1. With the economicsgrowth Govt. Expenditure Increases.
2. The onlysources of revenue for the Govt. is taxes
3. With increasesin expenditure Govt. has been increasing taxes dividing
4. To the extend135% of custom duty levied & it becomes matter of gossiping.
5. India becomemember of GATT & entered in to WTO agreement.
6. This agreementrestricted custom duty & created a wide gap in the Govt. revenue &Govt.
Expenditure & there for it become compulsory toimpose Additional Taxes.
7. Governmentappointed a committee for tax reforms under the chairmanship of Dr. RajChelaiya committee recomnded in production of extensive tax system intend ofexisting intensive tax system = Extraction of more amt. of taxesfrom the same sources.
This was not possible therefore committeerecommended introduction of Service Tax.
If goods can br taxed Why not Service Tax – Basedon this principal Service Tax has been imposed.
Can Govt. impose any tax was a question raised bythe C.A association of Gujarat & civil engineering & artitractor of Mumbai. Thevalidity was challenged
Therefore Constitution provide for there list
List A – Union List
List B –State List
List C – Concurrent List (Misc. List)
List A has 97 item on which central Govt. is empowered to make act. & impose taxes in this list of 97there was no Service Tax therefore it wasincluded under entry item97 residualtaxes& therefore only there service were tax i.e. Telephone, Stock Broker& General Insurance Service.
-Subsequently constitution was amended & entry 92© has been insertedto cover service tax & this has been pharmlise
THERE ARE CARTEN STAGES TO BE FOLLOWED FOR IMPOSING TAXES:-.
A. Enactmentpassing of an act by the parliament & approval by the precedent.
B. Establishmentof some machine for implementing of this act.
C. Determinationof assesses & his liabilities.
D. Forcefullyrecovery if not voluntarily paid.
E. Service taxyet to pass this stage no separate act has been to pass only available sectionfrom finance act has been for this purpose.
F. No departmenthas been created for services tax central excise department has been given thisresponsibilities.
G. This is how service tax come in to force.
TYPES OF TAXES
Taxes are two types:-
1. Direct tax
2. Indirect tax
In indirecttax the burden of tax(Incident of tax) is passed on the consumer good orservices.
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Tax law and practice notes book