Definition of service [Section 65B(44)] :
Earlier, under the selective approach of taxation of services, the word “service” was nowhere defined in the Finance Act, 1994. In the negative list approach of taxation of services, the definition of service gains paramount importance. In order to determine whether a person is liable to pay service tax, the first question he needs to answer is whether the activity undertaken by him comes within the ambit of definition of “service”. Consequently, section 65B(44) defines the word “service”. For ease of understanding, the definition of service tax may be divided into three sections:-
I. Meaning of service
Service means
(i) any activity for consideration
(ii) carried out by a person for another and
(iii) includes a declared service.
II. Exclusions
However, a service shall not include:-
(a) an activity which constitutes merely,—
(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or
(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or
(iii) a transaction in money or actionable claim;
(b) a provision of service by an employee to the employer in the course of or in relation to his employment;
(c) fees taken in any Court or tribunal established under any law for the time being in force.
III. Explanations
Explanation : For the removal of doubts, it is hereby declared that nothing contained in this clause shall apply to,—
(A) the functions performed by the Members of Parliament, Members of State Legislative, Members of Panchayats, Members of Municipalities and Members of other local authorities who receive any consideration in performing the functions of that office as such member; or
(B) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
(C) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or State Governments or local authority and who is not deemed as an employee before the commencement of this section.
Explanation : For the purposes of this clause, the expression “transaction in money or actionable claim” shall not include––
(i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;
(ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out ––
(a) by a lottery distributor or selling agent in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner;
(b) by a foreman of chit fund for conducting or organising a chit in any manner.
Explanation : For the purposes of this Chapter,—
(a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons;
(b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons.
Explanation : A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory.