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.
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
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
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