Service Tax Law | Finance Act 1994
Declared Services Under Section 66E of the Finance Act 1994
Declared services were activities specifically identified as services under Section 66E of the Finance Act, 1994. The provision identified nine categories, including renting of immovable property, certain construction contracts, software activities, works contracts and the service element of food supply. Declaration under Section 66E did not by itself eliminate the need to examine charging provisions, exclusions, exemptions, valuation and the facts of each transaction.
Meaning of service under Section 65B(44)
For the pre-GST regime, Section 65B(44) generally defined a service as an activity carried out by a person for another for consideration, including a declared service, subject to statutory exclusions. Section 66B provided the charging framework for taxable services, while Section 66D contained the negative list. Exemptions, including those notified under Notification No. 25/2012-Service Tax as amended, also had to be considered.
Complete list of nine declared services under Section 66E
1. Renting of immovable property
Section 66E(a) treated renting of immovable property as a declared service. The nature of the arrangement and applicable exemptions determined taxability.
2. Construction intended for sale
Section 66E(b) covered construction of a complex, building, civil structure or part thereof intended for sale, wholly or partly, unless the entire consideration was received after the completion certificate from the competent authority. Statutory explanations addressed the meaning of construction and the competent authority.
3. Intellectual property rights
Section 66E(c) covered temporary transfer or permitting the use or enjoyment of any intellectual property right.
4. Information technology software
Section 66E(d) covered development, design, programming, customisation, adaptation, upgradation, enhancement and implementation of information technology software.
5. Agreeing to refrain, tolerate or do an act
Section 66E(e) concerned agreeing to the obligation to refrain from an act, tolerate an act or situation, or do an act. Mere receipt of damages or penalties did not automatically establish such an agreement; an identifiable contractual obligation and consideration required examination.
6. Hiring or leasing goods without transfer of right to use
Section 66E(f) covered transfer of goods by hiring, leasing, licensing or similar arrangements without transfer of the right to use those goods.
7. Hire purchase and instalment arrangements
Section 66E(g) covered activities in relation to delivery of goods on hire purchase or any system of payment by instalments, subject to applicable valuation and exemption provisions.
8. Service portion of works contracts
Section 66E(h) covered the service portion in execution of a works contract. Section 65B(54) defined works contract in relation to movable or immovable property involving transfer of property in goods and specified activities.
9. Service portion of supply of food or drinks
Section 66E(i) covered the service portion of an activity in which food, articles for human consumption or drinks were supplied as part of the activity, such as specified restaurant or catering transactions.
Declared service versus taxable service
A declared service was a legislatively identified category of activity, not an unconditional rule that every transaction in that category attracted tax. Whether service tax was payable depended on the relevant date, the scope of the charging section, territorial and place-of-provision rules, consideration, exclusions, negative-list entries, exemptions and applicable abatements or valuation provisions.
Service tax after introduction of GST
For supplies within the GST regime, the Central Board of Indirect Taxes and Customs GST portal and the official GST portal provide current compliance resources. The legacy Finance Act, 1994 and related notifications remain relevant when examining disputes arising from earlier taxable periods. For authoritative legislative texts, consult India Code, and for service tax circulars, notifications and archived materials consult CBIC.
Frequently asked questions
How many declared services were listed in Section 66E?
Section 66E listed nine categories of declared services.
Is Section 66E used to levy service tax on new supplies today?
No. The general service tax regime was superseded by GST from 1 July 2017. Section 66E continues to matter in determining legacy-period obligations and disputes.
Was every payment for breach of contract a declared service?
No. The existence of a payment alone did not prove an agreement to tolerate an act or situation. The actual contractual obligation, consideration and applicable CBIC clarification must be assessed.