Broadly what types of Government Departments are chargeable to service tax? As per the definition mentioned in point 2 broadly three categories of government entities are covered under the service tax law: a. Departments of Central Government b. State Government & its departments c. Union Territory and its Departments
Prior to Finance Bill 2016, Legal Services were covered under reverse charge mechanism as per Notification No 30/2012-ST dated 20.06.2012. In respect of services received by any Business Entity [whose turnover exceeds Rs 10 lakhs in the preceding financial year] from an Individual Advocate or Firm of Advocates was chargeable to tax under reverse charge mechanism.
The government is showing the political will in enforcing GST law from April 01, 2016. In this scenario it becomes important to discuss about the provisions which would be applicable in case of interstate transactions.
Finance Act 2015 has drastically amended the penalty provisions under the Finance Act 1994 (Service Tax law) in order to ensure nondiscriminatory form of penalties. Earlier penalties u/s 76 (for short payment of S/Tax) and u/s 78(Suppression of facts) used to be at Rs 100/- per day or 1% per month whichever is higher. This lead to the number of litigation upon the calculation of penalty.
In a regime where cloud computing is gaining popularity and the servers providing the facility of data storage at remote location, it becomes pertinent to assess whether such activity constitute service or Goods for taxation purpose. Although service tax law has gone through drastic change by introduction of negative list concept w.e.f. 01/07/2012, litigation still continues on old system of service tax law.
