Chapter V of Finance Act, 1994

1[Principles of interpretation of specified descriptions of services or bundled services.

     66F. (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service.

2[Illustration – The services by the Reserve Bank of India, being the main service within the meaning of clause (b) of section 66D, does not include any agency service provided or agreed to be provided by any bank to the Reserve Bank of India. Such agency service, being input service, used by the Reserve Bank of India for providing the main service, for which the consideration by way of fee or commission or any other amount is received by the agent bank, does not get excluded from the levy of service tax by virtue of inclusion of the main service in clause (b) of the negative list in section 66D and hence, such service is leviable to service tax.]

      (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description.

      (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:–

           (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character;

           (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax.

               Explanation.- For the purposes of sub-section (3), the expression “bundled service” means a bundle of provision of various services wherein an element of provision of one service is combined with an element or elements of provision of any other service or services.]

 

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Notes:

  1. Inserted vide Finance Act, 2012 w.e.f. 1.7.2012
  2. Inserted vide THE FINANCE ACT, 2015 w.e.f. 14th May 2015