of  Excise  and  Customs constituted under the

Central Boards of Revenue Act, 1963 (54 of 1963)

(14)           “Body corporate” has the meaning assigned to it in clause (7) of section 2 of the

Companies Act, 1956 (1 of 1956)

(15)           “Broadcasting” has the meaning assigned to it in clause (c) of section 2 of the PrasarBharti (Broadcasting Corporation of India) Act, 1990 (25 of 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 or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables, direct to home signals or by any other means to cable operator including multisystem operator or any other person 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;

(16)           “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 or permitting the rights to receive any form of communication like sign, signal, writing, picture, image and sounds of all kinds by transmission of electro-magnetic waves through space or through cables,  direct  to  home signals or by any other means to  cable  operator, including multisystem operator or any other person on behalf of the said agency] or organisation;

(17)           “Beauty treatment” includes hair cutting, hair dyeing, hair dressing, face and beauty treatment, cosmetic treatment, manicure, pedicure or counselling services on beauty, face care or make-up or such other similar services;]

(18)           “Beautyparlour” means any establishment providing beauty treatment services; (19)           “Business auxiliary service” means any service in relation to-

(i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or

(ii) Promotion or marketing of service provided by the client; or (iii) Any customer care service provided on behalf of the client; or (iv) Procurement of goods or services, which are inputs for the client;

or[Explanation. — For the removal of doubts, it is hereby declared that for the

purposes of this sub-clause, “inputs” means all goods or services intended for

use by the client]

(v) Production or processing of goods for, or on behalf of, the client

(vi) Provision of service on behalf of the client; or

(vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision and includes services as a commission agent, [but does not include any activity that amounts to manufacture of excisable goods.

Explanation. — For the removal of doubts, it is hereby declared that for the purposes of this clause, -

(a) ”Commission agent” means any person who acts on behalf of another person and

causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person —

(i) Deals with goods or services or documents of title to such goods or services; or

(ii) Collects payment of sale price of such goods or services; or

(iii) Guarantees for collection or payment for such goods or services; or

(iv) undertakes any activities relating to such sale or purchase of such goods or services;

(b)“Excisable goods” has the meaning assigned to it in clause (d) of section 2 of the Central

Excise Act, 1944 (1 of 1944);

(c)“Manufacture” has the meaning assigned to it in clause (f) of section 2 of the Central

Excise Act, 1944 (1 of 1944)

(19a) “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, as the case may be

(19b) “business entity” includes an association of persons, body of individuals, company or firm but does not include an individual

(20)           “Cab” means –

(i)   Amotorcab, or

(ii)  Amaxicab, or

(iii) Any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward.

Provided that the maxicab referred to in sub-clause (ii) or motor vehicle referred to in sub-clause (iii) which is rented for use by an educational body imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, shall not be included within the meaning of cab

(21)           “Cable operator” has the meaning assigned to it in clause (aa) of section 2 of the

Cable Television Networks (Regulation) Act, 1995 (7 of 1995)

(22)           “Cable service” has the meaning assigned to it in clause (b) of section 2 of the Cable

Television Networks (Regulation) Act, 1995 (7 of 1995)

(23)          “Cargo handling service” means loading, unloading, packing or unpacking of cargo and includes, -

(a) cargo handling services provided for freight in special containers or for non- containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport, and cargo handling service incidental to freight; and

(b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking,but does not include, handling of export cargo or passenger baggage or mere transportation of goods

(24)          “Caterer” means any person who supplies, either directly or indirectly, any food, edible preparations, alcoholic or non-alcoholic beverages or crockery and similar articles or accoutrements for any purpose or occasion

(24a) “Civil enclave” has the meaning assigned to it in clause (i) of section 2 of the

Airports Authority of India Act, 1994 (55 of 1994)

(24b) “Cleaning activity” means cleaning, including specialised cleaning services such as disinfecting, exterminating or sterilising of objects or premises, of–

(i)         Commercial or industrial buildings and premises thereof; or

(ii)        Factory, plant or machinery, tank or reservoir of such commercial or industrial buildings and premises thereof,but does not include such services in relation to agriculture, horticulture, animal husbandry or dairying

(25)           “Clearing and forwarding agent” means any person who is engaged in providing any service, either directly or indirectly, connected with the clearing and forwarding operations in any manner to any other person and includes a consignment agent

(25a)“Clinical establishment” means —

(i)        a hospital, maternity home, nursing home, dispensary, clinic, sanatorium or an institution, by whatever name called, owned, established, administered

or managed by any person or body of persons, whether incorporated or not, having in its establishment the facility of central air-conditioning either in whole or in part of its premises and having more than twenty-five beds for in-patient treatment at any time during the financial year, offering services for diagnosis, treatment or care for illness, disease, injury, deformity, abnormality or pregnancy in any system of medicine; or

(ii)       an entity owned, established, administered or managed by any person or body of persons, whether incorporated or not, either as an independent entity or as a part of any clinical establishment referred to in sub-clause (i),

which carries out diagnosis of diseases through pathological, bacteriological, genetic, radiological, chemical, biological investigations or other diagnostic or investigative services with the aid of laboratory or other medical equipment,but does not include an establishment, owned or controlled by —

(a)The Government; or

(b)A local authority;

(25aa) “club or association” means any person or body of persons providing services,   facilities   or   advantages,   primarily  to   its   members,  for   a subscription or any other amount, but does not include —

(iii)     anybody established or constituted by or under any law for the time being in force; or

(iv)      any person or body of persons engaged in the activities of trade unions, promotion of agriculture, horticulture or animal husbandry; or

(v)       any person or body of persons engaged in any activity having objectives which are in the nature of public service and are of a charitable, religious or political nature; or

(vi)      any person or body of persons associated with press or media

(25b) “commercial or industrial construction” means —

(a)Construction of a new building or a civil structure or a part thereof; or

(b)Construction of pipeline or conduit; or

(c) Completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or

(d) Repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is —

(i)        used, or to be used, primarily for; or

(ii)       occupied, or to be occupied, primarily with; or

(iii)     engaged, or to be engaged, primarily incommerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams

(26)           “Commercial training or coaching” means any training or coaching provided by a commercial training or coaching centre;”Government” means the   [‘(26A) Departments of the Central Government, a State Government and its Departments and a Union territory and its Departments, but shall not include any entity, whether created by a statute or otherwise, the accounts of which are not required to be kept in accordance with article 150 of the Constitution or the rules made thereunder

(27)           “Commercial training or coaching centre” means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons

on any subject or field other than the sports, with or without issuance of a certificate and includes coaching or tutorial classes

(28)           [****]

(29)           “Commissioning and installation agency” means any agency providing service [in relation to erection, commissioning or installation

(30)           “Computer network” has the meaning assigned to it in clause (j) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000)

(30a) “Construction of complex” means –

(a)     Construction of a new residential complex or a part thereof; or

(b)     Completion  and  finishing  services  in  relation  to  residential  complex  such  as  glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or

(c)     Repair, alteration, renovation or restoration of, or similar services in relation to, residential complex

(31)           ”Consulting engineer” means any professionally qualified engineer or any body corporate or any other firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner [to any person] in one or more disciplines of engineering

(32)           “Convention” means a formal meeting or assembly which is not open to the general public, but does not include a meeting or assembly, the principal purpose of which is to provide any type of amusement, entertainment or recreation

(33)           “Courier agency” means a [any person] 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;

(33a) “credit card, debit card, charge card or other payment card service” includes any service provided, —

(i)      By a banking company, financial institution including non-banking financial company or any other person (hereinafter referred to as the issuing bank), issuing such card to a card holder;

(ii)     by any person to an issuing bank in relation to such card business, including receipt and processing of application, transfer of embossing data to issuing bank’s personalisation agency, automated teller machine personal identification number generation, renewal or replacement of card, change of address, enhancement of credit limit, payment updation and statement generation;

(iii)    by any person, including an issuing bank and an acquiring bank, to any other person in relation to settlement of any amount transacted through such card.Explanation. — For the purposes of this sub-clause, “acquiring bank” means any banking company, financial institution including

non-banking financial company or any other person, who makes the payment to any person who accepts such card;

(iv)    in relation to joint promotional cards or affinity cards or co-branded cards;

(v)     in relation to promotion and marketing of goods and services through such card;

(vi)    by a person, to an issuing bank or the holder of such card, for making use of automated teller machines of such person; and

(vii)   by the owner of trade marks or brand name to the issuing bank under an agreement, for use of the trade mark or brand name and other services in relation to such card, whether or not such owner is a club or association and the issuing bank is a member of such club or association.Explanation. — For the purposes of this sub-clause, an issuing bank and the owner of trade marks or brand name shall be treated as separate persons;

(34)           “Credit rating agency” means any person engaged in the business of credit rating of any debt obligation or of any project or programme requiring finance, whether in the 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;

(35)           “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 (52 of

1962)

(35a) “customs airport” means an airport appointed as such under clause (a) of sub- section (1) of section 7 of the Customs Act, 1962

(36)           “Data” has the meaning assigned to it in clause (o) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000)

(36a) “Dredging” includes removal of material including, silt, sediments, rocks, sand, refuse, debris, plant  or animal matter in  any excavating, cleaning, deepening, widening or lengthening, either permanently or temporarily, of any river, port, harbour, backwater or estuary

(36b) “Design services” includes services provided in relation to designing of furniture, consumer products, industrial products, packages, logos, graphics, websites and corporate identity designing and production of three dimensional models

(36c) “Development and supply of content” includes development and supply of mobile value added services, music, movie clips, ring tones, wall paper, mobile games, data, whether or not aggregated, information, news and animation films

(37)           “Dry cleaning” includes dry cleaning of apparels, garments or other textile, fur or leather articles

(38)           “Dry cleaner” means any person providing service in relation to dry cleaning

(39)           “Electronic form” has the meaning assigned to it in clause (r) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000)

(39a) “Erection, commissioning or installation”means any service provided by a commissioning and installation agency, in relation to, —

(i)       erection, commissioning or installation of plant, [machinery, equipment or structures, whether pre-fabricated or otherwise or

(ii)        Installation of –

(a)     Electrical and electronic devices, including wirings or fittings therefor; or

(b)         Plumbing, drain laying or other installations for transport of fluids; or

(c)         Heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work.

(d)         Thermal insulation, sound insulation, fire proofing or water proofing; or

(e)         Lift and escalator, fire escape staircases or travelators; or

(f)         Such other similar services

(40)           “Event management” means any service provided in relation to planning, promotion, organising or presentation of any arts, entertainment, business, [sports, marriage or any other event] and includes any consultation provided in this regard

(41)           “Event manager” means any person who is engaged in providing any service in relation to event management in any manner

(42)           “Facsimile  (FAX)” means a  form of telecommunication by which  fixed graphic images, such as printed texts and pictures are scanned and the information converted into electrical signals for transmission over the telecommunication system

(43)           “Fashion  designing”  includes  any  activity  relating  to  conceptualising,  outlining, creating the designs and preparing patterns for costumes, apparels, garments, clothing accessories, jewellery or any other articles intended to be worn by human beings and any other service incidental thereto

(44)           “Fashion designer” means any person engaged in providing service in relation to fashion designing

(45)           “Financial institution” has the meaning assigned to it in clause (c) of section 45-I of the Reserve Bank of India Act, 1934 (2 of 1934)

(46)           “Foreign exchange broker” includes any authorised dealer of foreign exchange

(46a) “Forward contract” has the meaning assigned to it in clause (c) of section 2 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952)

(47)           “Franchise” means an agreement by which the franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved

(48)           “Franchisor” means any person who enters into franchise with a franchisee and includes any associate of franchisor or a person designated by franchiser to enter into franchise on his behalf and the term “franchisee” shall be construed accordingly

(49)           “General insurance business” has the meaning assigned to it in clause (g) of section

3 of the General Insurance Business (Nationalization) Act, 1972 (57 of 1972)

(50)           “Goods” has the meaning assigned to it in clause (7) of section 2 of the Sale of Goods

Act, 1930 (3 of 1930);

(50a) “goods carriage” has the meaning assigned to it in clause (14) of section 2 of the

Motor Vehicles Act, 1988 (59 of 1988)

(50b) “goods transport agency” means any [person who] provides service in relation to transport of goods by road and issues consignment note, by whatever name called

(51)           “Health and fitness service” means service for physical well being such as, sauna and steam bath, turkish bath, solarium, spas, reducing or slimming salons, gymnasium, yoga, meditation, massage (excluding therapeutic massage) or any other like service

(52)           “Health club and fitness Centre” means any establishment, including a hotel or a resort, providing health and fitness service;

(53)           “Information” has the meaning assigned to it in clause (v) of sub-section (1) of section 2 of the Information Technology Act, 2000 (21 of 2000)

(53a) “information technology software” means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment

(54)           “Insurance agent” has the meaning assigned to it in clause (10) of section 2 of the

Insurance Act, 1938 (4 of 1938)

(55)           “Insurance  auxiliary  service”  means  any  service  provided  by  an  actuary,  an intermediary or insurance intermediary or an insurance agent in relation to general

insurance business or life  insurance business and  includes risk  assessment, claim settlement, survey and loss assessment

(55a) “Intellectual property right” means any right to intangible property, namely, trademarks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright;

(55b) “Intellectual property service” means, - (a)Transferring, temporarily, or

(b)Permitting the use or enjoyment of, any intellectual property right

(56)           “Intermediary or insurance intermediary” has the meaning assigned to it in clause (f) of sub-section(1) of section 2 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)

(56a) “International journey”, in relation to a passenger, means his journey from any customs airport on board any aircraft to a place outside India

(56b) “Internet” means a global information system which is logically linked together by a globally unique address, based on Internet Protocol or its subsequent enhancements or up gradations and is able to support communications using the Transmission Control Protocol or Internet Protocol suite or its subsequent enhancements or up gradations and all other Internet Protocol compatible protocols

(57)           “Internet cafe” means a commercial establishment providing facility for accessing internet;

(57a) “Internet telecommunication service” includes, —

(i)        Internet backbone services, including carrier services of internet traffic by one Internet Service Provider to another Internet Service Provider,

(ii)       Internet access services, including provision of a direct connection to the internet and space for the customer’s web page,

(iii)     Provision of telecommunication services, including fax, telephony, audio conferencing and video conferencing, over the internet