May 18th 2020 | By Adv. Shitij Saini

Before the introduction of the Goods and Services Tax Act, 2017 section 65 of the Finance Act 1994 defined “Services”. On perusal of section 65 of the Finance Act 1994, it can be construed that service tax will be attracted when a taxable service is provided by a defined service provider to a defined service receiver. Therefore, we can say that there will be no levy of service tax if the service is not provided by the defined service provider to a defined service receiver. For ready reference section 65B (44) of Finance Act, 1994 is extracted below:-

“Service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-

(a) an activity which constitutes merely:-
(i) transfer of title in goods or immovable property by way of sale, gift or in any other manner; or
(ii) a provision of service by an employee to the employer in the course of or in relation to this employment;
(iii) fees taken in any court or tribunal established under any law for the time being in force.”

Goods and Services Tax is an Indirect Tax which has replaced many Indirect Taxes in India. The Goods and Services Tax Act came into force on 1st July 2017 through the implementation of the Constitution (101 Amendment) Act, 2016. Goods and Services Tax Law in India is a comprehensive, multi-stage, destination-based tax that is levied on every value addition.

The term “Goods” as defined in the Constitution of India under Article 366(12) which include all materials, commodities and articles. Further with the introduction of Constitution (101 Amendment) Act, 2016 and with the insertion of clause 26A in Article 366 the term “services” was also defined as “anything other than goods”. The term “Services” is also defined under section 2(102) of Central Goods and Services Tax Act, 2017. For ready reference the same is extracted below:

“anything other than goods, money and securities but includes activities relating to the 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”.

Now to understand the definition of “Services” in a better way we have to first understand what does the term “anything” connotes under the definition stated above. Generally, “anything” refers to a thing, no matter what. While deciding the executive powers of Lt. Governor of Delhi the Hon’ble Apex Court in the case of Govt of Delhi v. UOI interpreted the term “Any” and “Anything” and it was construed that “Anything” does not include “Everything”. Further in Sahyadri SSK Ltd.

v. CCE, Pune 2003(153) ELT 18 (S.C.), it observed that the meaning of the word “Anything” may be employed to indicate “all” or “every” as well as “some” or “one” and its meaning in a given statute depends upon the context and the meaning is to interpreted as per the subject-matter of the statute.

Thus, from the above discussion, it can be concluded that the term “anything” used in the definition means services other than goods. This interpretation holds good for the Goods and Services Tax Act, 2017.

On perusal of the definitions mentioned under Article 366 of Constitution of India and section 2(102) of Central Goods and Services Tax Act, 2017, it can be construed that the definition itself says that “unless the context otherwise requires”. The meaning of services is to be decided from the standpoint of the recipient of such services. Further, it is observed that if something is imposed on the recipient of services that will not amount to services. Therefore, it is important to note the willingness of the recipient.

In Goods and Services Tax regime there are clear exemption entries under Schedule III of the Act wherein, it mentions certain activities or transactions which shall be treated neither as a supply of goods nor a supply of services. For instance, services provided by an employee to the employer will not be covered under the Goods and Services Tax regime. But if we look into related party transactions whether such transactions are with or without consideration then we can construe that the said transactions are under the ambit of GST Act as the value of such transaction will be computed as per the valuation rules.

Therefore, we can conclude by saying that if someone has to be taxed, then the transaction to be seen from the standpoint of the recipient to analyse what benefits he is accruing from such services for which the consideration is paid by him. In simpler words, it can be said that if something is forced on the recipient then it will not be considered as services because it was against the will of such person.