Upto 30.06.2012, the charging Section for the purpose of Service tax  is Section 66 of the Finance Act, 1994 according to which service tax is levied at the rate of 12% on all taxable services. With effect from 01.07.0212, Section 66 will no longer be in force and a new charging section 66B will take its place. Section 68 stipulates that service tax is payable by the service providers at the rate specified under Section 66 in such manner as may be prescribed. This Section is continued in the Finance Act, 1994 even from 01.07.2012. Government has now realised its mistake and come with a order specifying the charging section for service tax w.e.f 01.07.2012 to 66B.

The provisions of this Section 68 upto 30.06.2012 and from 01.07.2012 read as under:

Upto 30.06.2012:

Section 68. Payment of service tax. –  (1) Every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed.

(2) Notwithstanding anything contained in sub-section (1), in respect of any taxable service notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

From 01.07.2012 (after incorporating the amendments made vide Finance Act, 2012)

Section 68. Payment of service tax. –  (1) Every person providing taxable service to any person shall pay service tax at the rate specified in section 66 in such manner and within such period as may be prescribed.

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(2) Notwithstanding anything contained in sub-section (1), in respect of such taxable services as may be notified by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section 66 and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service.

“Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such person and the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider.”;

Order issued by the Government to remove the difficulties  is as follows :-

Service Tax (Removal of Difficulty) Order, 2012 – Amendment in section 68 of the Finance Act, 1994

Order No. 1/2012 [F. No. 334/1/2012-TRU], dated 15-6-2012

Whereas difficulties have arisen in giving effect to the provisions of section 143 of the Finance Act, 2012 (23 of 2012), insofar as it relates to insertion of section 66B in Chapter V of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act);

Now, therefore, in exercise of the powers conferred by sub-section (1-I) of section 95 of the Finance Act, the Central Government, hereby makes the following Order, namely:-

1. (1) This Order may be called the Service Tax (Removal of Difficulty) Order, 2012.

(2) This Order shall come into force on the 1st day of July, 2012.

2. In sub-sections (1) and (2) of section 68 of the Finance Act, for the figures “66”, the figures and letter “66B” shall be substituted.

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