Section 68 of the Finance Act, 1994 is the principal section which fixes responsibility to pay

service tax. The powers to decide time and manner of payment of service tax have been

granted to the Central Government vide Rule 6 of the Service Tax Rules, 1994.

As per section 68, every person providing taxable service to any person, pays service tax at

the rate specified in section 66 in the prescribed manner and within the prescribed period.

At present, the rate of service tax specified in section 66 is 12%. The period and the manner

is prescribed in Rule 6 of the Service Tax Rules, 1994 which have been discussed in paras

1.9 and 1.10 respectively.

However, in respect of certain services notified by the Central Government, the service tax

 

thereon is paid by certain specified persons in the prescribed manner. In pursuance of this

power, the Central Government in Rule 2(1)(d) of Service Tax Rules, 1994 has notified

specific class of persons who are liable to pay service tax.

Thus, as a general rule a service provider is liable to pay service tax, but in the cases and

circumstances mentioned in Rule 2(1)(d), service receiver or the specified persons are liable

to pay service tax.   in relation to general insurance business, the person liable to pay service tax is the

(ii) in relation to insurance auxiliary service provided by an insurance agent, the person

liable to pay service tax is the person carrying on general insurance business or the

life insurance business as the case may be, in India.

(iii)

country other than India and received by any person in India, the person liable to pay

service tax is the recipient of such service.

in relation to any taxable service provided or to be provided by any person from a

(iv) in relation to taxable service provided by a goods transport agency, where the

consignor or consignee of goods is,-

 

Following list provides the notified taxable services and the specified persons/class of

persons who are liable to pay service tax thereon as per Rule 2(1)(d) of Service Tax

Rules,1994:

(i)

 

 

insurer or re-insurer, as the case may be, providing such service.

(a) any factory registered under or governed by the Factories Act, 1948;

(b) any company

 

formed or registered under the Companies Act, 1956;

(vi) in relation to sponsorship service provided to any body corporate or firm, the person

liable to pay service tax is the body corporate or firm, as the case may be, who

receives such sponsorship service.

 

(c) any corporation established by or under any law;

(d) any society registered under the Societies Registration Act, 1860 or under any

law corresponding to that Act in force in any part of India;

(e) any co-operative society established by or under any law;

(f) any dealer of excisable goods, who is registered under the Central Excise Act,

1944 or the rules made thereunder; or

(g) any body corporate established, or a partnership firm registered, by or under

any law,

the person liable for paying service tax is any person who pays or is liable to pay

freight either himself or through his agent for the transportation of such goods by road

in a goods carriage.

(v) in relation to business auxiliary service of distribution of mutual fund by a mutual

fund distributor or an agent, as the case be, the person liable for paying service tax

is the mutual fund or asset management company, as the case may be, receiving

such service.