Non applicability of Service Tax in the State of Jammu & Kashmir

[Surender Gupta]

Since 1994 when the service tax was first time introduced, a lot of water has been flown but the scope of section 64 of the Chapter V of the Finance Act, 1994 remains same.

Sub section (1) of section 64 states that,

"This chapter extends to the whole of India except the State of Jammu and Kashmir."

What is the meaning and interpretation of this exclusion? Legislatures are still confused.

Chapter V of the Finance Act, 1994, like any other tax law, contains various provisions which may be grouped as: -

- Extent, Commencement and application

- Definitions

- Charging Provisions

- Method of determination of tax

- Method of collection and other procedural aspects.

- Assessment

- Interest and penal provisions.

- Appeal and other related aspects.

Now from the above, which aspect is not applicable in the state of Jammu & Kashmir? From the reading of section 64(1) it is interpreted that all the aspect of the service tax are not applicable in the state of Jammu & Kashmir.

However, it appears that the revenue department is considering that the provisions of the section 64(1) excludes only the levy of service tax if provided in the state of Jammu & Kashmir and other aspects are applicable.

One may go through the letter of the Director General of Service Tax (F. No. V/DGST/03/GEN/INS/01/2004, dated 17-8-2004) which refers the Central Board of Excise  and Customs (CBEC) Circular No. 56/5/2003, dated 25-4-2003 in which CBEC has clarified that,  "Service Tax is a destination based consumption tax and the principle of consumption of services would determine the liability of Service Tax."

According to the above letter of the DGST, the insurance services rendered to the clients having assets outside the state of Jammu and Kashmir, by M/s. New India Assurance Company Ltd., Jammu would be liable to Service Tax. However, services provided to the clients having assets in state of Jammu and Kashmir, by your Jammu Branch are not liable to Service Tax.

Now a question of million arises that under which provision of the Chapter V of Finance Act, 1994, the revenue shall collect the amount of service tax from the Insurance Companies Situated in Jammu & Kashmir on the services provided to the client having asset outside the state of Jammu and Kashmir?

Discussions to this article

[SUNEESH P. S]

I have a separate query altogether. What does Section 67/(10) of J&K VAT Act - 2005 say?

[Mudasir Rafiq Dar]

is serive tax applicable on the state of jammu and kashmir. for e.g: is service tax applicable on car and any other insurance, purchasing of new vehicles,bank accounts and purchasing of goods in j&K. thanks please reply mudasir

[VINOD KUMAR]

Sir, If we providing the service from j&k to other state of India (in courier sector)and customer paying the payment in J&K TO COURIER COMPANY tHE SERVICE TAX IS APPLICABLE OR NOT

[VINOD KUMAR]

Sir, I am asking to you if we send a material from jammu to Delhi and jammu customer will pay our payment at Jammu then Service tax will be applicable or not means a jammu customer sending a parcel for delhi and he will pay the freight at jammu then S.Tax applicable or not( in courier segment)

[Sachin Goel]

sir, i have a question. if any service provider in jammu & kashmir providing services to the person or persons in jammu & kashimir, for jammu to any other state, then is he liable to pay service tax on not?

[Tawheed Rasool]

Sir, I want to know is service tax applicate on Refilling, of LPG Storge & Transportation , if on what Rates . Thank you.

[Rama Krishana]

I think the answer to the query raised by Mr. Mudasir Rafiq Dar dated 6-1-2009, Mr. VINOD KUMAR dated 8-1-2009 and 9-1-2009 is no. No service tax is applicable on the above referred situations.

[Rama Krishana]

Refilling of LPG is not a service. It is a sale of product and hence should not be subject to service tax. However, the transportation of such cylinders is subject to service tax.

[sunil]

is Service Tax is applicable for term insurance plan in Jammu and kashmir State.

[sanjay jain]

sir we are running a vocation computer institute on a ngo which is affilifated with NIOS govt.of india is service tax applicable on it

[Riaz Gassi]

Is service tax on survey consultancy services exempted?

[Mahi Grewal]

Sir, Im a student from jammu.Our college authorities are taking service tax from us. My question is it valid because no other college is doing the same.Moreover whichever articles i read over internet regarding ST said that it is not applicable in j and k. Please help me with my query.